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 12, U.S. Securities and Exchange Commission (SEC) Chairman Paul S. Atkins testified before the Senate Banking Committee that, nine months into his tenure, the agency is refocusing on its core mission of investor protection, fair and efficient markets, and capital formation by streamlining disclosure and reducing regulatory “creep” that has made going public more costly and contributed to a sharp decline in listed U.S. companies. He outlined a three‑pillar plan to “make IPOs great again” by re-anchoring disclosures in materiality, depoliticizing shareholder meetings, and expanding litigation alternatives for public companies, and he endorsed pending bipartisan market-structure legislation, including the CLARITY Act, while highlighting the SEC-Commodity Futures Trading Commission (CFTC) “Project Crypto” to develop a token taxonomy and potential on‑chain exemptions as an interim bridge. Atkins also described cost-cutting and modernization initiatives such as a comprehensive review of the Consolidated Audit Trail and associated cost reductions, a 9.4% decrease in the Public Company Accounting Oversight Board’s budget alongside steep cuts to board compensation and new appointments focused on more efficient oversight, and he emphasized that enforcement is being returned to “first principles” through actions targeting offering frauds, insider trading, accounting and financial fraud, adviser breaches, and cross‑border manipulation via the Division of Enforcement’s new Cross‑Border Task Force. For more information, click here.
On February 12, the Federal Trade Commission (FTC) issued a final rule conforming three recent rulemakings to federal court decisions by: (1) revising its “Negative Option Rule” to recodify the prior version that existed before the now‑vacated 2024 amendments, (2) formally withdrawing the “Combating Auto Retail Scams” (CARS) Rule, and (3) removing the Non‑Compete Clause Rule from the Code of Federal Regulations. Acting in response to appellate and district court rulings that vacated these rules for procedural defects and/or lack of statutory authority, the FTC characterizes this action as a ministerial step to align its regulations with those decisions, and therefore proceeded without notice and comment under the Administrative Procedure Act’s good‑cause exception. The commission also notes that the Office of Management and Budget has determined the action is not a significant regulatory action under Executive Order 12866 and that, because it eliminates rather than adds regulatory burdens, it qualifies as a deregulatory action under Executive Order 14192. For more information, click here.
On February 12, the National Credit Union Administration (NCUA) proposed a new rule to implement the GENIUS Act’s stablecoin framework for federally insured credit unions, establishing a licensing, examination, and supervisory regime for “permitted payment stablecoin issuers” (PPSIs) that are subsidiaries of insured credit unions and limiting credit unions to investing only in NCUA‑licensed PPSIs. The proposal would require a PPSI that is a credit union subsidiary to apply jointly with any credit union “parent company,” define when a credit union or other investor is a “principal shareholder,” and set out detailed application, investigation, and evaluation standards — including review of business plans, capital and liquidity, governance, technology, and redemption policies — against statutory safety-and-soundness factors. It would also require PPSIs to submit initial and annual certifications that they maintain anti-money laundering and sanctions compliance programs reasonably designed to prevent money laundering and terrorist financing, impose notice requirements for changes in control by credit union investors, and make clear that credit unions may not themselves issue stablecoins directly but must act through subsidiaries. Comments on the proposal are due April 13, 2026. For more information, click here.
On February 10, a settlement agreement between the United States, Texas, Colony Ridge entities, affiliated management companies, and a property owners’ association was filed resolving alleged violations of the Equal Credit Opportunity Act (ECOA), the Fair Housing Act (FHA), the Consumer Financial Protection Act (CFPA), and the Interstate Land Sales Full Disclosure Act (ILSA). Specifically, it was alleged that Colony Ridge targeted Hispanic borrowers with deceptive Spanish‑language marketing, sold largely undeveloped and flood‑prone land, and engaged in predatory financing by steering borrowers into high‑rate, seller‑financed mortgage loans with extremely high foreclosure rates. The defendants deny any wrongdoing, but agree to significant, and in some cases unusual, operational, compliance, and infrastructure commitments in exchange for dismissal of the civil claims. For example, one of the provisions requires Colony Ridge to comply with the intrastate sales exception to the Interstate Land Sales Full Disclosure Act by “requiring purchasers to present an unexpired Texas-issued driver’s license, a Texas-issued identification card, a limited-term Texas-issued driver’s license issued after January 1, 2025 or an unexpired passport and valid visa issued or renewed after January 1, 2025.” In addition, the settlement requires that Colony Ridge spend an aggregate amount of $20 million to, among other things, increase law enforcement “presence and effectiveness” in the Terranos Houston Subdivision, including two additional full-time law enforcement officers and the purchase of law enforcement equipment, gear and vehicles for items and services associated with the property owners of Colony Ridge. Notably, the settlement does not impose any civil monetary penalties, relying instead on prospective reforms and investment obligations. For more information, click here.
On February 10, NCUA announced the fifth round of proposed regulatory changes under its ongoing Deregulation Project, seeking public comment on three measures aimed at clarifying guidance and reducing redundant or overly prescriptive requirements in the Code of Federal Regulations: amendments to 12 C.F.R. § 708a that would ease procedural, disclosure, and communications requirements for converting insured credit unions to mutual savings banks; revisions to 12 C.F.R. § 708b that would preserve core disclosure and notice obligations for mergers and terminations of federal share insurance while eliminating detailed, prescriptive language to give credit unions more flexibility in how they communicate with members; and the rescission of IRPS 06‑1 as duplicative of current Field of Membership standards already contained in the Chartering Manual. Collectively, the proposals are intended to streamline compliance, modestly reduce merger-related costs, and consolidate overlapping standards. NCUA is encouraging stakeholders to review the notices of proposed rulemaking and submit comments through the Federal Rulemaking Portal. For more information, click here.
On February 9, the Federal Trade Commission (FTC) announced that it sent warning letters to 13 data brokers reminding them of their obligations under the Protecting Americans’ Data from Foreign Adversaries Act of 2024 (PADFAA), which prohibits data brokers from selling, disclosing, or providing access to personally identifiable sensitive data about Americans to foreign adversaries such as China, Russia, Iran, and North Korea or entities they control. The FTC emphasized that PADFAA’s definition of sensitive data is broad — covering health, financial, genetic, biometric, geolocation, sexual behavior information, account or device credentials, and government identifiers like Social Security and passport numbers — and specifically noted that offerings involving information about individuals’ status as members of the U.S. Armed Forces fall within the statute’s scope. The agency directed recipients to conduct comprehensive reviews of their practices to ensure compliance and warned that violations could lead to enforcement actions carrying civil penalties of up to $53,088 per violation. For more information, click here.
On February 9, SEC Commissioner Mark T. Uyeda, speaking at the Asset Management Derivatives Forum in Austin, outlined the commission’s progress on implementing the Treasury Clearing Rule and its approach to tokenization of securities markets, emphasizing that the $29 trillion U.S. Treasury market is central to global financial stability and that mandatory central clearing and expanded agent clearing should enhance transparency, reduce bilateral exposures, and free up balance sheet capacity while the SEC continues to refine guidance on inter‑affiliate exemptions, extraterritorial application, and other implementation issues in close coordination with domestic and international regulators. He then turned to tokenization, arguing that moving securities onto blockchain‑based rails can improve security, transparency, settlement efficiency, and ownership visibility without changing the underlying legal obligations, and stressed that the SEC under the Trump administration is seeking a technology‑neutral, “first principles” framework that relies on sub‑regulatory guidance, exemptive relief, and pilot programs rather than enforcement‑first policy making, with the ultimate goal of modernizing market infrastructure, promoting responsible innovation, and ensuring that capital markets remain fair, orderly, efficient, and resilient for investors and the broader economy. For more information, click here.
On February 6, the U.S. Small Business Administration (SBA) issued a procedural notice announcing that, effective March 1, 2026, 7(a) lenders may use three new alternative base rate options for variable‑rate 7(a) loans — the Secured Overnight Funding Rate (SOFR), the 5‑year Treasury Note rate, and the 10‑year Treasury Note rate — in addition to the existing Prime and SBA Optional Peg base rates, and amending SOP 50 10 8 accordingly. The notice makes these “Alternative Base Rates” a permanent feature of the 7(a) program, clarifies how each rate is determined, and revises earlier Working Capital Pilot Program guidance by eliminating the prior 300‑basis‑point adjustment to SOFR. It also restates maximum allowable spreads tied to Prime, explains how lenders may change rates pre‑ and post‑disbursement within SBA caps, and confirms that while loans using an alternative base rate are not yet eligible for secondary market sale, SBA will monitor market demand and may revisit that limitation in the future. For more information, click here.
On February 6, the SBA announced that it has suspended 111,620 California borrowers tied to 118,489 Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) transactions totaling more than $8.6 billion in suspected pandemic-era fraud, barring those borrowers from new SBA lending and certain programs such as 8(a) federal contracting. According to SBA Administrator Kelly Loeffler, the California action, which follows recent suspensions of 6,900 borrowers in Minnesota tied to roughly $400 million in potentially fraudulent loans, is part of a broader effort by the “Trump SBA” to address an estimated $200 billion in previously unaddressed PPP and EIDL fraud. The agency stated that it is leveraging a new data-analytics partnership and working with the SBA Office of Inspector General and federal law enforcement to identify suspect loans, seek recoveries and civil penalties, and pursue criminal charges where appropriate. For more information, click here.
On February 6, NCUA voted to extend the temporary 18% interest rate ceiling on loans made by federal credit unions through September 10, 2027, after staff analysis concluded that statutory criteria for exceeding the Federal Credit Union Act’s general 15% cap had been met, including rising money market rates over the prior six months and prevailing rate levels that could threaten the safety and soundness of individual credit unions. The board indicated it will continue to monitor market conditions and credit union financial health going forward. For more information, click here.
On February 6, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced the launch of a new online Voluntary Self-Disclosure Portal, offering a streamlined and secure way for companies and individuals to submit voluntary self-disclosures of potential violations of OFAC sanctions. By moving this process online, OFAC intends to improve efficiency and transparency in its interactions with disclosing parties, including faster acknowledgments of submissions, clearer communication during the review process, and a more user-friendly experience overall, and it is strongly encouraging parties to begin using the portal for future self-disclosures. For more information, click here.
State Activities:
On February 11, the Texas State Securities Board issued an Emergency Cease and Desist Order against TEXITcoin, MineTXC, Blockchain Mint, and founder Robert J. Gray, alleging they violated the Texas Securities Act by fraudulently offering unregistered cryptocurrency mining “Mining Packages” or “seats on the rocket ship” to Texas residents through a multi-level marketing scheme that promised daily passive returns and paid commissions for recruiting new investors. The order asserts that neither the investments nor the parties involved were registered as required, and that investors were not given essential information about company finances, mining operations, or how their funds would be safeguarded. Effective immediately, the respondents are barred from offering or selling unregistered securities, acting as unregistered dealers or agents, engaging in securities fraud, or making materially misleading statements, and the board urged investors to be especially wary of crypto mining opportunities promoted on social media that emphasize recruitment incentives over demonstrable investment performance. For more information, click here.
On February 10, the U.S. District Court for the Northern District of Illinois issued a mixed ruling in Illinois Bankers Association v. Raoul on the Illinois Interchange Fee Prohibition Act (IFPA), holding that the statute’s Data Usage Limitation is preempted but its core Interchange Fee Provision is not. Applying the National Bank Act/Barnett Bank standard, the court concluded that the IFPA’s prohibition on using transaction data for purposes beyond “facilitating or processing” a payment significantly interferes with national banks’ and federal savings associations’ federally authorized data‑processing powers, and thus permanently enjoined enforcement of that provision against national banks, federal savings associations, and out‑of‑state banks, as well as federal credit unions under the Federal Credit Union Act and, on an equitable basis, card networks and other processors when acting to facilitate those institutions’ powers. By contrast, the court rejected preemption challenges to the IFPA’s ban on charging interchange fees on the portion of transactions attributable to state and local taxes and gratuities, emphasizing that those fees are set by card networks rather than banks and do not directly intrude on core banking powers, and it likewise rejected a Dormant Commerce Clause attack based on Illinois “parity” statutes. As a result, when the IFPA takes effect (currently scheduled for July 1, 2026), its interchange-fee restrictions will apply to most market participants, while the data‑usage limits cannot be enforced against the covered federal and out‑of‑state institutions and their networks. For more information, click here.
On February 9, the U.S. District Court for the Western District of Washington denied a motion for preliminary injunction brought by the Foundation Against Intolerance and Racism, which sought to halt the Washington State Housing Finance Commission’s Covenant Homeownership Program — a special-purpose credit program providing zero-interest downpayment and closing-cost assistance to certain first-time homebuyers based on race/ethnicity and pre‑1968 Washington residency. While the court rejected the state’s renewed standing challenge and held that the organization had associational standing through “Member A,” who is financially qualified and “able and ready” to apply but for her race, it concluded that the plaintiff had not shown a likelihood of success on the merits under strict scrutiny or a sufficient risk of irreparable harm. Relying heavily on a legislatively mandated historical study, the court found that Washington has a compelling interest in remedying specific, identified instances of state and locally facilitated housing discrimination (including racially restrictive covenants, exclusionary zoning, and other state-involved practices), and that the program is narrowly tailored: eligibility is limited to racial and ethnic groups with documented, substantial homeownership gaps tied to that discrimination, includes a pre‑1968 residency requirement, is subject to ongoing study and adjustment, and follows unsuccessful race-neutral efforts. The court also emphasized the plaintiff’s delay in seeking relief and the availability of other race-neutral homebuyer assistance programs, and therefore declined to disturb the status quo while the case proceeds on the merits. For more information, click here.
