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On December 13, 2022, the FDIC issued a request for comment on a proposal to modernize the regulations governing use of the FDIC’s official signage and advertising of FDIC-insured status by insured depository institutions (IDIs), and to clarify regulations issued earlier in 2022 regarding misrepresentations of deposit insurance coverage.  The proposed rule was published in the Federal Register on December 21, 2022 and comments are due no later than February 21, 2023.… Continue Reading

Earlier this week, Senator Sherrod Brown (D-Ohio) introduced a bill, the “Close the Shadow Banking Loophole Act,” (Act) that is intended to close what is often termed a “loophole” in the Bank Holding Company Act (BHCA) because it allows the parent companies of industrial loan companies (ILCs) to operate without the same level of federal oversight that applies to parent companies of other banking institutions.… Continue Reading

We discuss the FDIC’s final rule on misuse of the FDIC name or logo, advisory to insured banks on deposit insurance and dealings with crypto companies, and cease and desist letters to five crypto companies alleging they made false and misleading statements about deposit insurance.  We also discuss the CFPB’s circular warning that a misrepresentation involving the FDIC name or logo can constitute a UDAAP violation. … Continue Reading

A bi-partisan group of nine Senators (five Republicans and four Democrats) recently sent a letter to Acting FDIC Chairman Martin Gruenberg to express their support for the industrial loan company (ILC) charter and to remind him “to ensure the [FDIC] continues to follow the laws that Congress carefully designed for the FDIC to consider new deposit insurance applicants, including ILCs.” … Continue Reading

The White House has announced the names of two Republicans who President Biden is nominating to serve as members of the FDIC Board of Directors.

The FDIC Board of Directors has five members, two of whom are the Comptroller of the Currency and the CFPB Director.  Currently, there are only three members, all of whom are Democrats (consisting of Acting Chair Martin Gruenberg, Acting Comptroller Michael Hsu, and CFPB Director Rohit Chopra). … Continue Reading

We discuss each of the three categories of risk identified in the guidance (consumer compliance, third-party, and litigation), plaintiffs’ legal theories in class actions challenging NSF fees, the role of arbitration clauses and contract language in defending class actions, the FDIC’s suggested risk mitigation practices, issues to consider in navigating FDIC expectations for remediation of self-identified NSF fee issues and plaintiffs’ demands in class action settlements, the position of other federal regulators on re-presentment NSF fees, and state focus on NSF fees.… Continue Reading

On August 19, 2022, the FDIC issued cease and desist letters to five crypto companies, alleging they made false and misleading statements about FDIC deposit insurance and demanding immediate corrective action.  The five companies are FTX US, Cryptonews.com, CryptoSec.info, SmartAsset.com, and FDICCrypto.com.  The FDIC’s actions come weeks after issuing an “Advisory to FDIC-Insured Institutions Regarding Deposit Insurance and Dealings with Crypto Companies” to address the agency’s concerns regarding misrepresentations about FDIC deposit insurance.… Continue Reading

The FDIC has issued new supervisory guidance (FIL-40-2022) on multiple non-sufficient funds (NSF) fees arising from the re-presentment of the same unpaid transaction.  The guidance directly applies only to state-chartered banks and thrifts that are not members of the Federal Reserve System.  National banks and federal thrifts are supervised by the Office of the Comptroller of the Currency (OCC) and state-chartered banks that are members of the Federal Reserve System are supervised by the Federal Reserve Board (FRB). … Continue Reading

The FDIC has issued an “Advisory to FDIC-insured institutions Regarding Deposit Insurance and Dealings with Crypto Companies” to address the agency’s concerns regarding misrepresentations about FDIC deposit insurance by certain crypto companies.  Of particular concern to the FDIC is the risk that consumer confusion or harm can arise from crypto assets offered by, through, or in connection with an insured bank particularly when a non-bank offers crypto assets to its customers while also offering an insured bank’s deposit products.… Continue Reading

On July 25, 2022, the FDIC issued Financial Institution Letter (FIL)-34-2022 announcing updates to Chapters 1 and 4 of its Formal and Informal Enforcement Actions Manual (Manual). The Manual includes updates to the minimum standards for the FDIC’s termination of cease-and-desist and consent orders. The updates do not change any rights or obligations of the parties to an enforcement action.… Continue Reading