On Monday, January 31, 2017, a federal district court in the Southern District of New York granted a motion to compel arbitration in Bethune v. Lending Club Corporation, et al., a closely watched putative class action raising important issues for the fintech industry. To read the full article, please click here.
On December 2, 2016, Comptroller of the Currency, Thomas J. Curry, announced that the Office of the Comptroller of the Currency would move forward with considering applications from fintech companies to become special purpose national banks. Report.
The Comptroller explained that the proposed action will provide businesses with the option to seek a charter rather than imposing a mandate. The OCC will evaluate applicants to ensure they have a reasonable chance of success, appropriate risk management, effective consumer protection, and strong capital and liquidity.
The OCC published a paper discussing the issues and conditions that the agency will consider in granting special purpose national bank charters. Report. Comments on the proposal may be submitted through January 15, 2017.
On November 23, 2016, the Federal Housing Finance Agency (FHFA) announced an increase in the maximum conforming loan limits for mortgages acquired by Freddie Mac and Fannie Mae. The maximum loan limit for one-unit properties in 2017 will increase from $417,000 to $424,100 for most of the United States. In certain higher-cost areas, there will be a higher loan limit. Release. A list of the 2017 maximum conforming loan limits for all counties and county‑equivalent areas in the country can be found here.
On November 14, 2016, the SEC hosted a Fintech Forum at its headquarters in Washington, D.C. to explore the securities law disclosure, investor protection, capital formation and other implications of robo-advising, distributed ledger technology and blockchain, crowd funding and marketplace lending.
To learn more, please visit Orrick’s Website for our webinar reviewing the matters discussed at the Forum.
On October 26, the Office of the Comptroller of the Currency (“OCC“) announced that it will establish an office “dedicated to responsible innovation and implement a formal framework to improve the agency’s ability to identify, understand, and respond to financial innovation affecting the federal banking system [and stated that by] establishing an Office of Innovation, we are ensuring that institutions with federal charters have a regulatory framework that is receptive to responsible innovation and the supervision that supports it.”
The Office of Innovation will be headed by a Chief Innovation Officer assigned to OCC Headquarters. The office will be the central point of contact and clearinghouse for requests and information related to innovation and it will also implement other aspects of the OCC’s framework for responsible innovation, which include:
The OCC expects the office to begin operations in first quarter 2017.
The OCC emphasized that its assessment of granting a special purpose national bank charter to nonbank financial technology companies, and under what conditions, continues.
See “Recommendations and Decisions for Implementing a Responsible Innovation Framework.” Press Release.
SIFMA, along with the Association of Mortgage Investors and the National Association of Real Estate Investment Trusts, and separately along with the ABA, AMI, HPC, MBA, and SFIG, submitted comment letters to the FHFA in response to the FHFA request for comments on the GSEs credit risk transfer programs, particularly with respect to exploration of more “front end” risk transfer options that share risk with the private sector before, or concurrently with, the purchase of loans by the GSEs. SIFMA, AMI, NAREIT Comment Letter Joint Trades Comment Letter.
On September 13, 2016, Comptroller of the Currency Thomas J. Curry discussed marketplace lending’s risks and associated policy questions. He delivered his remarks at the inaugural Marketplace Lending Policy Summit. Remarks.
On September 8, 2016, the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation (FDIC) and Office of the Comptroller of the Currency (OCC) released a report detailing activities and investments that banking entities may engage in under state and federal law.
Pursuant to section 620 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), which requires the trio of federal banking agencies to conduct the study and report their findings to Congress, the report considers financial, operational, managerial and reputational risks associated with the permissible activities or investments and how banking entities work to mitigate those risks.
Each agency also offers specific recommendations regarding whether an activity or investment could harm the overall safety and soundness of the banking entity or broader financial system and any additional restrictions necessary to curb any such potential risks. Press release. Report.
Chief Deputy Whip Patrick McHenry (R, NC-10), the Vice Chairman of the House Financial Services Committee, introduced H.R. 5724, the Protecting Consumers’ Access to Credit Act of 2016, which would reaffirm the longstanding legal precedent under the National Bank Act and the Federal Deposit Insurance Act that federal law preempts a loan’s interest if valid when made. The legislation was introduced to address one of the issues raised by the Second Circuit in Madden vs. Midland Funding. Legislation.
On June 29, 2016, the Federal Housing Finance Agency published a report outlining its perspective on the credit risk transfer programs of Fannie Mae and Freddie Mac as well as providing an overview of upfront CRT transaction structures. The FHFA also announced that it is seeking input on a number of CRT policy issues and related questions. Input is due no later than August 29, 2016. Report.
