Legal and Regulatory Developments
McKernan's CFPB Nomination Hearing: What It Means for Consumer Financial Services Regulation
The Senate Banking Committee's hearing on Jonathan McKernan's nomination to lead the Consumer Financial Protection Bureau (CFPB) signals a potential shift in the agency's direction: McKernan, a Trump nominee, pledged to enforce consumer protection laws while advocating for reforms to increase accountability. Democratic senators, however, raised concerns that his leadership could further weaken an agency they argued has already been functionally shuttered under the new administration.
Consumer Financial Services Outlook 2025 – Deregulation, State Impact, and Industry Shifts
Transition Outlook Webinar Series: What to Expect from the Second Trump Administration
The financial services industry is facing a period of significant transformation as the Trump administration moves swiftly to reshape regulatory policies, according to Venable professionals speaking in a webinar. This panel discussed ongoing shifts in banking, fintech, payments, and cryptocurrency regulation.
The CFPB's 2021 Taskforce Report: A Playbook for the Future of Consumer Financial Law?
As political tides shift, so too does the regulatory outlook for consumer financial services. Among the key documents that could shape the direction of U.S. financial regulation is a January 2021 report by the CFPB Taskforce on Federal Consumer Financial Law. Released during the final days of the first Trump administration and the Trump/Kraninger CFPB, the report offered 100 or so recommendations (in two volumes) aimed at modernizing consumer financial laws and improving the efficiency of regulatory oversight. While its recommendations have yet to gain significant traction, the report remains a potential playbook for policymakers, particularly since it will align more closely with the new administration's deregulatory vision.
The Biden/Chopra CFPB's 2025 Guidance Compendium: A Last Gasp or Lasting Legacy?
On the eve of a change in administration, the Biden/Chopra CFPB released a "Compendium of Recent CFPB Guidance," a sweeping collection of interpretations of federal consumer financial laws under the current leadership (November 2021 – December 2024). Touted as a durable resource for courts and enforcers, the compendium feels more like a parting shot than a definitive playbook. With the incoming Trump administration poised to revisit and potentially rescind many of these interpretations of federal consumer financial law, the actual impact of this guidance, at least for the foreseeable future on the federal level, remains uncertain, although some state enforcers and private litigants may embrace it.
Navigating Financial Services M&A: Observations from Regulatory Due Diligence
As we move into 2025, anticipation in the financial services industry continues to build for a revitalized mergers and acquisitions (M&A) market. The financial services landscape will likely undergo significant changes under the new presidential administration, bringing both opportunities and challenges for venture capital, private equity, and other investors that are exploring opportunities in banking, payments, lending, and fintech.
Dawn of the Crypto Czar: The New Executive Order on Digital Assets
President Trump issued an executive order last week targeting government regulation of the digital asset industry to support the "responsible growth and use of digital assets." On the campaign trail, Trump promised to make the United States "the crypto capital of the planet," and this order is consistent with the president's pledge to overhaul the United States' crypto policy and move it in a more industry-friendly direction.
Fifth Circuit Places Partial Stay on CFPB Small Business Lending Rule Amid Leadership Change
The Fifth Circuit Court of Appeals heard arguments in early February challenging the validity of the Consumer Financial Protection Bureau's (CFPB Small Business Lending Rule. The rule is being challenged by various industry groups in Texas, and, following oral arguments, the court placed a partial stay on the rule. Moreover, given the change in leadership at the CFPB under the Trump administration, and the widely reported directive for employees to "stand down" on enforcement, supervision, and rulemaking, it is uncertain whether the Rule will ever take effect and be enforced.
CFPB Seeks Public Input on Privacy and Data Practices in Consumer Finance
The Consumer Financial Protection Bureau (CFPB) issued a Request for Information (RFI) to gather insights on how companies offering financial products and services collect, use, and monetize consumer payment and personal financial data. Comments are due by April 11, 2025, providing an opportunity for the current CFPB and industry stakeholders to influence potential updates to data privacy regulations, including Regulation P under the Gramm-Leach-Bliley Act. The RFI reflects the CFPB's continued focus on the development of consumer payment services that operate outside of the traditional banking system, including, for example, digital payment apps operated by large technology companies.
CFPB's Proposed Rule Targets Consumer Financial Contracts
The Consumer Financial Protection Bureau (CFPB) issued a proposed rule under Regulation AA to address the use of restrictive and coercive clauses in consumer financial contracts. This proposal seeks to prohibit terms in contracts for consumer financial products or services that in the view of the current CFPB limit fundamental rights or shield companies from accountability. Comments are due by April 1, 2025. This ambitious rulemaking follows other recent federal efforts to regulate agreements, such as the Federal Trade Commission's Click-to-Cancel rule, which implemented various required provisions for agreements that involve a negative option or automatic renewal feature.
Maximizing the Benefits (and Minimizing the Risks) of Payment Orchestration
The payments industry continues to evolve in response to the demand for flexible, fast, and secure payment options. Innovations have included payment facilitation, push-to-card services, and real time payments, among others. One of the newer innovations—payment orchestration—enables merchants to access numerous payment processors through a single integration for purposes of simplifying front- and back-end processes while providing consumers with multiple payment options (cards, digital wallets, etc.).
CFPB Proposes Interpretive Rule Clarifying EFTA Application to Crypto and Other Emerging Payment Mechanisms
The Consumer Financial Protection Bureau (CFPB) has proposed an interpretive rule aimed at addressing what it views as ambiguities in the application of the Electronic Fund Transfer Act (EFTA) and its implementing Regulation E to emerging payment mechanisms. The potential changes are relevant for crypto exchanges, digital gaming platforms, online marketplaces, and others. This development signals the Biden/Chopra CFPB's intention to influence the regulatory framework of the rapidly evolving landscape of financial technology and payment systems before new leadership takes control. The CFPB has opened the proposal for public comment through March 31, 2025.