OCC to Host Innovation Office Hours During Money20/20

On October 28, 2019, the Office of the Comptroller of the Currency (“OCC”) will hold Innovation Office Hours in Las Vegas, Nevada at The Venetian Hotel during the Money20/20 conference (October 27-30).

During the Innovation Officer Hours, the OCC’s Office of Innovation staff meets one-on-one with fintech firms and other companies that partner with banks to discuss new products or services to facilitate responsible innovation in the federal banking system.  You can request an Office Hours session here until October 18, 2019. Continue Reading Fintech Week in Review: Week of October 11, 2019

Increase to the Management Interlock Threshold Rule Approved

The Office of the Comptroller of the Currency (“OCC”), the Board of Governors of the Federal Reserve System (the “Federal Reserve”), and the Federal Deposit Insurance Corporation (“FDIC”) approved a change to the thresholds in the major assets prohibition for management interlocks stated in the Depository Institution Management Interlocks Act (“DIMIA”). Prior to the final rule, the DIMIA prohibited a management official of a depository organization that had total assets exceeding $2.5 billion from simultaneously serving as a management official of an unaffiliated depository organization that had total assets exceeding $1.5 billion (referred to as the “major assets prohibition”). The approved change now increases the respective $2.5 billion and $1.5 billion thresholds to $10 billion each. Continue Reading Fintech Week in Review: Week of October 4, 2019

CFPB and FTC to Host Credit Reporting Accuracy Workshop

The Federal Trade Commission (“FTC”) and the Consumer Financial Protection Bureau (“CFPB”) recently announced that they will be hosting a public workshop on December 10, 2019 to discuss issues related to the accuracy of credit reports and background screening reports for employment and housing rental purposes. The FTC published a study on accuracy in credit reporting in 2012, the same year the CFPB began supervising large credit reporting agencies (“CRAs”) and furnishers of credit reports. Additionally, a 2015 multi-state settlement required CRAs to follow stricter standards for accuracy in credit reports. The workshop will include numerous stakeholders, including industry representatives, consumer advocates, and regulators. Comments may be submitted to the FTC until January 10, 2020 about topics for discussion during the workshop. If you would like to review any comment with us, please contact Sam Boro (SBoro@perkinscoie.com) or Nick Lundgren (NLundgren@perkinscoie.com). Continue Reading Fintech Week in Review: Week of September 27, 2019

California Governor to Consider Capping Rate on Finance Lender Loans

The California State Assembly passed Assembly Bill 539, the Fair Access to Credit Act (FACA), with a vote of 61 to 8. FACA prevents licensed finance lenders from charging more than 36% (plus the federal funds rate) on consumer loans between $2,500 and $10,000. Reports from California’s Department of Business Oversight (DBO), as previously discussed here, found that many loans carried triple-digit annualized interest rates and were often issued to repeat, low-income customers.

Among other things, FACA requires lenders to report the borrower’s credit information to a national consumer reporting agency and offer a DBO-approved credit education program while largely prohibiting prepayment penalties. Notably, FACA allows for the collection of an administrative fee under certain conditions in addition to the interest cap. The bill also modifies existing loan term requirements. Now, the Governor must decide whether to sign FACA into law or veto it. Continue Reading Fintech Week in Review: Week of September 20, 2019


CSBS Suit Challenging OCC Fintech Charter Dismissed

For the second time, a federal judge has dismissed a suit brought by the Conference of State Bank Supervisors (“CSBS”) seeking to block the Office of the Comptroller of the Currency (“OCC”) from offering a national fintech banking charter. Judge Dabney Friedrich of the D.C. Circuit again found that the claims brought by the CSBS are not ripe, given that the no fintech charters have been approved or issued by the OCC, and therefore the CSBS lacks standing to bring the suit.

The New York Department of Financial Services (“NYDFS”), a CSBS member, has brought a separate suit on the matter in the Southern District of New York—and in that case, the judge has found the matter is ripe for adjudication and has allowed that suit to continue. In both suits, the plaintiffs allege the OCC’s fintech charter impinges on state sovereignty and exceeds the OCC’s congressional mandate.  Judge Friedrich notes in her opinion that her decision runs counter to the decision in the NYDFS case but disagrees with that decision where it conflicts with the D.C. Circuit’s dismissal of the CSBS case. Continue Reading Fintech Week in Review: Week of September 6, 2019

CFPB fines company for allegedly deceiving customers

The Consumer Financial Protection Bureau (“CFPB”) issued a consent order against a Texas money transmitter who communicated to customers that it would not be responsible for “errors made by banks or payment agents, or for any other reasons out of our control.” The company, Maxitransfers Corporation, focuses its business on providing remittance services to the Latin American community. The consent order notes that remittance transfer providers are responsible for the errors of agents, contrary to Maxitransfer’s disclosures. The order also alleges several other failings, including a failure to create written policies and procedures relating to the Remittance Transfer Rule, a failure to report error investigations, and treat International bill-pay services as remittances. The consent order does not allege any direct consumer harm.

The consent order requires the company to pay a $500,000 fine, maintain proper policies and procedures and a compliance program to ensure compliance with the Remittance Transfer Rule and train its agents, employees, and service providers. Continue Reading Fintech Week in Review: Week of August 30, 2019

U.S. Developments

California Proposes Regulations to Implement New Disclosure Requirements for Commercial Financing

Recently, the California Department of Business Oversight (“CA DBO”) issued proposed regulations to implement SB 1235, a 2018 law that, in certain situations, requires consumer-like disclosures for certain commercial financing transactions. The law has a few notable exemptions, including depository institutions, financings in excess of $500,000, transactions secured by real property, and closed-end loans that involve a principal of less than $5,000. The CA DBO is accepting public comment on the proposed regulations until September 9, 2019.

Once the regulations are adopted, the 2018 law will take effect. The 2018 law requires that regulations be promulgated to create disclosures to commercial financing transactions under the California Financing Law that include the following: Continue Reading Fintech Week in Review: Week of August 19-23, 2019

U.S. Developments

Federal Reserve to Build Real-Time Payments System

After years of speculation, the Federal Reserve announced this week it will create a real-time payments system, which it expects to be live by 2023 or 2024. The system, the FedNow Service, was announced by Federal Reserve Governor Lael Brainard during a speech at the Federal Reserve Bank of Kansas City. During the announcement, Brainard highlighted the strong support for the project the Federal Reserve received during its public comment period, noting that 90 percent of the comments called for the creation of the system. The system will allow near-instant transfers of funds 24 hours a day, 7 days a week, between depository institutions eligible to hold accounts at Federal Reserve Banks.  Eligible depository institutions will also be able to designate a service provider or agent to submit or receive payment instructions on the institutions’ behalf. The FedNow Service will be designed for payments of $25,000 or less. Continue Reading Fintech Week in Review: Week of August 9, 2019

U.S. Developments

FinCEN and Others Issue Joint Statement on BSA/AML Examinations

The Financial Crimes Enforcement Network (FinCEN) and several other federal banking regulators, including the Federal Deposit Insurance Corporation, National Credit Union Administration, the Office of the Comptroller of the Currency, and the Board of Governors of the Federal Reserve, issued a joint statement on Bank Secrecy Act and Anti-Money Laundering (BSA/AML) examinations of bank compliance programs. The joint statement does not establish new requirements, but rather is an effort to provide additional transparency regarding the risk-based approach these regulators take when conducting their examinations. Continue Reading Fintech Week in Review: Week of August 2, 2019

U.S. Developments

Regulatory Developments

House Task Force Looks to Allow Alternative Data for Credit Scoring

A newly formed U.S. House of Representatives task force, the Financial Technology Task Force, held a hearing this week to discuss a proposed bill that would allow new types of data to appear on consumer credit reports, including items like rent and phone payments. Proponents of the bill argue that in an era of more people renting, a large population of consumers could have positive payment histories excluded from their credit reports under the existing regulations.

Consumer advocates at the hearing cautioned lawmakers that some lower-income consumers could be hurt by the inclusion of this alternative data, including tenants who withhold rent payments due to substandard living conditions. Continue Reading Fintech Week in Review: Week of July 26, 2019