Financial Institutions & Industry Segments

Combining ILC and GENIUS Act applications is an intriguing possibility for a fintech looking to break out of the sponsor-bank paradigm. In this scenario, the company applies for a new ILC charter whose business plan includes a subsidiary issuer. The federal approver and regulator for both applications would be the FDIC. The approach has pluses and minuses. On one hand, the ILC and its subsidiary would enjoy: ✅ Nationwide deposit-taking and lending powers with the ability to export home state interest rates; ✅ Full credit and debit card issuance and acquiring capabilities; ✅ Eligibility for...

Of the myriad structural choices facing a prospective GENIUS Act stablecoin issuer, the most significant is between depository and non-depository options. I see three key differences between these categories (though some play out differently for new issuers vs. existing ones.) 1️⃣ Capabilities The stablecoin issuance powers of the two categories are similar. But depository institution options provide additional capabilities such as: Federal Reserve master account eligibility, Cleaner preemption of multi-state money transmission and custody licensing, and The prospect of engaging in a wider...

The FDIC's ILC RFI is missing a very important section on funding. Deposit and funding strategy issues determine the outcome of many ILC applications. Here are some questions they could have asked: How should the FDIC assess an applicant business plan funded primarily by sources other than customer deposits? Should the FDIC's analysis differ to the extent the proposed funding consists of: (1) traditional brokered deposits, (2) securitization, (3) secured wholesale borrowings, (4) parent credit lines or asset purchases? In the case of securitization, how much weight should the FDIC give the...

There’s a question in the FDIC’s Industrial Bank RFI that will make or break an industrial bank application. Which one? That depends on the applicant, the business model, and the structure. But I can say this with certainty: the question is in there. That's because the RFI goes far beyond the high-level debate over whether industrial banks should exist or who should be allowed to own them. It drills into specific factors that drive FDIC’s decision-making on individual applications. In fact, almost every decisive issue I’ve seen in real-world industrial bank applications is reflected somewhere...

Does the Senate Finance Committee have something against thrifts? Thrifts were inexplicably left out of an exception to the proposed tax on remittance transfers in the Senate Finance draft of title VII of the Big Beautiful Bill. The language exempts transfers that are withdrawn from an account in a financial institution "which is described in subparagraph (A), (B), (C), (D), (E), (G), or (H) of section 5312(a)(2) of title 31, United States Code...." This language references the following subparagraphs in the Bank Secrecy Act's definition of "financial institution" (conspicuously skipping...

In my experience, the top success factor for a novel bank charter application is already having a customer deposit business. Why? Because the biggest hurdle most applicants face is convincing the FDIC that their deposit projections are achievable. That's something to keep in mind now that the window for ILC charters appears to be open again. Even when the "window is open," applications from lending-only companies often don’t make it far enough to be rejected on “policy” grounds. They get bogged down making the case for their business plan -- especially the deposit strategy. It's a little hard...

On June 3, 2024, the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) published its final rule creating a registry (“Registry”) of nonbank covered persons subject to certain agency and court orders (“Final Rule”). The Final Rule is effective on September 16, 2024, but the implementation dates vary based on type of entity (as discussed below). In short, under the Final Rule, nonbank covered persons subject to certain final public orders obtained or issued by a government agency in connection with the offering or provision of a consumer financial product or service must report the...

We assist financial institutions and fintechs with charter strategy, regulatory applications, and transactions, including bank-fintech partnerships and acquisitions. Our practice covers the full range of licensing options including commercial bank charters, ILC charters, trust bank charters, and money transmission licenses. We prepare regulatory applications, conduct due diligence on acquisition targets, advise on control issues under the Bank Holding Company Act, Bank Merger Act, and Change in Bank Control Act, and help structure bank-fintech partnerships to address regulatory expectations....

We provide comprehensive legal counsel to banks ranging from community institutions to the largest national and regional banks, as well as specialized trust, wealth management, and employee benefits institutions. Our services span regulatory compliance and examination support, licensing and charter applications, M&A transactions, and public policy advocacy before Congress and federal banking regulators. Capital Analysis: We assess treatment of assets, instruments, and transactions under bank or GSE capital rules. Consumer Compliance: We assist clients with compliance matters on a variety of...

Our fintech work spans regulatory, strategic, and policy engagements for a diverse range of payment ecosystem participants and digital lenders. Our lawyers have experience working with both traditional and innovative institutions, including: retail and commercial payments and lending fintechs (including buy-now-pay-later providers), fintech banks and neobanks, prepaid program managers and issuers, money transmitters, finance companies, crypto and digital asset service providers, payment processors, payment system infrastructure operators, and payments and credit units of technology companies....

Insurance companies that participate in federally regulated banking and housing activities operate at the intersection of state insurance regulation and federal financial regulation. We advise insurance company clients on the federal banking, housing finance, and consumer protection rules that apply to those activities, including their obligations under federal supervisory frameworks. Our work spans regulatory advice, comment letters and legislative advocacy on federal proposals affecting the sector, and transaction support for activities that touch federally regulated functions. Services we...

Katie Wechsler heads the firm's consumer and housing finance practice. She represents financial institutions and trade associations before Congress and the federal regulatory agencies, with a particular focus on federal consumer financial laws, mortgage lending and servicing, and the implementation and supervision of consumer financial protection requirements. Katie has developed a detailed understanding of the CFPB's authority, including the implementation of section 1033 (personal financial data rights) and section 1071 (small business data collection). Katie previously served as counsel...

BJ Sanford advises payments and fintech companies, U.S. and foreign banks, trade associations, investors, and policy and consulting firms. His practice centers on payments regulation, public policy, and the regulation of bank activities and structure. He also advises clients on regulatory capital, bank investments and control, affiliate transactions, the U.S. operations of foreign banks, and regulatory examinations. Payments regulation. BJ advises payments firms and banks on payment regulation, product development, and compliance with rules including Regulation E, Regulation Z, Regulation II...

Nancy Worth specializes in matters involving the federal financial regulatory agencies, with a particular focus on federal consumer law and fair lending. She advises on supervision and compliance matters relating to mortgages, credit cards, and other lending products, and on examination guidance, applications, reports of examination, enforcement actions, and consumer complaints. Her practice extends to commenting on agency review of legislation and Consumer Financial Protection Bureau regulations. Nancy previously served as Special Counsel for the Office of the Comptroller of the Currency...