To keep you informed of recent activities, below are several of the most significant federal and state events that have influenced the Consumer Financial Services industry over the past week.
Federal Activities
State Activities
Federal Activities:
On February 14, the court in National Treasury Employees Union (NTEU) Russell Vought in his official capacity as acting director of the Consumer Financial Protection Bureau (CFPB), issued an agreed order in response to the NTEU’s motion for a temporary restraining order. The court issued several key directives to maintain the status quo until the resolution of the plaintiffs’ motion, which has been deemed a motion for a preliminary injunction with the parties’ consent. The directives included that defendants must not: delete, destroy, remove, or impair any data or other CFPB records covered by the Federal Records Act; terminate any CFPB employee, except for cause related to the specific employee’s performance or conduct. Additionally, no notices of reduction-in-force may be issued to any CFPB employee; and transfer money from the CFPB’s reserve funds, relinquish control or ownership of these funds, return any money to the Federal Reserve or the Department of Treasury, or take any steps to reduce the amount of money available to the CFPB below the amount available as of 4:00 p.m. on February 14, except to satisfy ordinary operating obligations. The lawsuit challenges the actions of Acting Director Russell Vought, arguing that his efforts to “shut down” the CFPB are unconstitutional and violate the congressional mandate outlined in the Dodd-Frank Act. For more information, click here.
On February 13, the Office of the Comptroller of the Currency (OCC) released the economic and financial market scenarios for the 2025 Dodd-Frank Act stress tests. These supervisory scenarios, which include baseline and severely adverse conditions, are required for covered institutions to conduct stress tests. The results of these tests provide the OCC with crucial forward-looking information for bank supervision and help assess the risk profile and capital adequacy of these institutions. This requirement, mandated by Section 165(i)(2) of the Dodd-Frank Act and amended by the Economic Growth, Regulatory Relief, and Consumer Protection Act, applies to certain financial companies, including national banks and federal savings associations. For more information, click here.
On February 12, Christopher J. Waller, a member of the Board of Governors of the Federal Reserve System, delivered remarks at “A Very Stable Conference” in San Francisco, CA, discussing the evolving stablecoin market. Waller highlighted the potential of stablecoins to enhance retail and cross-border payments, emphasizing the need for clear use cases and viable business models. He addressed the challenges of achieving scale, regulatory fragmentation, and the importance of a robust U.S. regulatory framework to ensure the safety and soundness of stablecoins. Waller underscored the necessity for both private sector innovation and public sector regulation to foster a stable and efficient stablecoin ecosystem. For more information, click here.
On February 12, the White House announced the nomination of Brian Quintenz, of Ohio, to be the chairman of the Commodity Futures Trading Commission (CFTC). Quintenz, who is a former CFTC commissioner and currently serves as the head of policy for the a16z crypto fund, has also been nominated to be a commissioner of the CFTC for a term expiring April 13, 2029. If confirmed, Quintenz would replace Acting Chair Caroline Pham. For more information, click here.
On February 11, President Donald Trump nominated Jonathan McKernan to be the new director of the CFPB. If confirmed by the Senate, McKernan will replace Vought, who also serves as the head of the Office of Management and Budget. The day before, McKernan resigned from his position on the Federal Deposit Insurance Corporation (FDIC) board after Trump nominated Rodney Hood, acting OCC comptroller, who then became an FDIC board member. In a post on X, McKernan said that if Hood is confirmed, “we would have more Republicans on the Board than permitted by law.” Under federal law, no more than three members of the FDIC board may be members of the same party. For more information, click here.
On February 11, Acting Comptroller of the Currency Rodney E. Hood issued a statement announcing the OCC’s withdrawal from the Network of Central Banks and Supervisors for Greening the Financial System. Hood emphasized that the OCC’s primary mission is to ensure the safety, soundness, and fairness of national banks and federal savings associations, and participation in the international climate organization extends beyond the OCC’s statutory responsibilities. He stated, “While severe weather events may be a broader societal concern, they do not fall within the OCC’s statutory mandate. Going forward, the OCC’s focus must singularly remain on fulfilling our core mission.” The next day, the White House announced Jonathan Gould’s nomination as comptroller of the currency. Gould’s background includes private practice as a financial regulatory attorney, serving as OCC senior deputy comptroller and chief counsel from 2018 to 2021, and advising Mike Crapo (R-ID) as a top staffer on the Senate Banking Committee. For more information, click here and here.
On February 11, the Federal Trade Commission (FTC) published the inflation-adjusted maximum civil penalty amounts for violations of 16 provisions of law that the FTC enforces, as mandated by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. These adjustments, which became effective upon their publication in the Federal Register on January 17, include increases in penalties for various sections of the FTC Act, the Clayton Act, and the Energy Policy and Conservation Act, among others. For example, the maximum penalty for violations of Sections 5(l), 5(m)(1)(A), and 5(m)(1)(B) of the FTC Act has increased from $51,744 to $53,088, while penalties for violations of Section 814(a) of the Energy Independence and Security Act of 2007 have risen from $1,472,546 to $1,510,803. For more information, click here.
On February 10, the U.S. District Court for the Northern District of Texas issued an order in Chamber of Commerce of the United States of America v. CFPB in light of recent changes within the Bureau’s leadership. The order acknowledges the new leadership within the CFPB and their instruction to employees to cease “all supervision and examination activity” and “all stakeholder engagement.” This directive was reported by The New York Times on February 9. Given these developments, the court has ordered the CFPB to file a status report within 30 days, explaining how it plans to proceed in this case. The litigation centers on the CFPB’s final rule issued on March 5, 2024, which amended 12 C.F.R. § 1026.52(b) to reduce the safe harbor for late fees from $30 for the first missed payment and $41 for subsequent late payments (within six billing cycles) to $8, and prohibited adjustments for inflation. The plaintiffs, including the Fort Worth Chamber of Commerce, challenged this rule under the Administrative Procedure Act, arguing that it exceeded the CFPB’s statutory authority under the Credit Card Accountability and Disclosure Act (CARD Act). For more information, click here.
On February 7, FDIC Acting Chairman Travis Hill sent a letter to Andrea Gacki, director of the Financial Crimes Enforcement Network (FinCEN), expressing his support for updating the Customer Identification Program (CIP) requirements to better align with modern financial services practices. In the letter, Hill highlighted the need to update CIP requirements to reflect current financial services practices. He noted that many nonbank fintech companies use processes where customers provide the last four digits of their tax identification number (TIN) and give permission to obtain the rest of the TIN from a trusted third-party source, such as a consumer reporting agency. Hill pointed out that many banks have requested the ability to onboard customers in this manner but believe the current CIP rule does not permit such an approach. He expressed his support for expediting efforts to provide flexibilities for banks to comply with CIP requirements using the last four digits of the TIN. For more information, click here.
On February 4, U.S. lawmakers introduced legislation to repeal the federal law underlying the final rule under Section 1071 of the Dodd-Frank Act. The identical bills, sponsored in the House by Representative Roger Williams (R-Texas) and in the Senate by Senator John Kennedy (R-La.), aim to eliminate the requirement under the Equal Credit Opportunity Act for financial institutions to collect and report data on small-business lending. The sponsors argue that Section 1071 imposes increased compliance costs on financial institutions, “potentially reducing access to credit for small businesses.” Last year, Congress passed a Senate joint resolution sponsored by Kennedy to overturn the CFPB’s rule implementing Section 1071, which received bipartisan support but was vetoed by former President Biden. For more information, click here.
State Activities:
On February 12, the California Department of Financial Protection and Innovation (DFPI) announced the upcoming meeting of its Debt Collection Advisory Committee. The committee, established on April 29, 2021, includes a diverse group of members from the debt collection, debt-buying, third-party collection, and collection law industries, as well as a consumer advocate. The committee provides critical feedback to the DFPI as it develops its debt collection licensing program and advises the commissioner on various matters related to the debt collection business. The next Debt Collection Advisory Committee meeting will take place on February 26 from 10:00 – 11:30 a.m. PST. For more information, click here.
