Financial Regulators

In Trump v. Slaughter, the U.S. Supreme Court made a profound change to the administrative state. The Court ruled that "for cause" removal protections for members of the Federal Trade Commission (FTC) are an unconstitutional infringement on the President's executive powers. Gone is Humphrey's Executor v. United States, the seminal case that upheld limits on the President's authority to remove FTC Commissioners, and nine decades of independent agency leadership with a degree of insulation from Presidential control. The implication of Slaughter for other independent agencies, including the...

On May 1, 2026, the CFPB published its final rule implementing section 1071 of the Dodd-Frank Act, the small business lending data collection and reporting rule (Final Rule or Rule). The rule is finalized largely as proposed, except that the final rule removes disaggregated data fields for race/ethnicity. While the final rule is effective June 30, 2026, the compliance date is January 1, 2028. This memorandum provides a brief overview of the Rule. This rule amends the 2023 small business lending data rule, which did not go into effect due to litigation and a change in administration. Under the...

It seems the OCC does not believe the GENIUS Act creates a new charter type, contrary to speculation late last year. They would, however, be pleased to offer applicants charters they already have. In the preamble to its proposed GENIUS Act rule, the OCC adopts a narrower reading than it could have of the savings clause that follows the Act's list of activities permitted to a stablecoin issuer. The savings clause says that nothing in the activities provision "shall limit a permitted payment stablecoin issuer from engaging in payment stablecoin activities or digital asset service provider...

The drama around yesterday's Fed decision to grant Morgan Stanley a 23A exemption makes the exemption a tempting target for criticism. But a minor factual error in Governor Bowman's statement defending the decision reveals critical context that puts the decision in perspective. In case you missed it, the Fed Board voted 4-3 to approve an exemption letting Morgan Stanley move a significant trading operation from its European non-bank subsidiary to its US FDIC-insured bank. Such a transaction would usually be prohibited by the restrictions on bank transactions with their affiliates in the...

One thing in the OCC's GENIUS Act proposed rule that I can wholeheartedly endorse: "The OCC proposes to use the term 'Federal Reserve' in place of 'Board' for greater clarity because the proposed rule refers separately to boards of directors in various sections." This practice should be adopted across the bank regulatory ecosystem. The prevailing practice of using "the Board" on second reference to the Federal Reserve decreases the accessibility of regulatory documents and increases cognitive load for anyone who has to read them -- even us experts.

Set to be published in the Dec. 23rd Federal Register, the CFPB is issuing an advisory opinion (Advisory Opinion) to resolve “regulatory uncertainty” regarding the application of TILA/Reg Z to earned wage access (EWA) products. The Advisory Opinion explains why “Covered EWA” is not credit under Regulation Z. It also explains why, to the extent any EWA product is credit under Regulation Z, expedited delivery fees and tips are not, in the normal course, finance charges under Regulation Z. The CFPB also is withdrawing the 2024 proposed interpretive rule on EWA. The Advisory Opinion is effective...

In a pending case brought by the union representing CFPB employees, the Administration has informed the court that CFPB will run out of funding early next year and that the Administration will not seek additional funding for the agency. This memorandum examines the implications for the CFPB’s key functions – rulewriting, supervision, enforcement, and publication of market data – should the agency cease operations in early 2026. The Dodd-Frank Act provides the CFPB with exclusive authority to prescribe rules implementing federal consumer financial laws. These laws include ECOA, EFTA, FDCPA,...

Nobody likes Vullo v. OCC, New York's challenge to the nondepository national fintech charter half a decade ago. For most people in the industry, the case stands for the idea that the OCC can’t charter national banks that don’t take deposits, unless the bank is restricted to trust company activities. The OCC dislikes this for a few reasons, but mostly because it isn’t true. The lower court’s decision against the OCC was reversed on procedural grounds, and the case went away after the applicant at issue applied for deposit insurance. Had the lower court’s substantive reasoning been put to the...

Before you get too excited about the "skinny" master account (aka payment account) proposed by Fed Governor Waller, it's important to read his words carefully. Waller repeatedly stressed that the account would be available to "legally eligible" entities. Under current law, this means depository institutions. Waller's proposal is not a recipe for payment service provider (PSP) access as adopted by the UK, EU, Canada, and others. It is a Fed compromise offer for the many "Tier 3" depository institutions that are currently eligible for master accounts that the Fed does not want to give them. To...

A common misconception is that the GENIUS Act allows only sub-$10b issuers to be state-qualified and imposes federal regulation on all larger issuers. Neither is true. For a state issuer that reaches the threshold, the default path is transition to hybrid supervision, under the federal framework, by both a state and a federal regulator. The state issuer doesn't have to convert to a federal charter unless it wants to. The hybrid framework has some odd quirks: Nonbank issuers transition to supervision administered by the state and OCC "acting in coordination." Meanwhile, (uninsured) depository...

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...

Yesterday's notice rescinding the CFPB rulemaking procedural rule references a rarely acknowledged problem in regulatory change monitoring: the distinction between the agency announcement of a rulemaking action and its publication in the Federal Register. Banking agencies typically announce rulemaking actions on their websites when they are transmitted to the Federal Register, but official publication in the Federal Register can take several weeks. There are important reasons to capture and track both events: 1️⃣ The agency announcement is important because stakeholders in regulated...

On Friday, May 30th, the CFPB filed a motion for summary judgment in Forcht Bank v. CFPB asking the court to vacate the entire rule implementing Section 1033 (Rule). The motion argues that the Rule is unlawful under the Administrative Procedure Act (APA) as it exceeds the agency’s statutory authority and is arbitrary and capricious. The CFPB states that the change in position is the result of the agency’s review of existing rules under Executive Order 14219 to ensure they are based on the best reading of the underlying statute and do not impose undue burdens on small businesses and impede...

On May 12, 2025, the CFPB published the withdrawal of several guidance documents, interpretive rules, policy statements, and advisory opinions dating back to 2011, when the CFPB began operations. Effective immediately, the CFPB is withdrawing 67 issuances in total: 8 policy statements, 7 interpretive rules, 13 advisory opinions, and 39 other guidance documents (including circulars and bulletins). Over two-thirds of these guidance materials were issued during President Biden’s term. The attached chart details each issuance that the CFPB is withdrawing. The CFPB gave three reasons for...

“The OCC discovered that the unauthorized access to a number of its executives’ and employees’ emails included highly sensitive information relating to the financial condition of federally regulated financial institutions used in its examinations and supervisory oversight processes.” OCC Notifies Congress of Incident Involving Email System occ.gov

DOGE’s focus on replacing humans with AI adds significance to this recent FRB OIG report on the Bank Exams Tailored to Risk (BETR) process, which tailors community bank exams to risk through model-driven off-site assessment. BETR models use forward-looking metrics to assign each institution a risk classification for each of 10 risk stripes. Each risk classification is associated with a suggested range of examination hours and tailored procedures. Examiners can then use qualitative factors to override the model-recommended classifications, hours, or procedures. The OIG report was relatively...

With the anticipated “streamlining” of the Consumer Financial Protection Bureau’s (CFPB) jurisdiction and authority, it is possible that the Federal Trade Commission (FTC) may assume an enhanced role in overseeing the activities of financial services providers. To appreciate the FTC’s role, the attached chart compares the powers and authorities of the FTC and the CFPB. The key takeaways from the chart are: The Agencies’ Missions Overlap: The CFPB implements and enforces federal consumer financial law for the purpose of ensuring that all consumers have access to markets for consumer financial...

The Justice Department has informed Congress that it views statutory limitations on the President’s power to remove members of multimember agencies to be unconstitutional. In that communication, the Department specifically cited the “for cause” removal provisions applicable to members of the Federal Trade Commission, the National Labor Relations Board, and the Consumer Product Safety Commission. This position, if accepted by the Supreme Court, would have a significant impact on the independence of other multimember agencies, including the Federal Reserve Board (Fed), the Federal Deposit...

Under current law, the operations of the CFPB are funded by a transfer of “earnings” from the Federal Reserve System to the CFPB. Since the Federal Reserve System is operating at a loss due to rising interest rates and arguably has no earnings, the Administration has been urged to shut down the agency by executive order. (See Chopra is Out. Now Shutter the CFPB, by Hal Scott in the Wall Street Journal, February 3, 2025.) As discussed below, such an order would have some unintended effects on the application of federal consumer financial laws to banks and certain nonbanks. Executive orders...

On December 3rd, the CFPB proposed a rule expanding the coverage of FCRA to data brokers, clarifying the definition of consumer report, limiting the use of credit header data, and expanding the consumer consent requirements to furnish a consumer report. Comments on the Proposed Rule are due March 3, 2025. With an expanded definition of “consumer report” and “consumer reporting agency” (“CRA”), particularly that a person selling any of four types of information about a consumer (credit history, credit score, debt payments, and income or financial tier) for any purpose generally would qualify...

On September 17th, the FDIC issued a notice of proposed rulemaking (NPR or Proposed Rule) that would impose on FDIC-insured depository institutions (IDIs) new recordkeeping requirements for custodial deposit accounts with transactional features. Comments are due 60 days after publication in the Federal Register. In addition to inviting comments on all aspects of the Proposed Rule, the FDIC requests comments on specific questions (see attached). The Proposed Rule is partially in response to the bankruptcy of Synapse, a technology company that worked with several IDIs and fintech companies....

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...

On May 16, 2024, the U.S. Supreme Court affirmed the mechanism established by Congress to fund the Consumer Financial Protection Bureau (CFPB). The case was brought by trade associations whose members were adversely impacted by a CFPB rule. The plaintiffs argued that the method by which funds are made available to the CFPB violates the Constitutional Appropriations Clause that provides that “[n]o Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” By a 7 to 2 majority, the Supreme Court disagreed, and upheld the constitutionality of the funding system....

Today, the CFPB issued its final rule on credit card late fees under TILA. This memorandum provides a brief overview of the final rule. New Safe Harbor for Credit Card Late Fees: The new safe harbor for credit card late fees is $8 (as opposed to $30/$41 under the previous rule) and is no longer adjusted for inflation. The rule eliminates for late fees a higher safe harbor dollar amount for subsequent violations of the same type that occur during the same billing cycle or in one of the next six billing cycles. The proposed provisions to restrict late fee amounts to 25% of the required minimum...

Financial services trade associations have been a core focus of our practice for over half a century. The firm has served as outside counsel to over a dozen leading industry trade associations, as well as numerous issue-focused coalitions. Several of the firm's senior lawyers worked in-house at trade associations prior to joining the firm. We provide trade associations with legal counsel on federal banking, consumer finance, and housing policy matters. Our work includes drafting and editing comment letters to regulators such as the OCC, Federal Reserve, CFPB, FDIC, Treasury, FHFA, and HUD, as...

Jim Sivon specializes in financial services law. He primarily works with financial institutions, fintechs, financial trade associations and consulting firms. Jim provides clients with strategic legal advice on charter options, including commercial bank charters, industrial loan company (ILC) charters, national trust bank charters, narrow state charters, money transmission licenses and options for foreign banks; prepares and shepherds regulatory applications related to corporate transactions and product approvals, including charter applications, Change in Bank Control filings, Bank Holding...

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...

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...

Alfred Pollard advises on housing finance, federal preemption, banking legislation, and regulatory affairs. He brings experience in major litigation, legislative and regulatory advocacy, and state and local government relations to clients facing the full range of issues that arise at the intersection of federal housing finance regulation, banking law, and public policy. Alfred served as General Counsel for the Federal Housing Finance Agency and its predecessor for over 20 years (2000–2021), where he managed the Office of General Counsel and personally addressed major litigation, legislative,...