March 22, 2019

Consumer Financial Services Practice Digest

2 min

FDIC Seeks to Modernize Treatment of Brokered Deposits

The FDIC recently issued an advance notice of proposed rulemaking inviting public comments on how best to modernize its approach to brokered deposits. Banks and fintech companies alike have been clamoring for the agency to revise its treatment of brokered deposits, and, as we previously discussed, even Congress has asked the FDIC to "update [the rule] to reflect technological, legal, business model and product range changes."

Winter 2019 Supervisory Highlights

The CFPB published its second issue of the agency’s Supervisory Highlights (winter 2019) on March 12, 2019. The Winter 2019 Supervisory Highlights mark the first published under Director Kathy Kraninger, and the second issuance since the departure of former Director Cordray. The current issue appears to be in keeping with the sentiment first expressed by former Acting Director Mick Mulvaney, that the Bureau would enforce the laws as written, but not push the envelope.

First HFSC Appearance for CFPB’s New Director

The recently confirmed CFPB Director Kathy Kraninger testified before the House Financial Services Committee (HFSC) on March 7, 2019. Kraninger’s appearance fulfilled the Dodd-Frank Act’s mandate that the CFPB director testify semi-annually before designated congressional committees regarding semi-annual reports that the CFPB must submit to those committees. In her first appearance before the HFSC as director, Kraninger emphasized her desire to foster transparency and accountability within the Bureau and to establish “clear rules of the road,” to more effectively prevent harm and work with institutions to promote a culture of compliance. She also stated that “enforcement is not the first tool” the CFPB uses, although she noted that it is the most effective tool in dealing with “those who are not seeking to comply.”

New Details on CSBS Streamlined Money Transmission License Application Program

As fintech companies and others in the payments industry seek to improve the ways in which payments are made and value is transferred among and between individuals and businesses, compliance with state money transmission laws is a continuing challenge. To receive funds for transmission, issue or sell stored value products, or provide services in or through cryptocurrency, as many as 50 state money transmitter licenses may be required. Thanks to a new initiative by the Conference of State Bank Supervisors and a growing group of participating states, a measure of relief in the application process may soon be available.