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 June 21, the Federal Deposit Insurance Corporation (FDIC) announced that it approved plans from Thrivent Financial to create Thrivent Bank, which would operate nationally as an online-only Utah industrial bank owned by Thrivent Financial, a Fortune 500 financial services nonprofit. For more information, click here.
• On June 19, the Securities and Exchange Commission’s (SEC) Division of Enforcement announced that it will not recommend an enforcement action against Consensys Software Inc. (Consensys), a company started by Joseph Lubin, who is a co-founder of Ethereum (ETH). The SEC was investigating Consensys’ offers and sales of ETH, implying that ETH was a security. Although the SEC closed its investigation of Consensys, the termination letter does not explicitly state that ETH is not a security. For more information, click here.
• On June 18, the Consumer Financial Protection Bureau (CFPB) announced that it is seeking public comment on a proposed rule amending Regulation V, which implements the Fair Credit Reporting Act (FCRA), concerning medical information. The CFPB is proposing to remove a regulatory exception in Regulation V from the limitation in the FCRA on creditors obtaining or using information on medical debts for credit eligibility determinations. The proposed rule would also provide that a consumer reporting agency generally may not furnish a consumer report containing information on medical debt to a creditor if the creditor is prohibited from using that information. Comments close on August 12. For more information, click here.
• On June 18, the Office of the Comptroller of the Currency (OCC) reported the key issues facing the federal banking system in its “Semiannual Risk Perspective” report for Spring 2024. The OCC reported that the overall condition of the federal banking system remains sound. It highlighted credit, market, operational, and compliance risks as the key risk themes in the report. For more information, click here.
• On June 17, the CFPB released a blog post on the Auto Finance Data Pilot, and issued nine market monitoring orders to three banks, three finance companies, and three captive lenders to provide information about their auto lending portfolios. This allows the CFPB to examine trends that may create risks for consumers, including a better understanding of loan attributes that may result in increased consumer distress. For more information, click here.
• On June 14, the Federal Housing Finance Agency (FHFA) released its 2023 report to Congress. The statutorily required report provides information about the agency’s 2023 examinations of Fannie Mae, Freddie Mac (the enterprises), the 11 Federal Home Loan Banks (FHLBanks), and the FHLBanks’ joint Office of Finance. For more information, click here.
• On June 14, the Bank of International Settlements released the results of its 2023 survey, concerning the exploration of central bank digital currencies and whether central banks are considering issuing such currencies in the future. For more information, click here.
• On June 14, the Department of Justice (DOJ) announced that it has charged two men with operating the “Empire Market,” which was a dark web marketplace that enabled users to use digital assets to buy and sell more than $430 million in illegal goods and services around the world. According to the DOJ, it seized digital assets worth $75 million in the aggregate during its investigation. For more information, click here.
• On June 14, the CFPB released a blog post on new protections for payday and installment loans that are slated to take effect next year. For more information, click here.
• On June 13, President Biden announced his intent to nominate:
  • Christy Goldsmith Romero, nominee for chair and member of the FDIC.
  • Kristin N. Johnson, nominee for assistant secretary for Financial Institutions, Department of the Treasury.
  • Caroline A. Crenshaw, nominee for member of the SEC.
  • Gordon I. Ito, nominee for member of the Financial Stability Oversight Council.
  For more information, click here.
• Last week, during oral argument of digital asset exchange Kraken’s pending motion to dismiss an enforcement action brought by the SEC, federal Judge William Orrick stated that he was “inclined to deny” Kraken’s motion. For more information about Kraken’s motion to dismiss, click here.
• The Bank for International Settlements (BIS) recently published the results of its 2023 survey on central bank digital currencies (CBDCs) and cryptocurrencies. Out of the surveyed central banks, 94% are exploring a central bank digital currency. For more information, click here.

State Activities:

• On June 20, New York Attorney General (AG) Letitia James, along with New York Governor Kathy Hochul, California Senator Andrew Gounardes, and Assemblymember Nily Rozic, announced that legislation designed to curb addictive social media feeds and to protect young online users’ privacy had been signed into law. The first bill, the Stop Addictive Feeds Exploitation for Kids Act (SAFE), will require social media companies to restrict addictive feeds for users under the age of 18. With SAFE in effect, users under the age of 18 will not receive addictive feeds without a parent’s consent. SAFE also authorizes the AG to seek civil penalties of up to $5,000 per violation. The second bill, the New York Child Data Protection Act (CDPA), will prohibit online sites from collecting, using, sharing, or selling personal data of anyone under the age of 18 without informed consent, or unless doing so is strictly necessary for the purpose of the website. The CDPA will also allow the AG to seek civil penalties of up to $5,000 per violation. For more information, click here.
• On June 17, the Nebraska Department of Banking and Finance (department) issued a letter to advise certain regulated licensees and applicants of changes to the statutes governing the state’s delayed deposit services licenses, installment loan licenses, installment sales licenses, money transmitter licenses, and the mortgage banker licenses (CFS licenses). The letter specifically advises the target licensees and applicants that, effective July 19, changes updating the background check procedures and notification requirement for data breaches as they pertain to CFS licenses will be implemented. The department will begin utilizing NMLS-based background checks exclusively for all CFS licenses. The department will also require that all companies with CFS licenses notify the department within three days from the date that the companies become aware of a data breach involving the personal information of the state’s residents. For more information, click here.
• On June 14, AG James announced that she recovered approximately $50 million from defunct digital asset financial services company Gemini Trust Company, LLC (Gemini). Prior to its closure, Gemini offered its customers “earn accounts,” which became a focal point of controversy after Gemini and similar companies offering the same product barred their customers from withdrawing funds from their respective platforms. For more information, click here.
• On June 14, California Governor Gavin Newsom approved SB 1096, which amends the state’s Consumers Legal Remedies Act (CLRA). Current law makes certain unfair methods of competition and deceptive acts or practices unlawful when undertaken by a person who is engaged in a transaction that is intended to, or that otherwise results in the sale or lease of goods or services to a consumer. The bill will add additional acts and practices that will constitute a violation of the CLRA. Among other things, the bill provides that it shall be unlawful for a covered person to advertise, offer for sale, or sell a financial product that is illegal under state or federal law. The bill will also make it unlawful for covered persons to fail to include certain information in a solicitation to a consumer for a consumer financial product. Such solicitation must include the name of the covered person and the entity acting on the covered person’s behalf (if applicable), along with relevant contact information. Such solicitation must also include, subject to certain exceptions, a certain disclosure statement, which must be in 18-point bold type, advising the consumer that the solicitation is an advertisement and does not require the consumer to make any payment or take other action. For more information, click here.