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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 September 25, Judge Ann Aiken of the U.S. District Court for the District of Oregon issued the third federal court ruling rejecting the Trump administration’s attempt to withhold funding from the Consumer Financial Protection Bureau (CFPB), holding in State of New York v. Vought that former Acting Director Russell Vought’s determination that the CFPB could not seek money from the Federal Reserve while the central bank was unprofitable was improper and violated the constitutional separation of powers. Judge Aiken rejected arguments that the case, brought by more than 20 Democratic state attorneys general, was moot given the CFPB’s subsequent $273 million funding request or non-final given the administration’s pending appeals of two prior adverse rulings, noting the administration has indicated it intends to revert to relying on the underlying Office of Legal Counsel memo on Federal Reserve profitability if those appeals succeed. The states had argued that inadequate CFPB funding would harm consumers by forcing a shutdown of the agency’s consumer complaint database and would impair states’ ability to assess banks’ fair lending compliance using Home Mortgage Disclosure Act data collected by the agency. For more information, click here.
On September 24, the Federal Reserve Board (FRB) requested public comment on two proposed rules implementing its regulatory responsibilities for payment stablecoin issuance under the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act), with comments on both due 60 days after Federal Register publication. The first, larger proposal establishes the ongoing substantive framework for FRB-supervised issuers and related custodians, covering permissible and prohibited activities, reserve asset composition and one-to-one backing requirements, redemption timelines and disclosure obligations, monthly reserve reporting and audit requirements, capital and risk management standards, and a cross-cutting anti-tying prohibition applicable to all permitted payment stablecoin issuers (PPSIs) regardless of regulator. The second proposal establishes a tailored application process for insured state member banks seeking FRB approval to issue stablecoins through a subsidiary, including required application contents, a 30-day completeness review and 120-day decision timeline (with deemed approval if the FRB misses the deadline), safety-and-soundness-based denial standards, and an appeals process. Together, the proposals represent the FRB’s first comprehensive articulation of how it will regulate stablecoin issuance by state member bank subsidiaries, closely coordinated with parallel Office of the Comptroller of the Currency (OCC) and Federal Deposit Insurance Corporation (FDIC) rulemakings, and the FRB has invited extensive comment on issues such as reserve diversification limits, multi-brand stablecoin structures, and real-time reporting that state member banks and other market participants should begin evaluating before the comment window closes. For more information, click here.
On September 24, Representative Suhas Subramanyam (D-VA) introduced H.R. 10610, the “Stop Spam Calls Act,” which would direct the Federal Communications Commission (FCC) to revise, within one year of enactment, the definition of “prior express written consent” under 47 C.F.R. § 64.1200(f)(9) to match the version of that section adopted in the FCC’s January 26, 2024, final rule, “Targeting and Eliminating Unlawful Text Messages, Implementation of the Telephone Consumer Protection Act of 1991, Advanced Methods To Target and Eliminate Unlawful Robocalls” (89 Fed. Reg. 5098). The revised definition would take effect 18 months after the bill’s enactment, and the bill includes a rule of construction clarifying that nothing in the legislation should be read to suggest the FCC previously lacked authority to require that prior express consent be in writing under § 64.1200 or any successor regulation. For more information, click here.
On September 23, a bipartisan coalition of state attorneys general sent a letter to congressional leadership urging Congress to immediately establish comprehensive federal regulation and safety protocols for frontier artificial intelligence (AI), arguing that recent incidents show unchecked AI already endangers Americans and could soon threaten the financial system, critical infrastructure, and national security. The AGs recommend a set of minimum federal measures, including mandatory safety testing and standards led by independent experts, transparent government-led incident response with public findings, safety infrastructure insulated from profit pressures, international coordination to pace AI development, antitrust safeguards, and explicit preservation of state authority to enforce these protections alongside existing state AI laws. The letter, signed by 24 state and territorial attorneys general, closes by reiterating that while states will continue enforcing their own AI-related laws, only federal action can achieve the coordination needed to prevent catastrophic harm. For more information, click here.
On September 22, the Federal Housing Administration (FHA) issued FHA INFO 2026-22, announcing that it had posted proposed policy updates to its Minimum Property Requirements (MPR) in Single Family Housing Policy Handbook 4000.1 on the FHA Single Family Drafting Table for review and feedback, developed in response to comments received on its May 29, 2026, Request for Information regarding Single Family MPRs. Noting that the MPRs have not been updated in over two decades and no longer reflect current industry practices, creating unnecessary burdens that increase housing costs and limit access to FHA-insured financing, particularly for first-time and low- to moderate-income homebuyers, FHA’s proposal seeks to modernize and strengthen the MPRs by aligning them with industry standards, reorganizing and simplifying their content and structure, narrowing the scope of standards to reasonably necessary actions, and more clearly defining property eligibility and acceptability standards, as part of a broader administration effort to reduce burdensome regulation and expand access to FHA mortgage insurance while protecting the Mutual Mortgage Insurance Fund. Stakeholders are encouraged to review the proposed updates and submit feedback through November 6, 2026, via the instructions posted on the Drafting Table, with FHA noting that the draft is not official policy and cannot be used in connection with any FHA-insured mortgage until finalized, and that existing MPR policy remains in effect in the interim. For more information, click here.
On September 16, the Conference of State Bank Supervisors (CSBS) released a new supervisory resource designed to help state examiners assess the use and risks of artificial intelligence (AI) at state-chartered banks and state-licensed nonbank financial institutions, while also giving regulated institutions insight into examiners’ general approach and the types of AI-related questions and information they may request. Described by CSBS President and CEO Brandon Milhorn as a principles-based, scalable approach that accounts for each institution’s size, complexity, risk profile, and extent of AI use, the framework draws on established resources such as NIST’s AI Risk Management Framework, the Cyber Risk Institute’s Financial Services AI Risk Management Framework, and Treasury’s AI Lexicon, and was approved by two CSBS supervisory committees in August 2026. It consists of five components: a Core Examiner Guide, an Examiner Work Program, Nonbank AI Supplements, an optional AI Use Case Risk Tiering Worksheet (with three risk tiers ranging from low-risk internal use to high-risk use cases involving direct consumer impact and limited human review), and a Source Support Document, and financial institutions may want to proactively use these materials to inventory and self-tier their own AI use cases before an examiner does so for them. Because adoption is discretionary and left to each state regulatory agency, institutions operating across multiple states should expect some variation in how examiners apply these principles, though the framework is intended for dual use, letting institutions also draw on it to assess their own AI programs, build governance and risk management practices, and prepare for examinations. For more information, click here.
On September 16, Fannie Mae issued Lender Letter LL-2026-07 to all Single-Family Servicers announcing that, at the direction of the Federal Housing Finance Agency (FHFA), it is updating its requirements for termination of conventional mortgage insurance to permit servicers to proactively solicit borrowers whose loans may be close to or have reached the loan-to-value requirements for mortgage insurance (MI) termination based on the current value of the property, and to notify such borrowers of the actions required to terminate MI as set out in Servicing Guide B-8.1-04, Termination of Conventional Mortgage Insurance. The policy change, which will be reflected in a future Servicing Guide update, is effective immediately, and servicers with questions may contact their Fannie Mae Account Team. For more information, click here.
State Activities:
On September 21, Governor Kathy Hochul announced next steps to implement New York’s Responsible AI Safety and Education (RAISE) Act, directing large frontier AI developers to begin registering with the state in November and requiring full compliance, including 72-hour critical safety incident reporting, quarterly catastrophic risk assessments, published safety and transparency frameworks, and biennial disclosure filings, starting January 2027 through the state’s new Office of Digital Innovation, Governance, Integrity and Trust (DIGIT) housed within the Department of Financial Services (DFS). Hochul also appointed Marc Gilman, formerly general counsel and VP of compliance at Theta Lake, Inc., as DIGIT’s Deputy Director to oversee RAISE Act implementation, and indicated she is exploring further measures to strengthen the law in the coming months. The announcement, framed as a rebuke of federal inaction on AI safety and timed to the U.N. General Assembly’s convening in New York, follows Governor Hochul’s earlier nation-leading executive order pausing new hyperscale data center permits for up to a year and Empire State Development’s recent release of the nation’s first statewide Host Community Investment Framework for data center development. For more information, click here.
On September 21, New York City’s Department of Consumer and Worker Protection (DCWP), submitted official comments to the New York State Department of Financial Services (DFS) on its proposed Buy Now Pay Later (BNPL) regulations, offering six recommendations to strengthen the rules, including explicit protections against predatory “Care Now Pay Later” and “Rent Now Pay Later” financing products, a call for DFS to use its § 1042 authority under the Consumer Financial Protection Act to reach abusive products like medical credit cards that fall outside DFS’s current BNPL definition, and a request that the state grant DCWP parallel enforcement authority to protect New Yorkers. The comments, largely supportive of DFS’s proposed rules, come as DCWP pursues litigation against two Brooklyn dental providers accused of pressuring vulnerable patients into “Care Now Pay Later” debt, and cite data showing that one in four Americans used a BNPL product in the past year, that late or missed BNPL payments rose from 34% to 41% between 2024 and 2025 per a LendingTree survey, and that BNPL providers’ lack of standardized credit-bureau reporting can obscure the resulting harm. DCWP also released its own data from its Financial Empowerment Centers (June 2023 to August 2026) showing that New York City BNPL borrowers are disproportionately young, female, lower-income, and concentrated in financially vulnerable neighborhoods, including that 75% had annual incomes below $57,000, 30% were unemployed, the majority were age 18 to 34, the Bronx accounted for 48% of the city’s BNPL users, and BNPL users carried median debt of about $11,690 with median savings of just $600, compared to $8,519 in debt and $2,800 in savings among non-BNPL users carrying debt. For more information, click here.
On September 17, the attorneys general (AGs) of Massachusetts, Maryland, New York, California, Delaware, Hawaii, Illinois, Michigan, Minnesota, Nevada, New Mexico, Oregon, Vermont, and Washington issued joint multistate guidance affirming that state and federal civil rights laws, including disparate impact liability, remain legal, enforceable, and effective, in response to what the guidance characterizes as Trump administration efforts to narrow or eliminate these protections through executive actions, agency memoranda, and misinformation labeling such laws “illegal.” The document further argues that enforcement of disparate impact liability by state and federal agencies and private litigants, including recent actions addressing algorithmic bias in lending, tenant screening, and employment decision-making, has expanded opportunity and deterred discrimination, and it closes by cataloguing proactive, non-enforcement measures, such as data collection, bias audits of algorithmic tools, language access planning, inclusive disaster preparedness, and standardized employment and education practices, that public and private entities can lawfully adopt across sectors including housing and lending, language access, disaster preparedness, siting and permitting, employment, and education to reduce discriminatory barriers before they occur. For more information, click here.
On September 17, the Illinois Department of Financial and Professional Regulation (IDFPR) announced enforcement actions against two companies for allegedly providing unlicensed student loan debt relief services in violation of the Debt Settlement Consumer Protection Act (DSCPA): an August 31, 2026, consent order with Consulting Cafe, LLC d/b/a Smartfile Services, barring it from student loan debt relief activity in Illinois and requiring $47,929.44 in consumer restitution plus a $50,000 penalty, and a September 10, 2026, Cease and Desist Order, Order of Restitution, and Order of Fine against Capital Core Advisors, LLC (stayed if a hearing is requested within 10 days) that, if finalized, would require it to cease unlicensed activity, pay $79,585.59 in restitution, and pay a $318,000 fine. IDFPR Secretary Mario Treto Jr. urged borrowers to verify licensure before sharing personal or financial information, and the agency reiterated that DSCPA licensure provides protections such as examination requirements, bonding, individualized suitability determinations, and fee limitations, cautioning consumers to watch for red flags including unlicensed status, requests for power of attorney, high-pressure tactics, claimed government affiliations, and promises to quickly eliminate debt. The release also noted that IDFPR, alongside the Illinois Student Loan Ombudsman, continues monitoring the private student loan market under the Illinois Know Before You Owe Act, which Governor JB Pritzker expanded in June 2026 via Public Act 104-504 to require additional lender reporting on default rates and cosigned loans, and highlighted a new episode of IDFPR’s “Making Cents of Money” podcast focused on avoiding student loan scams. For more information, click here.