STATE GOVERNMENT RELATIONS
Senate Bill 5 – Consumer Data Protection
Author: Sen. Liz Brown, R-Allen County
Latest action: The bill was amended in House Judiciary Committee on April 6. It is now eligible for second reading amendments.
Senate Bill 35 – Financial Literacy
Author: Sen. Mike Gaskill, R-Hamilton and Madison counties
Latest action: The bill passed a third reading vote by the House, 88-1.
Senate Bill 468 – Uniform Commercial Code Amendments
Author: Sen. Chris Garten, R-Clark and Floyd counties
Latest action: The bill was amended on second reading in the House this week. It will be on third reading next week for a final House vote.
House Bill 1008 – Pension Investments
Author: Rep. Ethan Manning, R-Cass and Miami counties
Latest action: The bill was amended in the Senate Pensions and Labor Committee this week. It passed as amended, 7-3, moving the bill to second reading.
Senate Bill 452 – Consumer Credit and Financial Institutions
Author: Sen. Eric Bassler, R-Daviess, Greene, Knox, Martin, Owen and Sullivan counties
Latest action: The bill was passed on second reading this past week. It will be on third reading next week for a final House vote.
FEDERAL GOVERNMENT RELATIONS
CFPB Defines Illegal Abusive Acts in Proposed Guidance
The Consumer Financial Protection Bureau Monday issued proposed guidance on the "abusiveness" standard as defined by the Consumer Financial Protection Act. The guidance summarizes previous actions to enforce the abusiveness standard and offers insight into how the agency, under its current leadership, plans to analyze the statutory elements of abusiveness to identify violative acts or practices.
Notably, the CFPB asserted that the statutory language prohibiting abusiveness includes acts or practices that “obscure, withhold, de-emphasize, render confusing or hide information relevant to the ability of a consumer to understand terms and conditions.” The agency also noted that such acts or practices could include buried disclosures, physical or digital interference, prominently placing certain content to interfere with the comprehension of other content (known as “overshadowing”) and various other means of “manipulating consumers’ understanding.”
Further, the CFPB said that institutions may not take “unreasonable advantage” of consumers’ lack of understanding of the risks, costs or conditions of a product or service; the inability of the consumer to protect their interests in using or selecting a consumer financial product or service; or reasonable reliance by the consumer that the institution will act in the consumer’s interest. The agency asserted that “advantages” can include market share, revenue, cost savings, profits, reputational benefits and other operational benefits.
“Evaluating unreasonable advantage involves an evaluation of the facts and circumstances that may affect the nature of the advantage and the question of whether the advantage-taking was unreasonable under the circumstances,” the CFPB indicated. “Such an evaluation does not require an inquiry into whether advantage-taking is typical or not. And even a relatively small advantage may be abusive if it is unreasonable.” Public comments on the policy are due July 3.
Read the CFPB's guidance statement
Lawmakers Criticize FinCEN’s Beneficial Ownership Registry Reporting Proposal
In a letter Tuesday, a bipartisan group of 12 lawmakers called on the Financial Crimes Enforcement Network to amend beneficial ownership information (BOI) reporting requirements set to take effect next year, saying the agency’s rulemaking deviates from congressional intent by allowing beneficial owners to withhold identifying information. Signatories included House Financial Services Committee Chairman Patrick McHenry, R-N.C., and Senate Banking Committee Chairman Sherrod Brown, D-Ohio.
FinCEN established a BOI registry last year pursuant to the Corporate Transparency Act (CTA). The new regulations would mandate that many corporations, limited liability companies and other entities created in or registered to do business in the U.S. to report information about their beneficial owners to the agency. Lawmakers said they were disappointed that FinCEN instead created an “escape hatch” to the reporting requirements by allowing “unable to identify…unable to obtain” or “unknown…not able to obtain” determinations in the registry. The CTA clearly states that the registry must include the name, date of birth, address and other identifying information about beneficial owners, they said.
“Allowing these options in any final rule will degrade the benefits of the registry to law enforcement and to financial institutions and provide an opportunity for bad actors to obscure the identity of the company applicant or beneficial owner,” the lawmakers said. “The result is that the registration form itself will undermine the underlying, bipartisan goals of the CTA.”
Senate Democrats Seek Proposals for Regulatory Changes Following Bank Closures
Senate Banking Committee Democrats last Friday asked Treasury Secretary Janet Yellen for an assessment of possible regulatory and legislative changes needed to strengthen the financial system following the failures of Silicon Valley Bank and Signature Bank. The letter – which was also signed by Sen. Krysten Sinema, I-Ariz. – urged banking regulators to “identify risks and vulnerabilities brought to light during this crisis and provide specific recommendations on regulation, legislation or other actions necessary to address these threats.” They asked for a report within 60 days.
Areas to assess include quantifiable risks within prudential regulation, such as liquidity and interest rate risk management, and concentrations in asset classes like commercial real estate and long-duration bonds, according to the letter. The senators also asked for assessments on qualitative risks such as social media and algorithmic marketing; the scope of federal liquidity backstops designed to reduce the risk of contagion; the patchwork of state and federal supervision; and the ability of regulators to hold executives accountable for mismanagement.
CFPB Launches 1071 Technical Support Program
The Consumer Financial Protection Bureau has launched a technical support program to help financial institutions implement and comply with its newly released Section 1071 final rule. The support program – dubbed SBL Help – is designed to provide oral and written assistance to financial institutions about their obligations to collect and report data on small-business loans under the final rule. Financial institutions can use an online form to submit technical questions.
The CFPB also published:
- An implementation webpage containing several regulatory resources about the final rule. View the webpage.
- A data webpage with several technical resources about submitting lending data. View the webpage.
- A YouTube video on its implementation and compliance support and the timeline in which these materials are typically released. View the YouTube video.
FHFA Updates Equitable Housing Plans for Fannie Mae, Freddie Mac
The Federal Housing Finance Agency Wednesday announced updates to Fannie Mae and Freddie Mac’s equitable housing finance plans for 2023. The plans were adopted last year to provide the government sponsored enterprises with a three-year roadmap to address inequities in the housing market.
According to the agency, updates to the plans include actions to remove barriers experienced by Latino renters and homeowners in Fannie Mae’s plan; an enhanced focus on ensuring existing borrowers receive fair loss mitigation support and outcomes through monitoring; provision of financial capabilities coaching to build credit and savings; support for locally-owned modular construction facilities in communities of color; and increases to the reach of enterprise special purpose credit programs to support homeownership attainment and housing sustainability in underserved communities.
FDIC Announces Upcoming Sale of Signature Bank Loan Portfolio
The Federal Deposit Insurance Corporation Monday announced the framework of a marketing process for the approximately $60 billion loan portfolio retained in receivership following the failure of Signature Bank in New York City. The portfolio is comprised primarily of commercial real estate loans, commercial loans and a smaller pool of single-family residential loans. The CRE loans include a concentration of multifamily properties, primarily in New York City.
The FDIC expects to begin marketing the retained loan portfolio later this summer. The agency has retained Newmark & Company Real Estate as an adviser on the sale.