Last Friday, as expected, the FTC announced the launch of a coordinated federal-state law enforcement initiative targeting deceptive student loan debt relief companies. According to the FTC, 11 states and the District of Columbia are participating in the initiative, which is being called “Operation Game of Loans.” The participating states are Colorado, Florida, Illinois, Kansas, Maryland, North Carolina, North Dakota, Oregon, Pennsylvania, Texas, and Washington,
Hours after the CFPB released its final payday/auto title/high-rate installment loan rule on October 5, 2017, the OCC rescinded its guidance on deposit advance products. That guidance, entitled Supervisory Concerns and Expectations Regarding Deposit Advance Products published in November 2013 (OCC Bulletin 2013-40), and substantially identical guidance issued by the FDIC on the same day, had effectively precluded banks subject to OCC and FDIC supervision from offering deposit advance products. We were sharply critical of the prior guidance and applaud the OCC’s action.
Acting Comptroller Keith Noreika, in his statement about the OCC’s action, mentioned the CFPB and the risk of “potentially inconsistent regulatory direction and undue burden as they prepare to implement the requirements of the CFPB’s final [payday loan] rule.” The Acting Comptroller went further, explaining that the OCC guidance “may even hurt the very consumers it is intended to help, the most marginalized, unbanked and underbanked portions of our society.” The OCC, therefore, appears to invite banks to consider offering the product. It remains to be seen whether the FDIC will follow suit.
We think that national banks and federal savings banks (and perhaps other financial institutions) have an opportunity to structure deposit advance products that will fall outside the new CFPB rule, meet supervisory expectations, produce substantial revenues, and provide badly needed credit to consumers whose options may be sharply constrained by the CFPB rule.
We will continue to monitor any developments as they unfold.
A group of Democratic House members led by Rep. Maxine Waters has introduced H.R. 3937, the “Megabank Accountability and Consequences Act of 2017,” that would require federal bank regulators to consider the revocation of a bank’s charter and deposit insurance if the bank is found to have engaged in a “pattern or practice” of violations of federal consumer protection laws. The bank’s officers and directors would also be subject to civil and criminal liability.
The 45-page bill includes 10 pages of “findings.” One such finding is that since the enactment of Dodd-Frank, “some very large banking organizations operating in the United States have repeatedly violated Federal banking and consumer protection laws by engaging in unethical business practices” and that such banks “continue to act with impunity and violate numerous laws designed to protect consumers” despite enforcement actions that have been taken “most notably” by the CFPB.
Other findings include:
- Senior bank executives “rarely have been held personally accountable for Federal consumer protection law violations and other illicit practices that occurred during their tenure.”
- Federal prudential banking agencies, despite their wide-ranging statutory powers to address violations, “continue to rely on enforcement tools such as consent orders, cease and desist orders, and civil money penalties, even in instances when an institution’s violations have demonstrated unsafe or unsound business practices and past supervisory and enforcement actions have not sufficiently deterred illegal practices.”
- Institutions have continued to engage in inappropriate and illegal practices because the federal prudential banking agencies have failed to “exercise statutorily provided enforcement authorities—such as revoking a bank’s national charter or terminating its Federal deposit insurance” or “hold the institution’s board of directors and senior officers accountable.”
- Even if a bank’s violations of federal consumer financial laws “are deemed not to technically constitute unsafe or unsound banking practices, it may still demonstrate a pattern of wrongdoing causing unacceptable harm to its customers, such that continuing to enable it to engage in the business of banking distorts the regulatory purpose of providing national banks charters, deposit insurance and other benefits.”
The bill’s provisions would apply to a national bank, federal savings association, state Federal Reserve member bank, insured depository institution, foreign bank, or federal branch or agency of a foreign bank if such entity is “affiliated with a global systematically important bank holding company.” A “global systematically important bank holding company” is defined as a bank holding company that the Fed has identified as a “global systematically important bank holding company” or a “global systematically important foreign banking organization” pursuant to existing federal regulations.
The bill contains a definition of “pattern or practice of unsafe or unsound banking practices or other violations related to consumer banking” that lists 7 types of activities and provides that a bank satisfies the “pattern or practice” definition if it engages in all of such activities “to the extent each activity was discovered or occurred at least once in the 10 years preceding the date of the enactment of this Act.” It also contains a definition of “pattern or practice of violations of federal consumer protection laws.”
The bill includes the following requirements and sanctions:
- If the OCC, after consultation with the CFPB, determines that a bank “is engaging or has engaged in a pattern or practice of unsafe or unsound banking practices and other violations related to consumer harm,” the OCC must “immediately initiate proceedings to terminate the [bank’s] Federal charter…or appoint a receiver for [the bank].”
- If the FDIC, after consultation with the CFPB, determines that an insured depository institution “is engaging or has engaged in a pattern or practice of unsafe or unsound banking practices and other violations related to consumer harm,” the FDIC must “immediately initiate an involuntary termination of the [bank’s] deposit insurance.”
- If the Fed, after consultation with the CFPB, determines that a state member bank “is engaging or has engaged in a pattern or practice of unsafe or unsound banking practices and other violations related to consumer harm,” the Fed must “immediately initiate proceedings to terminate such bank’s membership in the Federal Reserve System.”
- If the Fed, after consultation with the CFPB, determines that a foreign bank or federal branch or agency of a foreign bank “is engaging or has engaged in a pattern or practice of unsafe or unsound banking practices and other violations related to consumer harm,” the Fed must “immediately initiate proceedings to terminate the foreign bank’s ability to operate in the United States” or recommend to the OCC that the branch’s or agency’s license be terminated.
- If the OCC, Fed, or FDIC makes a determination to initiate proceedings to terminate a bank’s charter or deposit insurance, the agency must notify the bank “that removal is required of any director or senior officers responsible, as determined by [that agency], for overseeing any division of the [bank] during the time the [bank] was engaging in the identified pattern or practice of unsafe or unsound banking practices.” Any current or former director or senior officer determined to have such responsibility “shall also be permanently banned from working as an employee, officer, or director of any other banking organization.”
- If the FDIC determines that an insured depository institution “is engaging or has engaged in a pattern or practice of unsafe or unsound banking practices and other violations related to consumer harm” or is notified by the OCC or Fed of the termination of a bank’s charter or an agency’s or branch’s license, the FDIC must not only initiate an involuntary termination of deposit insurance, it also must place the institution into receivership and can transfer the institution’s assets as provided in the bill.
- Every “executive officer and director” of a national bank or federal savings association or a branch, representative office, or agency of a federally-licensed foreign bank must annually certify in writing to the appropriate banking agency, the CFPB, and any relevant federal law enforcement agency, that he or she has “regularly reviewed the institution’s lines of business and conducted due diligence to ensure,” that the institution (1) has established and maintained internal risk controls to identify significant federal law consumer compliance deficiencies and weaknesses, (2) has promptly disclosed all known violations of applicable federal consumer protection laws to the CFPB and appropriate banking agency, (3) is taking all reasonable steps to correct any identified federal law consumer compliance deficiencies and weakness based on prior examinations, and (4) is in substantial compliance with all federal consumer protection laws.
- An officer or director who submits a certification that contains a false statement is subject to a fine or imprisonment if the statement is “done knowingly” or “done intentionally.”
- An officer or director who knowingly violates any federal consumer protection law or directs any of the institution’s agents, officers, or directors to violate such a law is personally liable for any damages sustained by the institution or any other person as a result of the violation. An officer or director who knowingly causes an institution to violate any federal consumer protection law or directs any of the institution’s agents, officers, or directors to commit a violation that results in the director or officer “being personally unjustly enriched and the institution being conducted in an unsafe and unsound manner” can be fined in an amount up to all of the compensation he or she received during the period in which the violations occurred or in the one to three years preceding discovery of the violations, and is subject to up to 5 years imprisonment. The OCC, Fed, or FDIC, as applicable, must remove an officer or director who engaged in the foregoing conduct from his or her position and permanently ban such person from being involved in the operation and management of a federally-chartered or federally-insured bank.
Were it to become law, the bill’s certification requirement would likely make it very difficult for banks to attract and retain highly-qualified officers and directors. It could also lead to instability in the banking system by creating a “run” on deposits by depositors of a bank that became subject to the bill’s sanctions, particularly those whose deposits at the bank exceeded the insured deposit limit.
Fortunately, given the large Republican majority in the House, the bill is very unlikely to advance.
Among the more than 20 bills that the House Financial Services Committee is scheduled to mark-up this Wednesday, October 11, is a bill to provide a “Madden fix” as well as several others relevant to consumer financial services providers.
These bills are the following:
- H.R. 3299, “Protecting Consumers’ Access to Credit Act of 2017. In Madden, the Second Circuit ruled that a nonbank that purchases loans from a national bank could not charge the same rate of interest on the loan that Section 85 of the National Bank Act allows the national bank to charge. The bill would add the following language to Section 85 of the National Bank Act: “A loan that is valid when made as to its maximum rate of interest in accordance with this section shall remain valid with respect to such rate regardless of whether the loan is subsequently sold, assigned, or otherwise transferred to a third party, and may be enforced by such third party notwithstanding any State law to the contrary.”
This language is identical to language in a bill introduced in July 2017 by Democratic Senator Mark Warner as well as language in the Financial CHOICE Act and the Appropriations Bill that is also intended to override Madden. Like those bills, H.R. 3299 would add the same language (with the word “section” changed to “subsection” when appropriate) to the provisions in the Home Owners’ Loan Act, the Federal Credit Union Act, and the Federal Deposit Insurance Act that provide rate exportation authority to, respectively, federal savings associations, federal credit unions, and state-chartered banks. In the view of Isaac Boltansky of Compass Point, the bill is likely to be enacted in this Congress.
- H.R. 2706, “Financial Institution Consumer Protection Act of 2017.” This bill is intended to prevent a recurrence of “Operation Chokepoint,” the federal enforcement initiative involving various agencies, including the DOJ, the FDIC, and the Fed. Initiated in 2012, Operation Chokepoint targeted banks serving online payday lenders and other companies that have raised regulatory or “reputational” concerns. The bill includes provisions that (1) prohibit a federal banking agency from (i) requesting or ordering a depository institution to terminate a specific customer account or group of customer accounts, or (ii) attempting to otherwise restrict or discourage a depository institution from entering into or maintaining a banking relationship with a specific customer or group of customers. unless the agency has a material reason for doing so and such reason is not based solely on reputation risk, and (2) require a federal banking agency that requests or orders termination of specific customer account or group of customer accounts to provide written notice to the institution and customer(s) that includes the agency’s justification for the termination. (In August 2017, the DOJ sent a letter to the chairman of the House Judiciary Committee in which it confirmed the termination of Operation Chokepoint. Acting Comptroller Noreika in remarks last month, in which he also voiced support for “Madden fix” legislation, indicated that the OCC had denounced Operation Choke Point.)
- H.R. 3072, “Bureau of Consumer Financial Protection Examination and Reporting Threshold Act of 2017.” The bill would raise the asset threshold for banks subject to CFPB supervision from total assets of more than $10 billion to total assets of more than $50 billion.
- H.R. 1116, “Taking Account of Institutions with Low Operation Risk Act of 2017.” The bill includes a requirement that for any “regulatory action,” the CFPB, and federal banking agencies must consider the risk profile and business models of each type of institution or class of institutions that would be subject to the regulatory action and tailor the action in a manner that limits the regulatory compliance and other burdens based on the risk profile and business model of the institution or class of institutions involved. The bill also includes a look-back provision that would require the agencies to apply the bill’s requirements to all regulations adopted within the last seven years and revise any regulations accordingly within 3 years. A “regulatory action” would be defined as “any proposed, interim, or final rule or regulation, guidance, or published interpretation.”
- H.R. 2954, “Home Mortgage Disclosure Adjustment Act.” The bill would amend the Home Mortgage Disclosure Act to create exemptions from HMDA’s data collection and disclosure requirements for depository institutions (1) with respect to closed-end mortgage loans, if the institution originated fewer than 1,000 such loans in each of the two preceding years, and (2) with respect to open-end lines of credit, if the institution originated fewer than 2,000 such lines of credit in each of the two preceding years. (An amendment in the nature of a substitute would lower these thresholds to fewer than 500 closed-end mortgage loans and fewer than 500 open-end lines of credit.)
- H.R. 1699, “Preserving Access to Manufactured Housing Act of 2017.” The bill would amend the Truth in Lending Act and the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act) to generally exempt a retailer of manufactured housing from TILA’s “mortgage originator” definition and the SAFE Act’s “loan originator” definition. It would also increase TILA’s “high-cost mortgage” triggers for manufactured housing financing.
- H.R. 2396, “Privacy Notification Technical Clarification Act.” This bill would amend the Gramm-Leach-Bliley Act’s requirements for providing an annual privacy notice. (An amendment in the nature of a substitute is expected to be offered.)
The FTC has announced that it will host a workshop on December 12, 2017 in Washington, D.C. to examine consumer injury in the context of privacy and data security.
In the workshop, the FTC plans to examine questions about the injury consumers suffer when information about them is exposed or misused such as “how to best characterize these injuries, how to accurately measure such injuries and their prevalence, and what factors businesses and consumers consider when evaluating the tradeoffs involved in collecting, using, or providing information while also potentially increasing their exposure to injuries.”
The types of consumer harm that flow from data security and privacy breaches has significant implications both for government enforcement and private actions. With regard to government enforcement actions, in remarks given in February 2017 soon after her appointment by President Trump as Acting FTC Chairman, Maureen Ohlhausen observed that a focus on consumer injury is important both in deciding what cases to bring and in determining what remedy to seek. She stated that the FTC can best use its limited resources “by focusing on practices that are actually harming or likely to harm consumers” and used recent privacy and data security actions as examples of situations where the FTC “strayed from a focus on actual harm.” She also criticized the FTC’s pursuit of disgorgement that was “disproportionate to any consumer harm” and stated that she intended to “work to ensure that our enforcement actions target behaviors causing concrete consumer harm, and that remedies are tied to consumer harm.”
With regard to private actions, the issue of what types of consumer injury will satisfy Article III standing under the U.S. Supreme Court’s Spokeo decision continues to be litigated. In Spokeo, the Supreme Court held that a plaintiff alleging a violation of the Fair Credit Reporting Act does not have Article III standing to sue for statutory damages in federal court unless the plaintiff can show that he or she suffered “concrete,” “real” harm as a result of the violation.
In advance of the workshop, the FTC is seeking comment by October 27 on the issues to be covered by the workshop, including the following questions:
- What are the qualitatively different types of injuries from privacy and data security incidents? What are some real life examples of these types of informational injury to consumers and to businesses?
- What frameworks might we use to assess these different injuries? How do we quantify injuries? How might frameworks treat past, current, and potential future outcomes in quantifying injury? How might frameworks differ for different types of injury?
- How do businesses evaluate the benefits, costs, and risks of collecting and using information in light of potential injuries? How do they make tradeoffs? How do they assess the risks of different kinds of data breach? What market and legal incentives do they face, and how do these incentives affect their decisions?
- How do consumers perceive and evaluate the benefits, costs, and risks of sharing information in light of potential injuries? What obstacles do they face in conducting such an evaluation? How do they evaluate tradeoffs?
The United States Department of Justice announced last week that Westlake Services LLC and its subsidiary, Wilshire Consumer Capital LLC, have agreed to pay $760,788 to resolve allegations the companies violated the Servicemembers Civil Relief Act (“SCRA”) by repossessing 70 vehicles owned by SCRA-protected servicemembers without obtaining the required court orders.
The CFPB referred the matter to the Justice Department’s Civil Rights Division’s Housing and Civil Enforcement Section in 2016, after receiving a complaint that Los Angeles-based Westlake Services and Wilshire Consumer Capital were conducting repossessions in violation of the SCRA. The Justice Department sued the companies in United States District Court for the Central District of California.
The United States’ complaint alleged that Westlake and Wilshire repossessed vehicles in violation of 50 U.S.C. § 3952(a) and 50 U.S.C. § 3953(c), respectively. Both provisions require lenders to obtain a court order before repossessing a covered servicemember’s motor vehicle, with the latter provision extending that protection for one year following the termination of military service. The complaint alleged the companies failed to check the Defense Manpower Data Center (DMDC) database to determine whether customers were SCRA-protected servicemembers before repossessing vehicles without a court order.
The settlement agreement requires that Westlake and Wilshire pay $10,000 per violation to each of the affected servicemembers, plus an amount to compensate them for any lost equity they suffered in the repossessed vehicle, plus interest. The companies must also repair the credit reporting of all affected servicemembers and pay a $60,788 civil penalty to the United States. The companies also agreed that they would not repossess an SCRA-protected servicemember’s vehicle without obtaining a court order or valid SCRA waiver in the future and that they would implement enhanced policies and procedures and training to ensure compliance with SCRA requirements. The Settlement Agreement is available here.
This is not the first time that Westlake and Wilshire have been the target of a federal agency. In 2015, the companies entered into a Consent Order with the CFPB under which the companies agreed to pay a $4.25 million civil money penalty and $44.1 million in refunds and debt forgiveness to borrowers for alleged unlawful conduct including engaging in debt collection practices in violation of the Fair Debt Collection Practice Act and advertising auto financing in violation of the Truth in Lending Act. The alleged unlawful debt collection conduct included: threatening to refer borrowers for criminal prosecution; illegally disclosing information about debts to borrowers’ employers, friends and family; and using a software program, Skip Tracy, which disguised the phone number and caller ID text information of outbound calls so that the calls appeared to originate from other callers, such as pizza delivery services, flower shops or the borrower’s family and friends. See “Consent Order with the CFPB.”
The Military Lending Act (MLA) will apply to credit card accounts starting Tuesday, October 3. The final rule took effect last October but provided a one-year exemption for “credit extended in a credit card account under an open-end (not home-secured) consumer credit plan.” Although the final rule permits the Secretary of Defense to extend the exemption for up to one year (October 3, 2018), the DoD declined to do so and is allowing the exemption to expire next week.
The MLA final rule imposes a host of requirements in connection with extensions of “consumer credit” to active-duty servicemembers and their dependents (“covered borrowers”), including a 36-percent cap on the Military Annual Percentage Rate (MAPR), substantive oral and written disclosures, and prohibitions against subjecting covered borrowers to certain contractual terms. In particular, creditors are prohibited by the final rule from including pre-dispute arbitration provisions in consumer credit contracts extended to covered borrowers, a fact that has been overlooked (or ignored) by some proponents of the CFPB’s arbitration rule. As such, even if Congress were to repeal the CFPB arbitration rule using the Congressional Review Act, servicemembers and their dependents who are protected by the MLA would still have the right to take their cases to court.
Credit card issuers should take steps to ensure that they (and their servicers) are prepared to comply with the MLA final rule with respect to credit card accounts opened on or after Tuesday, October 3.
California and the District of Columbia have recently released regulations under their respective student loan servicing laws. Each is taking comments on its regulations, but whereas California has merely issued proposed regulations, the District of Columbia has issued emergency regulations that are currently in effect. A brief summary of the regulations and their effective dates appears below, with links to more detailed discussions that also note the extraordinarily small number of complaints to the CFPB from residents of these jurisdictions as well as the bizarre economic impact of these licensing regimes, which will effectively result in the Department of Education paying the administrative expenses incurred by states asserting the authority to supervise federal student loan servicers.
The California Department of Business Oversight (DBO) has released proposed regulations under the state’s Student Loan Servicing Act. The legislation, approved by the Governor September 29, 2016, authorized the Commissioner of the DBO to exercise rulemaking authority beginning January 1, 2017. The proposed regulations were issued on September 8, 2017 and are subject to comment until November 6, 2017. Unless exempt, any person directly or indirectly engaged in the business of “servicing a student loan” must comply with the Act and the final regulations beginning July 1, 2018.
In particular, the proposed regulations provide additional restrictions and responsibilities related to the licensing, borrower protection, and recordkeeping provisions of the Act. The borrower protection provisions include requirements related to online account records, the application of payments from borrowers and co-signers, training requirements for customer service representatives, and online and written notifications of borrower benefits. In August the DBO announced that Melinda Lee was selected as the Financial Institutions Manager for the DBO’s new Student Loan Servicing Program. For more information about the proposed regulations, please see our full coverage here.
The District of Columbia Department of Insurance, Securities and Banking (DISB) has released a Notice of Emergency and Proposed Rulemaking to implement the Student Loan Ombudsman Establishment and Servicing Regulation Amendment Act of 2016. The Act, which became effective February 18, 2017, directed the Commissioner of the DISB to issue rules implementing the Act’s Student Loan Ombudsman and licensing provisions within 180 days of the Act’s effective date. Although it did not meet that deadline, as we reported, the DISB did start accepting applications and transition filings for the Student Loan Servicer License on the National Mortgage Licensing System (NMLS) on August 10, 2017.
However, as apparently permitted by Section 2-505 of the DC Code, the Student Loan Servicer emergency rules were adopted and made effective on September 8, 2017. The emergency rules would seem to be subject to comment for at least 30 days and final rules are expected to be adopted before the emergency rules expire on January 6, 2018. Unless exempt, any person that is directly or indirectly servicing a “student education loan” must comply with the Act and the rules. The emergency rules outline specific application requirements and ongoing obligations for licensees, such as recordkeeping, renewal, notification, and examination requirements. In addition, we have been informed by the DISB that Charles Burt was appointed as the Student Loan Ombudsman earlier this summer. For more information about the rules, please see our full coverage here.
In Madden, the Second Circuit ruled that a nonbank that purchases loans from a national bank could not charge the same rate of interest on the loan that Section 85 of the National Bank Act allows the national bank to charge. Yesterday, at the Online Lending Policy Summit in Washington, D.C., Acting OCC Comptroller Keith Noreika advocated a Madden “fix” as an example of an action Congress could take “to reduce burden and promote economic growth.” Mr. Noreika stated that the OCC supports proposed legislation that would codify the “valid when made rule” and provide that a loan that is made at a valid interest rate remains valid at that rate after it is transferred.
During the Q&A following Mr. Noreika’s remarks, I asked whether the OCC would consider issuing an interpretive opinion to address Madden should Congress fail to act. Unlike former Comptroller Curry, who we criticized for his reluctance to weigh in on the issue, Mr. Noreika responded that the OCC would “not be hesitant” to formally address the “valid when made” rule.
Mr. Noreika also was asked whether, as we have previously suggested, the OCC would address the risk posed by the theory that a bank making loans is not the “true lender” if a nonbank marketing and servicing agent acquires the “predominant economic interest” in the loans. Unfortunately, Mr. Noreika stated that “true lender” guidance might be unnecessary at this time due to prior guidance issued during the tenures of former Comptrollers Hawke and Duggan. Mr. Noreika acknowledged that the OCC’s views were not being followed uniformly by the courts, and we do not think the OCC has been sufficiently clear on the issue. Accordingly, we remain hopeful that the OCC will involve itself here, as well, and will make it clear that Section 85 fully applies to loans made by national banks, even if a nonbank agent of the bank has the predominant economic interest in the loans.
With regard to the OCC’s special purpose national bank (SPNB) charter proposal, Acting Comptroller Noreika stated (as he previously did in July 2017) that the OCC is continuing to consider the proposal and intends to defend its authority to grant an SNPB charter to a nondepository company in the lawsuits filed by the NY Department of Financial Services and the Conference of State Bank Supervisors. Remarking that “we will keep you posted,” however, he remained noncommittal about what the OCC’s ultimate position would be on implementing the proposal and again suggested that fintech companies consider seeking a national bank charter by using more established OCC authority such as trust banks and bankers’ banks. For a fintech company that is not part of a corporate group engaged in nonfinancial activities prohibited by the Bank Holding Company Act, a standard national bank charter may remain a better option.
Indeed, we have previously suggested that a non-bank marketplace lender should consider conversion to a standard national bank. Many years ago, two of my Ballard partners successfully converted a consumer finance company to a standard national bank with the right to export throughout the country “interest” (as broadly defined under the OCC’s regulations) as permitted by its home state and to accept FDIC-insured deposits.
Mr. Noreika also indicated that the OCC intends to revisit its guidance on deposit advance products, observing that its views on such products are not necessarily consistent with those of the CFPB. In November 2013, the OCC issued final guidance that made it impractical for many banks to provide or continue to provide deposit advance services. Since the CFPB’s final payday loan rule is expected to cover deposit advance loans, there will be a need to reconcile any new OCC guidance with the CFPB’s rule.
Finally, Acting Comptroller Noreika referenced his letter sent last month to House Financial Services Committee Chairman Jeb Hensarling in which he “added [his] voice to that chorus in letters to Congress denouncing Operation Chokepoint.” “Operation Chokepoint” was a federal enforcement initiative allegedly involving both the DOJ and the federal banking agencies, that targeted banks serving online payday lenders and other lawful companies that have raised regulatory or “reputational” concerns. A lawsuit brought by the payday lending industry, challenging Operation Chokepoint, is ongoing. In a tone that conveyed strong conviction, Mr. Noreika indicated that it was not the OCC’s policy to direct banks to close entire categories of accounts without assessing the risks presented by individual customers or the bank’s ability to manage such risks. Mr. Noreika observed that “banks make the decisions to retain or terminate customer relationships, not the regulators, and not the OCC.”
I left the meeting much encouraged with the direction the OCC appears to be taking.
In addition to the guidance regarding Hurricane Harvey disaster relief, the housing agencies and government-sponsored enterprises (GSEs) recently addressed the mortgage-related relief available to victims of both Hurricane Harvey and Hurricane Irma in Presidentially-declared disaster areas. Click here for a summary of these announcements.