Today, the Consumer Financial Protection Bureau (CFPB) announced it has determined that state disclosure laws covering lending to businesses in California, New York, Utah, and Virginia are not preempted by the federal Truth in Lending Act. The CFPB examined the state disclosure laws to determine if they were inconsistent with and preempted by the Truth in Lending Act. After analyzing public comments on its preliminary determination, the CFPB affirms there is no conflict because the state laws extend disclosure protections to businesses and entrepreneurs that seek commercial financing.

In an effort to educate consumers, and as an anti-fraud measure, Nacha is amending its sample form WSUD to include a disclosure, similar to those found on other widely used banking forms, informing consumers of the possible penalties that could result from making false representations to a financial institution.  Nacha’s goal is to alert well-meaning consumers to federal laws and help them avoid violating such laws, based on misguided advice they may have received.

The Federal Deposit Insurance Corporation (FDIC) entered into a purchase and assumption agreement for all deposits and loans of Silicon Valley Bridge Bank, National Association, by First-Citizens Bank & Trust Company, Raleigh, North Carolina. Thhe purchase includes roughly $72 billion in SVB assets at a discount of $16.5 billion, according to the FDIC, which estimates the cost of the bank failure to the Deposit Insurance Fund will be about $20 billion. About $90 billion in securities and other assets will remain in FDIC receivership, the regulator said. First Citizens said in a press release that SVB’s 17 branches will open Monday as “Silicon Valley Bank, a division of First Citizens Bank”. Approximately $90 billion in securities and other assets will remain in the receivership for disposition by the FDIC. In addition, the FDIC received equity appreciation rights in First Citizens BancShares, Inc., Raleigh, North Carolina, common stock with a potential value of up to $500 million.

https://www.fdic.gov/news/press-releases/2023/pr23023.html

The Financial Crimes Enforcement Network (FinCEN) published its first set of guidance materials to aid the public, and in particular the small business community, in understanding upcoming beneficial ownership information (BOI) reporting requirements taking effect on January 1, 2024. The new regulations require many corporations, limited liability companies, and other entities created in or registered to do business in the United States to report information about their beneficial owners the persons who ultimately own or control the company to FinCEN. The guidance also includes FAQ’s, key questions, key filing questions, and multiple introductory videos.

The U.S. Court of Appeals for the Second Circuit on March 23, 2023 ruled the Consumer Financial Protection Bureau’s (CFPB) funding structure is constitutional. The Second Circuit case was brought by a New York-based debt collection law firm, which argued it should not have to comply with a CFPB civil subpoena due to the unconstitutional nature of the agency’s funding structure. The Second Circuit, however, rejected the Fifth Circuit’s decision, arguing that “because the CFPB’s funding structure was authorized by Congress and bound by specific statutory provisions … the CFPB’s funding structure does not offend the Appropriations Clause.”“[The court] indicated that one branch of the federal government can reasonably utilize another branch to implement a legitimate legislative purpose — the use of funds from the Federal Reserve to operate the CFPB is such an example and clearly permissible,” Lynyak said. Meanwhile, the Supreme Court will hear arguments in the Fifth Circuit case in October 2023, the start of its next term, meaning a final decision is unlikely until 2024.

Today, the Consumer Financial Protection Bureau (CFPB) launched an improved survey of credit card issuers that can help consumers and families compare interest rates and other features when shopping for a new credit card. Americans pay $120 billion in credit card interest and fees each year, which contributes to the almost trillion dollars in nationwide household credit card debt. In the current high-rate environment, it is important for Americans to be able to be able to accurately compare products. Upgrades to the CFPB’s terms of credit card plans survey are designed to increase price competition in the credit card market by allowing people to comparison shop for the best prices and products. The survey will also help smaller credit card issuers, who often offer the lowest rates, reach comparison shoppers.

A statement was released by Secretary of the Treasury Janet L. Yellen, Federal Reserve Board Chair Jerome H. Powell, and FDIC Chairman Martin J. Gruenberg: Today we are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system. This step will ensure that the U.S. banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth.
After receiving a recommendation from the boards of the FDIC and the Federal Reserve, and consulting with the President, Secretary Yellen approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank, Santa Clara, California, in a manner that fully protects all depositors. Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.
We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority. All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer.

https://www.fdic.gov/news/press-releases/2023/pr23017.html

The additional funding will be made available through the creation of a new Bank Term Funding Program (BTFP), offering loans of up to one year in length to banks, savings associations, credit unions, and other eligible depository institutions pledging U.S. Treasuries, agency debt and mortgage-backed securities, and other qualifying assets as collateral. These assets will be valued at par. The BTFP will be an additional source of liquidity against high-quality securities, eliminating an institution’s need to quickly sell those securities in times of stress.

The Risk Management Advisory Group (RMAG) recently released blogs offering a checklist approach for Originators and for ODFIs responding to instances of credit-push fraud. These checklists can help Originators and ODFIs think through how they plan their responses to a credit-push fraud incident.

In a matter of days, Phase 2 of the Nacha Micro-Entries Rule takes effect. Starting March 17, 2023, Originators of Micro-Entries will have to use commercially reasonable fraud detection.