In this Issue. The Board of Governors of the Federal Reserve System (Federal Reserve) announced that the Bank Term Funding Program (BTFP) will cease making new loans as scheduled on March 11; the Acting Comptroller of the Currency discussed bank mergers; the Office of the Comptroller of the Currency (OCC) requested comments on proposed rulemaking and policy statement on bank mergers; and the Consumer Financial Protection Bureau (CFPB) released a summary of its 2023 enforcement work. These and other developments are discussed in more detail below.

Regulatory Developments

Federal Reserve Announces the Bank Term Funding Program will Cease Making New Loans as Scheduled on March 11
On January 24, the Federal Reserve announced that the BTFP, launched in response to the Silicon Valley Bank and Signature Bank failures of March 2023, will cease making new loans on March 11. While the BTFP will continue making new loans to participant banks until March 11, the interest rate applicable to these new loans will be no lower than the interest rate in effect on reserve balances on the day the loan is made.

Acting Comptroller of the Currency Discusses Bank Mergers
On January 29, Acting Comptroller of the Currency Michael J. Hsu discussed improving transparency and trust in the bank merger process in remarks at the University of Michigan. In his remarks, Mr. Hsu discussed how developing a view on the overall structure of the U.S. banking system could help ensure that it remains diverse, dynamic, and balanced with the economy, as well as inform bank merger policy and decisions.

In furtherance of that objective, Mr. Hsu announced that the OCC was inviting comment on a proposal to amend its regulations governing business combination applications to eliminate automatic expedited approvals and to clarify the features of merger applications and indicators that are consistent with and inconsistent with approval.

"The banking system supports the economy and the businesses, communities, and individuals that comprise it. This point bears reemphasizing when thinking about what the banking system should look like. Put simply, we don't exist to serve banks; banks exist to serve us. Therefore, in order to have a view on what the banking system should look like, we need to be clear about what to measure it against."

‒ Michael Hsu, Acting Comptroller of the Currency

OCC Requests Comments on Proposed Rulemaking and Policy Statement on Bank Mergers
On January 29, the OCC requested comment on a proposal to update its rules for business combinations involving national banks and federal savings associations. The OCC believes that the proposal will increase transparency about its process when reviewing transactions under the Bank Merger Act (BMA). The proposal includes a policy statement to clarify the OCC's review of applications under the BMA. The proposed policy statement addresses: (1) general principles for the OCC's review of applications under the BMA, including indicators for applications that may raise concerns; (2) the OCC's consideration of financial stability; (3) managerial and financial resources and future prospects; (4) convenience and needs statutory factors under the BMA; and (5) the OCC's decision making process for extending the comment periods or holding public meetings. Comments from the public are due 60 days from the date of publication in the Federal Register.

The CFPB's Enforcement Work in 2023 and What Lies Ahead
On January 29, the CFPB released a summary of its 2023 enforcement actions. The enforcement team filed 29 new enforcement actions and resolved 6 previously filed lawsuits. These actions resulted in approximately $3.07 billion in relief for consumers and approximately $498 million in civil penalties. Key enforcement efforts concerned high-interest loans and false advertising to military families; junk fees, credit card rewards, and fake accounts; discrimination against credit card applicants; loan churning; inaccurate rental background checks; and junk advance fees for credit repair services. The CFPB noted that it is significantly expanding its enforcement capacity in 2024.

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Crypt-D'OH! FINRA says 70% of BD Crypto Asset Communications Are Deficient
On January 23, the Financial Industry Regulatory Authority (FINRA) provided an update on its targeted examination of firms' crypto asset communications. FINRA launched this targeted examination series in November 2022 to "review the practices of certain member firms that actively communicate with retail customers concerning crypto assets and crypto asset-related services," including for compliance with FINRA Rule 2210 (Communications with the Public). FINRA Rule 2210, among other requirements, prohibits claims that are false, exaggerated, promissory, unwarranted, or misleading and prohibits the omission of any material fact if the omission, in light of the context of the material presented, would cause a communication to be misleading.

During the exams, FINRA reviewed over 500 crypto asset communications from its member firms, including those distributed or made available by third parties. Remarkably, FINRA identified substantive rule violations in approximately 70% of the communications it reviewed.

To learn more about the findings, view this recent client alert.

FINRA Publishes 2024 Annual Regulatory Oversight Report
On January 9, FINRA published its 2024 Annual Regulatory Oversight Report (the "Report"). FINRA publishes the Report as a way to provide its broker-dealer members with insight into findings from FINRA's Member Supervision, Market Regulation, and Enforcement programs. FINRA also intends for the Report to serve as a roadmap firms can use to bolster their compliance programs throughout the year. Read more on this report in our client alert.

Corporate Transparency Act (CTA) Resource Center
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Consumer Finance Insights (CFI) Blog
The latest on consumer finance regulation, litigation, and enforcement.

Fintech Flash
The latest news and developments for the rapidly evolving fintech industry – which often can change in a flash.

Bank Failure Knowledge Center
Timely updates on important developments following the March 2023 US bank failures.

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