The FDIC recently announced that it has entered into a Consent Order with Cross River Bank (CRB or Bank) to resolve FDIC charges that the Bank engaged in unsafe or unsound practices related to its fair lending compliance. (The Consent Order was issued in March 2023 but not made public until the end of last month.) … Continue Reading
Fintech
GAO issues report on fintech products; recommends CFPB clarify when earned wage access products are “credit” under Truth in Lending Act
The Government Accountability Office (GAO) has issued a new report entitled “Financial Technology: Products Have Benefits and Risks to Underserved Consumers, and Regulatory Clarity Is Needed.”
The report focuses on the following four types of fintech products:
- Digital deposit accounts offered by fintech companies through partnerships with banks or credit unions.
This week’s podcast episode: A look at the consumer financial products offered by fintechs and the regulatory issues they raise, with special guests Penny Lee, Chief Executive Officer, Financial Technology Association (FTA), and Gerron Levi, Senior Vice President and Head of Government Affairs, American Fintech Council (AFC)
By Barbara S. Mishkin on
We begin with a discussion of the goals and themes of FTA’s recent summit and AFC’s advocacy regarding retention of the strategic plan option under the Community Reinvestment Act. We then discuss consumer benefits of buy-now-pay-later (BNPL) and regulatory concerns raised by the CFPB in its BNPL report, state level regulatory issues facing fintechs, the Treasury’s report on bank/fintech relationships and takeaways for fintechs, consumer benefits of earned wage access products and artificial intelligence and regulatory concerns raised by the CFPB, and reactions to the CFPB’s Section 1033 rulemaking.… Continue Reading
Treasury report on bank/fintech relationships includes recommendations for CFPB supervision of non-bank installment lenders and data aggregators
By Ronald K. Vaske on
Posted in Fintech
The Treasury Department has released a report entitled “Assessing the Impact of New Entrant Non-bank Firms on Competition in Consumer Finance Markets.” The report was issued in response to President Biden’s July 2021 Executive Order on promoting competition. That Order directed the Secretary of the Treasury to issue a report assessing how the entry of large technology firms and other non-banks into consumer finance markets has affected competition.… Continue Reading
Small Business Administration to expand 7(a) program to fintechs and alternative lenders
By John Sadler & Justin Kerner on
The Biden Administration recently announced a slate of new public and private sector initiatives aimed at advancing racial equity by delivering “capital and resources to underserved small businesses and the community lenders who serve them.” Among these initiatives was a proposed rule change for the Small Business Administration (SBA) that would increase the number of nonbanks, including Fintechs, eligible to offer SBA 7(a) loans. … Continue Reading
OCC’s New Office of Financial Technology Portends Increased Supervisory Activity
By Mindy Harris & Ronald K. Vaske on
The OCC’s announcement that it will establish an Office of Financial Technology to “bolster the agency’s expertise and ability to adapt to a rapidly changing banking landscape” should come as no surprise to those who have been following recent pronouncements of Acting Comptroller Michael J. Hsu.
Over the past few months, Mr.… Continue Reading
OCC keeps focus on bank/fintech partnerships
By Ronald K. Vaske & Mindy Harris on
Since the beginning of Michael Hsu’s tenure as Acting Comptroller of the Currency, bank/fintech partnerships have been a focus of OCC concern. Although bank lending partnerships with fintechs continue to receive OCC attention, recent remarks by OCC officials indicate that OCC scrutiny is now also directed at partnerships outside of the lending arena.… Continue Reading
Class Action Lawsuit Filed Against FinTech Lender Opportunity Financial For Evading Texas State Usury Laws
By Andrew Carobus on
On June 1, 2022, plaintiff Kristen Michael filed a class action lawsuit against FinTech lender Opportunity Financial, LLC (“OppFi”) on behalf of herself and a putative class alleging, inter alia, that OppFi loans money at an interest rate upwards of 130% higher than allowed by state law. Ms. Michael alleges that OppFi offers “OppLoans” in over 30 states, whereby it originates, underwrites, services and enforces these loans, even claiming the loans on its financial reports. … Continue Reading
CPFB states that it did not scrap no-action letter and compliance assistance sandbox programs in connection with its overhaul of its Office of Innovation and Operation Catalyst
By Alan S. Kaplinsky on
On May 25, 2022, my colleagues, Mike Gordon, John Culhane and Ron Vaske published a blog which reported on a press release issued by the CFPB on the prior day entitled “CFPB Launches New Effort to Promote Competition and Innovation in Consumer Finance.” The blog stated:
… Continue ReadingIn its press release, the CFPB states that “[a]fter a review of these programs [the No Action Letter (NAL) and Compliance Assistance Sandbox (CAS) programs], the agency concludes that the initiatives proved to be ineffective and that some firms participating in these programs made public statements indicating that the Bureau had conferred benefits upon them that the Bureau expressly did not.”
CFPB announces plans to supervise more nonbanks; Ballard Spahr to hold May 11 webinar on Director Chopra’s first six months in office
By Michael Gordon & Lisa Lanham on
Posted in CFPB Supervision, Fintech
The CFPB has announced that it plans to invoke its “dormant authority” to supervise nonbanks engaged in conduct that poses risk to consumers. In conjunction with the announcement, the CFPB issued a procedural rule concerning the confidentiality of proceedings in which the CFPB invokes such authority. These moves by the CFPB are notable for two reasons. … Continue Reading