The financial services regulatory world is never a quiet place, particularly when the CFPB is involved. In less than two months, the CFPB released two of its most highly anticipated notice of proposed rulemakings, finally addressing mandatory arbitration clauses and small dollar loans. The CFPB is not the only game in town, however, and other regulators are active in prosecuting financial institutions. In this month's digest, we call attention to a recent prosecution that ended in a bank executive going to prison for obstructing a Federal Reserve exam.

Venable LLP's financial services group continues to monitor rulemakings and enforcement actions across the wide spectrum of financial services regulators.

Arbitration Clause Rule: The CFPB published a Notice of Proposed Rulemaking (NPRM) of its arbitration clause rule on May 22, 2016, formally beginning the comment period on the proposed rule. While not banning arbitration agreements outright, the rule would prevent their use as "class action waivers" and affected companies would be required to alert consumers to their ability to participate in class actions. The NPRM was discussed in a previous alert. Venable attorneys John Cooney, Thomas Gilbertsen, Jonathan Pompan, and Peter Frechette formed a panel, moderated by Allyson Baker, to discuss the proposed rule, its impacts, potential legal challenges, and compliance considerations.

Small Dollar Lending Rule: On June 2, 2016, the CFPB issued an NPRM proposing requirements and restrictions for short-term and longer-term small dollar loans. The proposed rule would require lenders to determine a loan applicant's "ability to repay" (or "ATR") – similar in many respects to the analysis required for mortgage applicants. Alternatively, lenders that choose not to conduct the ATR analysis would only be allowed to offer loans that meet the requirements of the CFPB's alternative loan options. Read responses to FAQs about the rulemaking.

On the Hook – Individual Liability: The recent sentencing of a bank executive who pleaded guilty to obstructing a bank examination serves as a reminder that the financial services regulators and law enforcement maintain a focus on individuals, as well as financial institutions. Learn about the background of the charges and issues faced by officers, directors, and other individuals.


Upcoming Event:

"Lead Gen Legal Responsibility and Accountability: A Sit Down" – at the 2016 LeadsCon New York Conference (August 23, 2016)Jonathan Pompan will moderate a panel of regulators discussing regulatory, enforcement, and compliance issues in lead generation.


Recent Events:

"CFPB Turns Five: The Evolving Legal and Regulatory Landscape for Debt Collection" – at the 2016 ACA International Convention & Expo (June 17, 2016)Jonathan Pompan and Alexandra Megaris joined Greg Nodler, Senior Counsel for Enforcement Policy and Strategy at the CFPB, for a discussion of the use of the CFPB's supervision, enforcement, and rulemaking authorities since the agency began its operations in 2011, and what may be on the horizon.

"CFPB Enforcement 2016" for Bloomberg BNAAllyson Baker spoke on a panel addressing the key areas that have been the focus of CFPB enforcement initiatives. They also discussed the ways in which the agency is seeking to expand the reach of federal law and its jurisdiction.