Earlier this week, by a party-line 34-26 vote, the House Financial Services Committee passed H.R. 4861, a bill seemingly intended to ease restrictions on short-term, small-dollar loans made by depository institutions.  The bill is part of the efforts of House Republicans to provide greater regulatory relief to banks than would be provided by S. 2155, the banking bill passed by the Senate last week.  We expect that Jeb Hensarling, who chairs the House Committee, will attempt to make the bill part of a final banking bill.

H.R. 4861 would nullify the FDIC’s November 2013 guidance on deposit advance products, which effectively precludes FDIC-supervised depository institutions from offering deposit advance products.  (The FDIC supervises state-chartered banks and savings institutions that are not Federal Reserve members.)  We had been sharply critical of that guidance, as well as the OCC’s substantially identical guidance as to national banks.  However, in October 2017,  just hours after the CFPB released its final rule on payday, vehicle title, and certain high-cost installment  loans (CFPB Rule), the OCC rescinded its guidance on deposit advance products.  Because the FDIC has not yet followed suit, H.R. 4861 would remove a regulatory impediment to state-chartered banks and savings institutions offering one form of small-dollar lending to their customers.

H.R. 4861 would require the federal banking agencies to promulgate regulations within two years “to establish standards for short-term, small-dollar loans or lines of credit made available by insured depository institutions.”  The standards must “encourage products that are consistent with safe and sound banking, provide fair access to financial services, and treat customers fairly.”  The regulations would preempt any state laws “that set standards for [such loans or lines of credit]” and would override the CFPB Rule for insured depository institutions that become subject to H.B. 4861 regulations.  (Insured and uninsured credit unions would gain relief from the CFPB Rule even before regulations are adopted.)

Presumably, the “standards” under H.B. 4861 regulations could include interest rate standards.  Thus, federal banking agencies supportive of short-term, small-dollar loans could authorize interest rates higher than the insured depository institutions could otherwise charge under applicable federal law.  Unfortunately, as it is currently drafted, H.R. 4861 could be interpreted to allow the banking agencies to establish rate limits that are more restrictive than the limits that currently apply under federal law.  Accordingly, we would hope that the final bill will clarify that it does allow the federal banking agencies to impair existing rate authority under applicable federal law, including Section 85 of the National Bank Act, Section 27 of the Federal Deposit Insurance Act, and Section 4(g) of the Home Owners’ Loan Act.



The CFPB has issued a request for information that seeks comment on its inherited regulations and inherited rulemaking authorities.  Comments on the RFI must be received on or before 90 days after the date the RFI is published in the Federal Register, which the CFPB expects to occur on March 26, 2018.

As used in the RFI, the “Inherited Regulations” consist of “the statutory authority and regulations that were transferred to the Bureau by title X of the Dodd-Frank Act” and also “include the regulations that the Bureau restated in Title 12, Chapter X of the Code of Federal Regulations.”  Such regulations were issued by other agencies pursuant to the rulemaking authority transferred to the CFPB by Dodd-Frank.

The CFPB seeks feedback on all aspects of the Inherited Regulations, including the following:

  • Aspects of the Inherited Regulations that should be tailored to institutions of particular types or sizes, create unintended consequences, overlap or conflict with other laws or regulations so as to make compliance difficult or particularly burdensome, are incompatible or misaligned with new technologies, or could be modified to provide consumers more protection from identity theft
  • Changes the CFPB could make to the Inherited Regulations to more effectively meet the statutory purposes and objectives set forth in the federal consumer financial laws and the CFPB’s goals for a particular Inherited Regulation in the first instance
  • Changes the CFPB could make to the Inherited Regulations that would advance the CFPB’s statutory purposes set forth in Section 1021 of Dodd-Frank
  • Pilots, field tests, demonstrations, or other activities the CFPB could launch to better quantify benefits and costs of potential revisions to the Inherited Regulations or to make compliance with the Inherited Regulations more efficient and effective
  • Areas where the CFPB has inherited rulemaking authority that it has not exercised but where rulemaking would be beneficial and align with the purposes and objectives of applicable federal consumer financial laws

The new RFI represents the ninth in a series of RFIs announced by Mr. Mulvaney.  The subjects of the CFPB’s first eight RFIs and their comment deadlines are as follows:

(The initial comment deadlines for the first three RFIs listed above were extended this week to the dates indicated.)

In its press release announcing the latest RFI, the CFPB stated that the next RFI in the series will be issued next week and will address the CFPB’s guidance and implementation support.



The CFPB has published a notice in the Federal Register soliciting applications for membership on its Consumer Advisory Board and its Credit Union Advisory Council.  Submissions must be received by April 23, 2018.

Members of the Board  are typically appointed  for a three-year term and Council members are typically appointed for a two-year term.


The CFPB has issued its seventh annual Fair Debt Collection Practices Act report covering the CFPB’s and FTC’s activities in 2017.

The CFPB’s previous FDCPA annual reports began with a message from former Director Cordray.  Unlike those reports, the new report begins not only with a message from CFPB Acting Director Mick Mulvaney but also has an opening message from Maureen K. Ohlhausen, the FTC’s Acting Chairman.

While the new report incorporates information from the FTC’s annual letter to the CFPB describing its FDCPA activities during the year covered by the report, the text of the letter is not included as an appendix to the report as it was in prior reports.  In addition, unlike in prior years, the FTC did not issue a press release about its annual letter concurrently with the issuance of the letter.  Instead, the FTC’s letter on its 2017 FDCPA activities (which is dated February 8, 2018) is linked to a press release issued by the FTC about the CFPB’s report.

Both the CFPB and FTC press releases about the report quote Mr. Mulvaney’s statement that “[f]rom now on, we will be working closely with the FTC to enforce the FDCPA while protecting the legal rights of all in a manner that is efficient, effective, and accountable.”  Mr. Mulvaney’s statement, and the prominence given to Ms. Ohlhausen in the report, perhaps signal that both the CFPB and FTC will continue to take an active, and possibly more coordinated, approach to FDCPA enforcement under the Trump Administration.

With regard to the CFPB’s debt collection rulemaking, the report provides no new insights into the CFPB’s rulemaking plans.  It reviews the CFPB’s debt collection rulemaking activities to date, including its November 2013 Advanced Notice of Proposed Rulemaking, its July 2016 publication of an outline of proposals under consideration in anticipation of convening a SBREFA panel, and its August 2016 convening of the panel.  The report states only that the CFPB “is continuing to consider the feedback it received through the SBREFA panel and from other stakeholders subsequent to the publication of the Outline” and is also “engaged in research and market outreach.”

It is widely thought that the CFPB will not entirely abandon its debt collection rulemaking activities under the Trump Administration.  Continued debt collection rulemaking would be consistent with recent statements by Mr. Mulvaney, such as to the National Association of Attorneys General earlier this month, in which he highlighted the high volume of debt collection complaints and indicated that complaint volume will be a significant factor in how the CFPB sets its priorities.  In his introductory message in the new report, Mr. Mulvaney observed that in 2017 debt collection was “one of the most prevalent topics of complaints about consumer financial products or services received by the Bureau.”

Although the CFPB was expected to propose a debt collection rule under former Director Cordray that covered both first- and third-party collections, the debt collection rule proposals outlined for the SBREFA panel only covered third-party debt collectors.  Accordingly, while the CFPB’s debt collection rulemaking is likely to continue, it is also likely that any debt collection rule proposed by the CFPB under Mr. Mulvaney or a new Director appointed by President Trump would similarly be limited to third-party debt collectors and not cover first-party collections.

Other information set forth in the report includes the following:

  • According to the report’s section on complaints, the CFPB handled approximately 84,500 debt collection complaints in 2017 (which was 3,500 less than in 2016).  The most common complaint was about attempts to collect a debt that the consumer claimed was not owed.  The second and third most common complaint issues were, respectively, written notifications about the debt and communication tactics.
  • In the report’s section on the CFPB’s supervision of debt collection activities engaged in by banks and nonbanks subject to CFPB supervision, the CFPB described the following FDCPA violations found by its examiners:
    • Impermissible communications with third parties due to the supervised entity’s failure to adequately confirm that it had contacted the correct party before beginning to discuss the debt
    • Deceptively implying that authorized credit card users were responsible for a debt
    • Falsely representing to consumers the effect on their credit scores of paying a debt in full rather than settling it for less than the full amount
    • Communicating with consumers outside of the hours of 8 a.m. to 9 p.m. or at times the consumers had previously indicated were inconvenient due to the supervised entity’s failure to accurately update account notes and the use of autodialers that based call parameters solely on the consumer’s area code, rather than also considering the consumer’s last known address
  • The CFPB continues to be in active litigation in one FDCPA matter filed in 2015 and another filed in 2016.  In addition, the CFPB “is conducting a number of non-public investigations of companies to determine wither they engaged in collection practices that violate the FDCPA or the CFPA.”
  • In 2017, the CFPB’s public enforcement actions involving debt collection resulted in over $577,000 in consumer relief and over $78,000 paid into the civil penalty fund.  (In dramatic contrast, these amounts in 2016 were, respectively, $39 million in consumer relief and over $20 million paid into the civil penalty fund.)

As we previously reported, on March 23, 2018 in Washington, D.C., the FTC and FCC will co-host a joint policy forum that will cover recent policy changes and enforcement actions as well as the agencies’ efforts to encourage private sector technological solutions.  We believe the event will be of interest to clients who launch legitimate account management or marketing campaigns from autodialers as well as those whose names have been misappropriated by fraudulent telemarketers.

Because it comes on the heels of the D.C. Circuit’s March 16 decision addressing a number of critical issues involving the Telephone Consumer Protection Act’s restrictions on the use of autodialers, the forum is likely to include a discussion of the decision.  Ballard has issued a legal alert summarizing the decision and will hold a webinar on April 3, 2018 in which the participants will address the decision’s implications and its potential impact on pending and future TCPA litigation.  (Our legal alert includes a link to register for the webinar.)

The tentative agenda and other information about the event, including how to access a live video feed, can be found here.


The New York Department of Financial Services has sent a letter directed to businesses that the DFS “understands…may be involved in online lending in the State of New York” and that asks recipients to complete a “New York Marketplace Lending Survey” that they can access online.

The letter states that the DFS is conducting the survey to gather information for a public report that it is required to issue by July 1, 2018 and which must include information about online lenders operating in New York and their business practices, including lending practices, interest rates and costs charged, and consumer complaints and investigations about the industry.  The report will also include an analysis of the primary differences between online lending products and those of traditional lenders, the risks and benefits of the products offered, other forms of credit that would be available to such borrowers in the absence of online lending opportunities, the types and availability of credit products for individuals and businesses, and access to capital by New York consumers.

Last month, we reported that identical bills had been introduced in the New York Assembly and Senate that would direct the DFS to issue the online lending report.  Those bills are intended to amend legislation signed into law by New York Governor Cuomo in December 2017 that created a seven-person task force to study online lending and issue a report by April 15, 2018.  The bills would eliminate the task force and provide that the report is to be prepared by the DFS by July 1, 2018 “in consultation with stakeholders, including online lenders, consumers and small businesses.”

In the letter, the DFS states that it is directed to issue the report by legislation passed by the New York legislature “which is subject to a chapter amendment.”  Our research indicates that neither of the identical bills have yet been signed by Governor Cuomo and that a “chapter amendment signature” is legislation signed by the Governor with the understanding that additional, minor, or technical amendments will be made at a later date.  Presumably the DFS has sent the letters in anticipation of the amendments contemplated by the bills becoming law.

In December 2015, the California Department of Business Oversight announced that it was launching an inquiry into the marketplace lending industry and, in April 2016, it issued a summary report of aggregate data provided by the companies that responded to the DBO’s online survey that was part of the inquiry.


The CFPB is scheduled to publish notices in tomorrow’s Federal Register that it is extending by 30 days the due dates for comments on its first three requests for information.

According to the notices, the extensions were provided in response to requests from two industry trade groups.  The groups pointed out to the CFPB that all of the other RFIs it has issued have 90-day rather than 60-day comment periods.

The three RFIs and their new comment due dates are the following:

The CFPB’s five other RFIs issued to date and their comment due dates are the following:

The decision last week by the U.S. Court of Appeals for the D.C. Circuit on petitions seeking review of the Federal Communications Commission’s 2015 Declaratory Ruling and Order implementing the Telephone Consumer Protection Act (TCPA) represents a partial victory for the industry.

In the decision, the D.C. Circuit reversed the FCC’s guidance on the definition of an automatic telephone dialing system going back to 2003, leaving only the TCPA’s statutory definition.  That definition does not, on its face, include predictive dialers.

The decision creates some uncertainty about TCPA liability for calls to reassigned numbers.  In addition, callers continue to face the challenge of capturing revocations sent by consumers using methods other than those prescribed by the caller.

On April 3, 2018, from 12 p.m. to 1 p.m. ET, Ballard Spahr attorneys will hold a webinar—The D.C. Circuit’s TCPA Decision: What It Means to Your Business.  The webinar registration form is available here.

Click here for the full alert.

Washington has become the latest state to impose a licensing requirement on student loan servicers. Yesterday, Governor Jay Inslee signed  SB 6029, which establishes a “student loan bill of rights,” similar to the bills that have been enacted in California, Connecticut, the District of Columbia, and Illinois.

The law has an effective date of 6/7/2018, and its requirements include the following:

  • Creation of Advocate Role: The law creates the position of “Advocate” within the Washington Student Achievement Council to assist student education loan borrowers with student loans. This role is analogous to that of “ombudsman” under proposed and enacted servicing bills in other states.  One of the Advocate’s roles is to receive and review borrower complaints, and refer servicing-related complaints to either the state’s Department of Financial Institutions (“DFI”) or the Attorney General’s Office, depending on which office has jurisdiction. The Advocate is also tasked with:
    • Compiling information on borrower complaints;
    • Providing information to stakeholders;
    • Analyzing laws, rules, and policies;
    • Assessing annually the number of residents with federal student education loans who have applied for, received, or are waiting for loan forgiveness;
    • Providing information on the Advocate’s availability to borrowers, institutions of higher education, and others;
    • Assisting borrowers in applying for forgiveness or discharge of student education loans, including communicating with student education loan servicers to resolve complaints, or any other necessary actions; and
    • Establishing a borrower education course by 10/1/20.
  • Licensing of Servicers: SB 6029 requires servicers to obtain a license from the DFI. There are various exemptions from licensing for certain types of entities and programs (trade, technical, vocational, or apprentice programs; postsecondary schools that service their own student loans; persons servicing five or fewer student loans; and federal, state, and local government entities servicing loans that they originated), although such servicers would still need to comply with the statute’s substantive requirements even if they are not licensed.
  • Servicer Responsibilities: All servicers, except those entirely exempt from the statute, are subject to various obligations. Among other things, servicers must:
    • Provide, free of charge, information about repayment options and contact information for the Advocate ;
    • Provide borrowers with information about fees assessed and amounts received and credited;
    • Maintain written and electronic loan records;
    • Respond to borrower requests for certain information within 15 days;
    • Notify a borrower when acquiring or transferring servicing rights; and
    • Provide borrowers with disclosures relating to the possible effects of refinancing student loans.
  • Modification Servicer Responsibilities: The bill imposes a number of requirements on third-parties providing student education loan modification services, including mandates that such persons: not charge or receive money until their services have been performed; not charge fees that are in excess of what is customary; and immediately inform a borrower in writing if a modification, refinancing, consolidation, or other such change is not possible.
  • Requirements for Educational Institutions: Institutions of higher education are required to send borrower notices regarding financial aid.
  • Fees: The bill also calls for the establishment, by rule, of fees sufficient to cover the costs of administering the program created by the bill.
  • Bank Exemption: The statute provides for a complete exemption for “any person doing business under, and as permitted by, any law of this state or of the United States relating to banks, savings banks, trust companies, savings and loan or building and loan associations, or credit unions.” Notably, this exemption does not expressly cover state banks chartered in other states.

As we recently noted, bills like  SB 6029 are being introduced in legislatures across the country at an increasing rate, and we are continuing to track the progress of these proposals as they move through various statehouses.

Hopefully the torrent of such proposals will soon be reduced to a trickle, now that the U.S. Department of Education has formally weighed in on this trend, issuing an interpretation emphasizing that the Higher Education Act, federal regulations, and applicable federal contracts preempt laws like SB 6209 that purport to regulate federal student loan servicers.

In a blog post entitled “How S.2155 (the Bank Lobbyist Act) Facilitates Discriminatory Lending” Professor Adam Levitin claimed that “This bill functionally exempts 85% of US banks and credit unions from fair lending laws in the mortgage market.”  The claim was set forth in bold and italic text.  If the intent was to draw attention to the claim, it worked.  Members of this firm saw the claim.  In short, the claim greatly mischaracterizes the limited implications of the amendment.

The Professor is referring to an amendment that S.2155 would make to the Home Mortgage Disclosure Act (HMDA) for insured banks and insured credit unions that satisfy certain conditions.  First, I will address what the amendment would not do.  The amendment:

  • Would not exempt any institution from the Equal Credit Opportunity Act, the Fair Housing Act or any other substantive fair lending law.
  • Would not exempt any institution from the mortgage loan data reporting requirements of HMDA that were in effect before January 1, 2018.
  • Would not prevent bank and credit union regulators from obtaining any information on the mortgage lending activity of institutions that they supervise.

What the amendment would do is exempt small volume mortgage lenders from the expanded HMDA data reporting requirements that became effective on January 1, 2018 if they met certain conditions.  The conditions are that:

  • To be exempt from the expanded data reporting requirements for closed-end mortgage loans, the bank or credit union would have to originate fewer than 500 of such loans in each of the preceding two calendars years
  • To be exempt from the expanded data reporting requirements for home equity lines of credit (HELOCs), the bank or credit union would have to originate fewer than 500 of such credit lines in each of the preceding two calendars years.
  • The bank or credit union could not receive a rating of (1) “needs to improve record of meeting community credit needs” during each of its two most recent Community Reinvestment Act (CRA) examinations or (2) “substantial noncompliance in meeting community credit needs” on its most recent CRA examination.

The exemption for HELOC reporting would have no implications initially, and perhaps longer.  For 2018 and 2019 the threshold to report HELOCs is 500 transactions in each of the preceding two calendar years.  The 500 HELOC threshold was implemented by a temporary rule adopted by the CFPB under former Director Cordray in August 2017, which amended the HMDA rule adopted by the CFPB in October 2015 to revise the HMDA reporting requirements.  The October 2015 rule for the first time mandated the reporting of HELOCs, and set the reporting threshold at 100 HELOCs in each of the two preceding calendar years.  The CFPB indicated in the preamble to the temporary rule that it had evidence that the number of smaller institutions that would need to report HELOCs under the 100 threshold may be higher than originally estimated, and that the costs on those institutions to implement reporting may be higher than originally estimated.  The temporary rule allows the CFPB time to further assess the appropriate threshold.

While Professor Levitin inaccurately claims that the S.2155 amendment creates a functional exemption from the fair lending laws for small volume lenders, the statement that 85% of banks and credit unions would be covered by the exemption mischaracterizes the scope of lending activity subject to HMDA reporting requirements.  Based on the data used by the CFPB to assess the 2015 rule, the change from the 100 to 500 threshold would reduce the number of institutions reporting HELOCs from 749 to 231, but would reduce the percentage of HELOCs reported only from 88% to 76%.  Additionally, 2016 HMDA data reflect that while credit unions and small banks comprised over 73% of HMDA reporting entities, the institutions received under 15% of the reported applications for the year.  While the CFPB now acknowledges it may have underestimated the number of institutions that would be covered at the 100 HELOC threshold, these statistics reflect that focusing on the percentage of institutions subject to reporting, and not the percentage of transactions subject to reporting, paints an inaccurate picture of lending activity subject to HMDA reporting requirements.

Even for institutions that would qualify for the exemption from reporting the expanded HMDA data, the CFPB and financial institution regulators will still receive the traditional HMDA data from these institutions.  And regulators can use that information to assess whether they should take a closer look at the mortgage lending activity of any institutions.  Of great significance, as noted above, the S.2155 amendment would not limit the amount of information on mortgage lending that bank or credit union regulators can obtain from institutions that they supervise.

While the expansion of the HMDA data is intended to permit regulators to better assess the mortgage lending of an institution before having to request additional information from the institution, even the expanded data does not provide for a conclusive assessment of whether or not a given institution has engaged in discrimination when evaluating mortgage loan applications.  In fact, even with data that is more comprehensive than the expanded HMDA data, a statistical analysis still does not provide for a conclusive determination regarding underwriting determinations.  You have to get your hands on the actual loan files.

The main impact from the S.2155 amendment would be the reduction of some HMDA information from small volume lenders that will be made available to the public.  With new leadership at the CFPB, we don’t know what parts of the expanded HMDA data will be released to the public.  However, even under Director Cordray, the CFPB did not plan to issue credit score information, which is an important item of information to conduct a fair lending analysis.  A significant concern of the mortgage industry regarding the expanded HMDA data is that members of the public will improperly use the data that is released to claim that the data conclusively show that the institutions engaged in discrimination.  Given that Professor Levitin paints an inaccurate picture of the impact of the HMDA amendment under S.2155, those concerns appear to be warranted.