To keep you informed of recent activities, below are several of the most significant federal events that have influenced the Consumer Financial Services industry over the past week.
Federal Activities:
On February 27, the Office of the Comptroller of the Currency (OCC) announced the issuance of a final rule amending 12 CFR 5.20 to clarify that national banks limited to the operations of a trust company, i.e., “national trust banks” may engage in nonfiduciary activities in addition to fiduciary activities, by revising references to “fiduciary activities” in §§ 5.20(e)(1)(i) and (l)(1) to instead track the statutory language “the operations of a trust company and activities related thereto” in 12 U.S.C. 27(a), while retaining the requirement that special purpose banks conducting activities other than trust company operations and related activities perform at least one core banking function (receiving deposits, paying checks, or lending money). The OCC explains that this change is intended to eliminate confusion stemming from a 2003 amendment that was never meant to restrict national trust bank activities, reaffirms that nonfiduciary activities must still be authorized under other statutory provisions such as 12 U.S.C. 24(Seventh), declines commenters’ requests to further define the scope or minimum level of fiduciary or nonfiduciary activities or to bar national trust banks from using “bank” in their names, and concludes that the rule neither expands nor contracts OCC chartering authority, imposes no new reporting or compliance burdens, is not a significant or major rule under applicable executive orders and the Congressional Review Act, and will be effective April 1, 2026. For more information, click here.
On February 26, a bipartisan group in Congress led by Representative Scott Fitzgerald (R-WI) introduced the Promoting Innovation in Blockchain Development Act of 2026, legislation aimed at ensuring that software developers who build open-source blockchain and digital asset infrastructure are not swept into criminal liability under 18 U.S.C. § 1960, a money-transmitter statute designed for money laundering cases rather than code development, a move proponents frame as critical to keeping the “next century of tech” written in America rather than pushed offshore by legal uncertainty. For more information, click here.
On February 25, the OCC released a 367‑page notice of proposed rulemaking (NPR) to implement the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act for entities under its jurisdiction. The proposal would create a comprehensive framework for “payment stablecoin” issuers supervised by the OCC, foreign payment stablecoin issuers accessing the U.S. market, and certain custody activities by OCC‑regulated banks. Comments will be due 60 days after the NPR is published in the Federal Register. The NPR also poses more than 200 specific questions for public comment on definitions, activities, reserves, liquidity, and other key design choices. The proposal is lengthy, highly technical, and only one part of the broader GENIUS Act implementation, with separate rulemakings to come on Bank Secrecy Act, anti‑money laundering, and Office of Foreign Assets Control sanctions obligations. For more information, click here.
On February 24, the U.S. Securities and Exchange Commission’s (SEC) Division of Enforcement announced significant updates to its Enforcement Manual, the first comprehensive revision since 2017. These changes, which will now be reviewed annually, are designed to promote greater fairness, transparency, and efficiency in SEC investigations and enforcement actions. One of the most consequential updates involves the Wells process, the stage at which potential respondents and defendants are given an opportunity to respond to the staff’s anticipated enforcement recommendations. The revised manual emphasizes open and substantive dialogue between SEC staff and Wells recipients, with the aim of improving the quality of decision-making and the fairness of outcomes. As part of this, Wells recipients will ordinarily have four weeks to make their submissions, and the manual now provides guidance on what makes a Wells submission most useful to staff and the commission. Another key development is the formal restoration and clarification of the commission’s practice of simultaneously considering settlement recommendations and related waiver requests. The Enforcement Manual also includes a more detailed framework for how the division evaluates cooperation by individuals and entities, including how cooperation may affect charging decisions and civil penalties. For more information, click here.
On February 24, the National Credit Union Administration (NCUA) announced the sixth round of proposals under its Deregulation Project, requesting comment on six rule changes intended to sharpen the focus of its regulations on credit union safety, soundness, and resilience while reducing duplicative or unduly burdensome requirements. The proposals would eliminate the mandate that new directors obtain finance and accounting expertise within six months, clarify and modestly broaden the “overall financial performance” exception for loan-related incentive compensation (including for senior management), give federal credit unions more flexibility over eligible obligations policies and remove overlapping compensation provisions, repeal the refund-of-interest rule and the written-contract requirement for service contracts as duplicative of statute or unnecessary, and streamline the statutory lien regulation by deleting superfluous definitional text. Stakeholders are encouraged to submit comments through the Federal Rulemaking Portal. For more information, click here.
On February 24, the Consumer Financial Protection Bureau (CFPB) published a series of Paperwork Reduction Act notices seeking Office of Management and Budget approval to extend four existing information collections — Truth in Savings (Regulation DD), Home Mortgage Disclosure Act reporting (Regulation C), Registration of Mortgage Loan Originators (Regulation G), and Disclosure Requirements for Depository Institutions Lacking Federal Deposit Insurance (Regulation I) — without substantive changes. The CFPB further invited public comment by March 26, 2026, on whether these collections remain necessary, how accurate the CFPB’s burden estimates are, and ways to improve data quality and reduce compliance burden for affected depository institutions, nondepository mortgage lenders, and uninsured depository institutions. For more information, click here, here, here, and here.
On February 23, the Federal Reserve Board requested comment on a proposed rule that would formally remove “reputation risk” as a standalone component of bank supervision and codify its previously announced policy that banks should not be penalized or discouraged from serving customers engaged in lawful activities. The proposal, which follows the board’s June decision to drop reputation risk from examination programs, is intended to ensure that supervisory decisions focus on material financial risks rather than a customer’s political views, religious beliefs, or participation in disfavored but legal businesses. Vice Chair for Supervision Michelle W. Bowman highlighted concerns about “debanking” driven by reputational considerations and emphasized that discrimination on these bases is unlawful and outside the Fed’s supervisory framework. The board stressed that the change does not lessen expectations for strong risk management, safety and soundness, or compliance. Comments will be due 60 days after publication in the Federal Register. For more information, click here.
On February 23, the Federal Deposit Insurance Corporation (FDIC) Office of Inspector General released its Semiannual Report to Congress for April 1–September 30, 2025, detailing seven audits and evaluations with 23 recommendations on issues including FDIC workplace harassment and culture, emergency contracting for major bank resolutions, succession and workforce planning, supervision of significant service providers, cloud and information security, and a failed-bank review. The OIG reported robust investigative activity — 60 indictments or informations, 59 convictions, 47 arrests, and more than $494 million in fines, restitution, forfeitures, and other recoveries in cases ranging from bank fraud and embezzlement to pandemic-related loan abuses and contract double-billing schemes — while highlighting ongoing concerns about governance, human capital, readiness for large-bank resolutions, emerging financial and cyber risks, contract management, IT security, and fraud schemes misusing the FDIC’s name. For more information, click here.
On February 20, the U.S. Department of Housing and Urban Development (HUD) announced a proposed rule that would require proof of U.S. citizenship or eligible immigration status for every resident in HUD‑funded housing, including members of “mixed status households,” with the stated goal of ensuring that federal housing assistance is provided only to citizens and eligible noncitizens. The proposal would eliminate existing arrangements under which ineligible household members can reside in assisted units, and HUD cited an audit with nearly 200,000 tenants lacking complete eligibility verification and an estimated 24,000 ineligible individuals in 20,000 mixed‑status households as justification for the change. HUD framed the rule as part of a broader initiative to “protect federal housing benefits for vulnerable American citizens” and to implement a presidential executive order on limiting federal benefits for individuals without eligible status, alongside recent actions such as revised Fair Housing Act (FHA) regulations residency requirements, nationwide tenant audits, and new interagency coordination with the Department of Homeland Security. For more information, click here.
On February 20, the OCC granted preliminary conditional approval for Foris DAX National Trust Bank, a proposed uninsured national trust bank based in Chicago that will do business as Crypto.com National Trust Bank and provide fiduciary custody of digital assets and U.S. dollars, related trade settlement, staking, and riskless principal digital asset trading services primarily to institutional clients. The OCC concluded that the bank’s limited‑purpose trust activities are permissible under the National Bank Act and 12 U.S.C. § 92a, rejected commenters’ challenges to its chartering authority and supervisory capacity, and imposed a series of conditions, including limiting operations to trust‑company activities, maintaining specified minimum capital and “eligible liquid assets,” obtaining prior nonobjection for material business plan changes and senior management or board appointments, and satisfying extensive pre‑opening governance, audit, BSA/AML/OFAC, information security, and operational requirements before the OCC will grant final approval to commence business. For more information, click here.
On February 19, staff in the SEC’s Division of Trading and Markets updated their crypto asset and distributed ledger technology FAQs to address how broker‑dealers should treat proprietary positions in payment stablecoins for net capital purposes, stating they would not object if firms treat such positions as having a “ready market” under Rule 15c3‑1 and apply a 2% haircut to the market value of the greater of the long or short position when computing net capital. The staff emphasized that this guidance reflects its views only, is not commission action, and does not create new legal obligations or alter existing law. For more information, click here.
On February 19, Senator Elizabeth Warren, ranking member of the Senate Banking Committee, sent a letter to Treasury Secretary Scott Bessent and Federal Reserve Chair Jerome Powell seeking written assurances that neither the Treasury nor the Federal Reserve will use tools such as the Exchange Stabilization Fund or emergency lending facilities under § 13(3) to bail out the Bitcoin market, crypto intermediaries, or “cryptocurrency billionaires” in response to the recent crypto crash, which has wiped out roughly $2 trillion of Bitcoin’s market value since October 2025. Emphasizing that any intervention would disproportionately benefit large, highly compensated crypto investors (including potentially President Donald Trump’s crypto firm, World Liberty Financial) she argued that taxpayer funds should not be used to prop up digital asset prices and urged that any government response focus instead on bolstering protections and safeguards for individual retail crypto holders, amid record losses to scams and fraud. For more information, click here.
On February 18, the U.S. Department of Education issued new guidance urging colleges and universities to strengthen default management and prevention efforts, reminding them of their shared responsibility under Title IV to support borrowers throughout repayment and warning that rising nonpayment rates — now at or above 25% at more than 1,800 institutions — may foreshadow failures of cohort default rate (CDR) tests that can trigger loss of eligibility for federal student aid. The department calls on institutions to proactively contact former students who are delinquent or in default, to embed default management beyond the financial aid office into institutional leadership priorities, and to leverage tools such as borrower portals, financial literacy resources, and dedicated staff to improve repayment outcomes. The guidance, issued as the department implements Trump’s Working Families Tax Cuts Act reforms by July 1, also highlights specific steps institutions should take, including steering at‑risk borrowers toward the new Repayment Assistance Plan, informing defaulted borrowers about rehabilitation options, using program‑level earnings data in entrance counseling, and reassessing financial aid packaging and program‑level borrowing limits in light of recent legislative changes. For more information, click here.
State Activities:
On February 23, the New York Department of Financial Services (DFS) issued a proposed new Part 423 to Title 3 of the NYCRR to implement New York Banking Law Article 14‑B for Buy-Now-Pay-Later (BNPL) lenders. The proposal would move BNPL firmly into New York’s credit system, imposing licensing, supervision, disclosure, data privacy, and underwriting requirements on both interest‑free and interest‑bearing BNPL products offered to New York consumers. If adopted, the rule would take effect 180 days after the notice of adoption is published in the State Register, with a short transitional period for existing BNPL providers. DFS is accepting pre-proposal comments through March 5, 2026, after which the proposed rule will be published in the New York state register for a formal 60-day comment period. For more information, click here.
On February 20, District of Columbia Attorney General Brian L. Schwalb sued real estate lending and investment firm Red Oak Capital Holdings, LLC, alleging that its lending practices facilitated an illegal housing discrimination scheme that shut out Washington, D.C., tenants who do not use housing subsidies from more than 300 rent‑controlled apartments across seven buildings in Wards 4, 5, 6, 7, and 8. According to the complaint, Red Oak allegedly provided inflated loans to developers based on business plans that explicitly depended on circumventing rent‑control requirements by renting exclusively to voucher‑holding tenants at higher, subsidy‑backed rents, and in some instances contemplated removing existing rent‑controlled tenants. The Office of the Attorney General contends that these practices violate the district’s Human Rights Act by discriminating on the basis of source of income and seeks to halt Red Oak’s alleged discriminatory lending, impose civil penalties, and recover costs and fees. For more information, click here.
On February 19, Colorado lawmakers introduced House Bill 26‑1261, which, if passed, would significantly expand consumer protections around motor vehicle finance and sales. Specifically, House Bill 26‑1261 would overhaul repossession timelines for certain “qualified motor vehicles,” restrict use of vehicle-disabling technology, and create a three‑business‑day right to return certain vehicles purchased from dealers. Violations would be deemed unfair or deceptive trade practices under the Colorado Consumer Protection Act, exposing creditors and dealers to statutory remedies, including treble damages for willful violations and attorneys’ fees. For more information, click here.
On February 17, New York Attorney General Letitia James issued a consumer alert and online guide warning New Yorkers about “pig butchering” scams, in which fraudsters use social media, dating apps, unsolicited texts, and encrypted messaging platforms to build fake romantic or professional relationships, lure victims into bogus investment opportunities (often involving crypto or foreign currency), show fabricated account gains, and then steal deposits — sometimes totaling hundreds of thousands of dollars — by blocking withdrawals or demanding fake “fees” and “taxes.” The alert explains how these schemes operate, flags common red flags such as secrecy demands, pressure to move conversations to encrypted apps, requests for cash, crypto, or personal financial information, and urges New Yorkers to independently research solicitors, consult trusted advisors before investing, avoid irreversible payments to people they do not know, and report suspected scams to platforms, law enforcement, and the Attorney General’s office, which is accepting complaints online and via a dedicated hotline. For more information, click here.
On February 11, Illinois Attorney General Kwame Raoul co-led a coalition of 24 state attorneys general in a comment letter to the U.S. Department of Housing and Urban Development opposing a proposed rollback of FHA regulations that recognize liability based on the discriminatory effects of ostensibly neutral housing policies. The coalition argues that HUD’s effort to strip all references to “discriminatory effects” liability is unlawful because it lacks adequate justification, conflicts with longstanding federal law, and would undermine a critical enforcement tool used to challenge practices such as exclusionary zoning, occupancy limits, no‑pet rules, and English‑only policies that disproportionately harm people of color, women, LGBTQ+ individuals, people with disabilities, and other marginalized groups. The attorneys general warn that rescinding these regulations would both increase burdens on state agencies to educate the public and send a misleading signal that certain forms of discrimination are now acceptable, even though they remain illegal, and urge HUD to retain the existing rule, which they say provides clear, nationwide standards for what conduct violates the FHA and how discrimination claims should be assessed. For more information, click here.
On February 10, the Connecticut Banking Commissioner issued a final order against Omnipoint Management Solutions LLC, ordering the company to cease and desist from unlicensed consumer collection activity and abusive collection practices and imposing a $100,000 civil penalty, after Omnipoint failed to request a hearing on earlier charges. The order finds that Omnipoint operated as a consumer collection agency in Connecticut without the required license, communicated with third parties about debts without the debtor’s consent, and engaged in conduct the natural consequence of which was to harass, oppress, or abuse consumers, including repeatedly calling a hospital’s emergency medical phone line despite being told not to do so, in violation of Connecticut’s consumer collection statutes and regulations and federal Fair Debt Collection Practices Act standards incorporated into state law. For more information, click here.