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On March 12, at the Institute of International Bankers Annual Washington Conference, Acting Comptroller of the Currency Michael J. Hsu discussed the importance of operational resilience in the banking sector and hinted that potential regulations aimed to promote the same may be forthcoming.

In a recent speech at Vanderbilt University, Acting Comptroller of the Currency Michael Hsu discussed his views on the potential risk of financial instability due to the merging boundaries between banking and commerce. In his speech, Comptroller Hsu underscored the importance of vigilance, especially in the realms of payments and private credit/equity, where he predicts the risk of this ‘blurring’ is most imminent. The Comptroller also advocated for the analytic framework recently adopted by the Financial Stability Oversight Council (FSOC) as having the greatest potential to identify and address emerging financial stability risks.

The Federal Deposit Insurance Corporation (FDIC) recently announced a consent order with Tennessee-based Lineage Bank containing orders relating to the bank’s third-party risk management program and its financial technology (fintech) partners.

The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) recently announced a Notice of Proposed Rulemaking (NPRM) aimed at keeping bad actors from exploiting the U.S. financial system and assets through investment advisers. Specifically, it would require certain investment advisers to apply Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) requirements pursuant to the Bank Secrecy Act (BSA), including implementing risk-based AML/CFT programs, reporting suspicious activity to FinCEN, and fulfilling recordkeeping requirements such as those relating to the transmittal of funds (i.e., comply with the Recordkeeping and Travel Rule). FinCEN is proposing to delegate its examination authority to the SEC.

On February 9, the Securities and Exchange Commission (SEC) announced settlements with 16 firms relating to record-keeping violations stemming from off-channel communications totaling $81 million. The 16 firms were five broker-dealers (BD firms), seven dually registered broker-dealers and investment advisers, and four affiliated investment advisers (IA firms). Off-channel communications are unapproved methods of communication used for business-related communications.

Yesterday, the Texas Bankers Association, the Amarillo Chamber of Commerce, the American Bankers Association, the Chamber of Commerce of the United States of America, the Longview Chamber of Commerce, the Independent Community Bankers of America, and the Independent Bankers Association of Texas Revenue Based Finance Coalition (collectively, the plaintiffs) filed a complaint in the U.S. District Court for the Northern District of Texas challenging the Federal Reserve Board, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency’s (collectively, the agencies) Final Rule modernizing how they assess lenders’ compliance under the Community Reinvestment Act (CRA). In their complaint, the plaintiffs asked the court to vacate the Final Rule and provide a preliminary injunction that would pause implementation of the Final Rule while the court decides the case.

As discussed here, on October 24, the Federal Reserve Board, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency finally issued their long-awaited final rule modernizing how they assess lenders’ compliance under the Community Reinvestment Act (CRA). The CRA regulations had not been updated since 1995.

We are pleased to share our annual review of regulatory and legal developments in the consumer financial services industry. With active federal and state legislatures, consumer financial services providers faced a challenging 2023. Courts across the country issued rulings that will have immediate and lasting impacts on the industry. Our team of more than 140 professionals has prepared this concise, yet thorough analysis of the most important issues and trends throughout our industry. We not only examined what happened in 2023, but also what to expect — and how to prepare — for the months ahead.

On January 29, the Office of the Comptroller of the Currency (OCC) issued a notice of proposed rulemaking regarding its review of business combinations under the Bank Merger Act (BMA). Specifically, the OCC proposed: (i) amendments to 12 C.F.R. § 5.33 to remove provisions related to expedited review and the use of streamlined business combination applications subject to BMA review; and (ii) the adoption of an official policy statement setting forth general principles the OCC will use in its review of applications subject to the BMA. If adopted as proposed, the rulemaking will likely lead to longer approval timelines for certain national bank transactions, particularly for mergers involving well-managed, well-capitalized community banks, internal corporate reorganizations, and branch acquisitions that would have otherwise been able to take advantage of expedited review. Currently, assuming certain criteria are met, a BMA filing that qualifies as a business reorganization eligible for a streamlined application is deemed approved on the 15th day after the close of the comment period, unless the OCC notifies the applicant that the filing is not eligible for expedited review or the expedited review process is extended. However, if the rulemaking is adopted as proposed, § 5.33 would be amended to remove the procedures for expedited review and the use of streamlined applications.