On November 13, the Consumer Financial Protection Bureau (CFPB) and the Federal Reserve Board (Fed) announced increased dollar thresholds used to determine whether certain consumer credit and lease transactions in 2024 are exempt from Regulation Z (Truth in Lending) and Regulation M (Consumer Leasing).
As discussed here, 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. Today, CUNA announced that the organizations’ members voted overwhelmingly (94% of CUNA members and 86% of NAFCU members) in favor of the merger. America’s Credit Unions will be legally formed on January 1, 2024.
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 17, the Clearing House Association, LLC (Association) and National Automated Clearing House Association (Nacha) joined forces to submit an amicus brief in support of a credit union held liable by a district court for a fraud perpetrated by an outside party on the sender of a wire. According to the amici, the district court wrongly held the credit union which banked the beneficiary of the wire responsible for the sender’s losses, even though it had no relationship with the sender. The case, Studco Building Systems US, LLC v. 1st Advantage Federal Credit Union, on appeal before the Fourth Circuit, challenges the district court ruling. The case deals with the liability scheme found in Article 4A of the Uniform Commercial Code (UCC). According to the amici, under the UCC the disappointed originator (the plaintiff) has recourse against the person paid (its own bank), but not against the bank that paid the beneficiary of the wire, with whom the sender has no relationship. The amici argue that “[t]he district court’s opinion muddles these rules, uncaps banks’ liability, and threatens the efficiency of all U.S. funds-transfer systems — not just the ACH networks — to the detriment of every economic participant, down to the consumer.”
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.”
The Consumer Financial Protection Bureau (CFPB) has issued a final rule adjusting the Truth in Lending Act (TILA) dollar amounts for certain provisions, including under the Home Ownership and Equity Protection Act of 1994 (HOEPA), and the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), where appropriate, based on the annual percentage change reflected in the consumer price index (CPI). The rule takes effect on January 1, 2024.
On August 28, the U.S. Department of Justice (DOJ) announced its eighth redlining settlement under its Combatting Redlining Initiative. The settlement between the DOJ and the American Bank of Oklahoma, which originated from a referral by the Federal Deposit Insurance Corporation (FDIC), aims to resolve allegations that the bank engaged in a pattern or practice of lending discrimination by redlining historically Black neighborhoods in the Tulsa, Oklahoma Metropolitan Statistical Area (Tulsa MSA). Under the terms of the proposed consent order, American Bank of Oklahoma will pay more than $1.15 million to resolve the allegations that it engaged in a “pattern or practice” of redlining in violation of the Fair Housing Act and the Equal Credit Opportunity Act.
On July 31, the Board of Governors of the Federal Reserve System (Federal Reserve) issued its July Senior Loan Officer Opinion Survey on Bank Lending Practices, which addressed changes in the standards and terms on, and demand for, bank loans to businesses and households in the second quarter of 2023. Banks reported that lending standards are currently on the tighter end of the range for all loan categories. Specifically, standards tightened for all consumer loan categories and demand weakened for auto and other consumer loans, while it remained basically unchanged for credit card loans. Looking forward, banks reported expecting to tighten standards further on all loan categories citing an uncertain economic outlook and expected deterioration in collateral values and the credit quality of loans.
In April, we discussed how Colorado’s state supreme court issued its highly anticipated decision confirming a borrower’s bankruptcy discharge does not accelerate secured installment debt or trigger the final statute of limitations period to recover the debt. Now, Washington’s high court has rendered its decisions on the topic, joining the handful of states to address this trending issue.
On June 6, Nebraska Governor Jim Pillen signed into law Legislative Bill 92, which, among many other subjects, amends the Nebraska Installment Loan Act (the NILA). Previously, a license was required for a lender seeking to take advantage of the usury authority provided by the NILA and also for any person that holds or acquires any rights of ownership, servicing, or other forms of participation in a loan under the NILA. Legislative Bill 92 expands the scope of the licensing requirement to “any person that is not a financial institution who, at or after the time a [covered] loan is made by a financial institution, markets, owns in whole or in part, holds, acquires, services, or otherwise participates in such loan.” “Financial institution” is broadly defined to include all federally insured depository institutions. And the licensing requirement, by its terms, applies to entities providing limited services and/or purchasing limited interests (not just the predominant economic interest) in loans by financial institutions of $25,000 or less, with rates exceeding the Nebraska general usury limit.