#2022-27, October 7, 2022

Trade Groups Sue CFPB for Exceeding its Statutory Authority on UDAAP

The American Bankers Association (ABA), Texas Bankers Association, and several other trade associations recently filed a lawsuit in the US District Court for Eastern Texas against the Consumer Financial Protection Bureau (CFPB) and Director Rohit Chopra for exceeding the agency’s legal authority in a March update to the UDAAP exam manual.  The update expanded the statutory definition of “unfairness” to encompass discrimination.

While the groups are clear that they support the fair enforcement of the nation’s nondiscrimination laws, the lawsuit states that they “cannot stand by while a federal agency exceeds its statutory authority, creates regulatory uncertainty and imposes costly burdens on the business community.”  Specifically, the lawsuit, filed say the Bureau violated the Administrative Procedure Act (APA) in three ways.

First, the agency exceeded its statutory authority as outlined in the Dodd-Frank Act.  Second, the updated manual is “arbitrary” and “capricious” because the bureau did not address Congress’s decision to narrowly define the Federal Trade Commission’s unfairness authority; and third, the update violates the APA’s procedural requirements because it constituted a legislative rule that failed to go through notice and comment.

To read more, click here.

Fed Issues Final Rule Expanding Durbin Routing Requirements to Card-Not-Present Transactions

The Federal Reserve issued a final rule last week expanding Regulation II (the implementing regulation for the Durbin Amendment) mandating that debit card transactions be processed on at least two unaffiliated payment card networks.  Specifically, a PIN debit and a signature debit network must now be provided for card-not-present transactions.  The final rule also states that the debit card issuer is responsible for ensuring at least two unaffiliated networks have been enabled and standardized.

The final rule is substantially similar to the original proposal, which the banking industry opposed, stating that the Fed’s Reg II update would impose costly and complex compliance burdens, particularly for smaller card issuers—and that the Fed’s so-called “clarification” would materially change the compliance obligations associated with Reg II.  The final rule also did not include industry-proposed changes to improve the proposal.  The rule is effective on July 1, 2023.

To read more, click here.

Fed Launching New Bank Application Filing System

The Federal Reserve announced this week that it is replacing the current bank application filing system with a new and upgraded system later this month.  The cloud-based system, known as FedEZFile, provides real-time status tracking, two-way messaging and digitally signed documents for applications. Substantive requirements of applications will remain the same.

FedEZFile will utilize Login.gov, a secure sign-in service run by the federal government that allows individuals to use a single username and password to access participating government agency websites.  Users will be able to register for FedEZFile starting October 17.  All pending applications filed before October 17 will be transferred to FedEZFile for continued processing.  An “Ask the Fed” webinar on the new system will be scheduled at a later date.

To read more, click here.

Reading Cooperative Bank’s Juliann Thurlow Elected ABA Chair-Elect

At the ABA convention in Austin, Texas earlier this week, members attending elected new officers and directors to serve on ABA’s board for the 2022-2023 association year.  We are pleased to report that as part of the slate of officers, Julieann Thurlow, president and CEO, Reading Cooperative Bank was elected Chair-Elect of the ABA.

In addition, Daniel Robb, president and CEO, Jonesburg State Bank in Jonesburg, Missouri, was elected chair.  John Asbury, CEO of Atlantic Union Bancshares in Richmond, Virginia was elected Vice Chair, while Carissa Rodeheaver, chairman, president and CEO of First United Bank and Trust in Oakland, Maryland was elected Treasurer.

MBA congratulates Chair-Elect Thurlow, and we look forward to working with her in the coming months/

To read more, click here.