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Lori Sommerfield

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With over two decades of consumer financial services experience in federal government, in-house, and private practice settings, and a specialty in fair lending regulatory compliance, Lori counsels clients in supervisory issues, examinations, investigations, and enforcement actions.

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In the last three weeks, the U.S. Department of Justice (DOJ) reached two more settlements with lenders under its Combatting Redlining Initiative, which began in October 2021. On September 27, the DOJ announced that Washington Trust Company agreed to pay $9 million to resolve allegations that it engaged in redlining majority-Black and Hispanic neighborhoods in Rhode Island. On October 19, the DOJ announced a separate $9 million agreement with Ameris Bank to resolve allegations that it engaged in redlining predominately Black and Hispanic neighborhoods in Jacksonville, Florida. And, according to Attorney General Merrick Garland, this is just the beginning. “[T]he Justice Department currently has over two dozen active investigations into redlining, spanning neighborhoods across the country.”

On October 11, the Consumer Financial Protection Bureau (CFPB or Bureau) issued an advisory opinion regarding § 1034(c) of the Consumer Financial Protection Act (CFPA), which requires large banks and credit unions to comply in a timely manner with consumer requests for information concerning their accounts. This advisory opinion follows a June 2022 request for information where the CFPB asked for public input on customer service obstacles encountered when interacting with large financial institutions. According to the CFPB, this initiative is in response to large financial institutions moving away from “relationship banking.”

Yesterday, the U.S. Department of Justice (DOJ) and the Consumer Financial Protection Bureau (CFPB) (collectively, the agencies) issued a joint statement on the subject of creditors’ use of immigration status for eligibility for credit transactions, an issue that has been kicking around in private litigation for years, but as to which the federal regulators have been silent. The joint statement warns lenders that “unnecessary or overbroad” reliance on immigration status in the credit decisioning process may violate the Equal Credit Opportunity Act (ECOA) and other federal laws. According to the agencies, the joint statement was issued in response to consumers reportedly being rejected for credit cards and loans because of their immigration status, even when they have strong credit histories and are otherwise qualified to receive the loans.

On October 11, the Consumer Financial Protection Bureau (CFPB or Bureau) published a special edition of its Supervisory Highlights report. This report serves as a “victory lap” for the Bureau, which highlights the relief it has obtained for consumers since the release of its March 2023 Special Fees Edition, discussed here. According to the Bureau, its supervisory efforts have led to institutions refunding over $140 million to consumers, including $120 million in overdraft and non-sufficient funds (NSF) fees.

On August 1, the two major national credit union trade associations — the National Association of Federal Credit Unions (NAFCU) and the Credit Union National Association (CUNA) — announced plans to merge and create a new organization called America’s Credit Unions. The goal of the merger would be to form a single credit union trade group “to serve credit unions more efficiently and effectively” through “one strong and united voice.”

This summer, Representative Roger Williams (R-Texas) and Senator John Kennedy (R-La.) introduced identical Congressional Review Act (CRA) resolutions in the U.S. House and Senate (H.J. Res. 66 and S. J. Res. 32, respectively) disapproving the Consumer Financial Protection Bureau’s (CFPB or Bureau) implementation of the small business data collection and reporting final rule under § 1071 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Final Rule). Currently, the Senate resolution has not moved beyond introduction, but the House Financial Services Committee recently approved the House resolution to advance. If the resolutions are adopted by both houses of Congress and signed by the President, the Final Rule would be overturned. While that outcome appears unlikely under the current Democratic administration, letters submitted to Congress by banking and credit union trade groups supporting the joint resolution do appear to confirm the nearly unanimous industry opposition to the Final Rule.

When using artificial intelligence (AI) or complex credit models, can lenders rely on the checklist of reasons provided in Regulation B sample forms for adverse action notices? According to today’s guidance issued by the Consumer Financial Protection Bureau (CFPB or Bureau), the answer to that question is, in many circumstances, no.

On September 14, a federal district court in the Eastern District of Kentucky became the second court to issue an order granting, in part, a plaintiffs’ motion for a preliminary injunction enjoining the Consumer Financial Protection Bureau’s (CFPB or Bureau) from enforcing its final rule under § 1071 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Final Rule) against the plaintiffs and their members. (A discussion of the first injunction issued by a Texas federal court can be found here.) The injunction in The Monticello Banking Company v. CFPB will dissolve if the U.S. Supreme Court reverses the Fifth Circuit in the Community Financial Services Association (CFSA) v CFPB case, which found the CFPB’s funding structure unconstitutional and, therefore, rules promulgated by the Bureau invalid.

On September 8, a federal court in the Eastern District of Texas granted summary judgment in favor of the U.S. Chamber of Commerce (Chamber) and several other trade associations, holding that the Consumer Financial Protection Bureau’s (CFPB or Bureau) “March 2022 manual update is beyond the agency’s constitutional authority based on an Appropriations Clause violation and beyond the agency’s statutory authority to regulate ‘unfair’ acts or practices under the Dodd–Frank Act.”

On August 18, the American Financial Services Association, Consumer Bankers Association, CRE Finance Council, Equipment Leasing and Finance Association, Mortgage Bankers Association, National Association of Federally-Insured Credit Unions, Truck Renting and Leasing Association, and the U.S. Chamber of Commerce (collectively “the Trades”) sent a joint letter to the Consumer Financial Protection Bureau (CFPB or Bureau) urging it to stay enforcement and implementation of the small business data collection and reporting final rule under § 1071 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Final Rule) for all covered financial institutions to correct the current disparity between those institutions covered by the Texas Bankers Association et al v. CFPB injunction and those that are not covered.