In this Issue. The Board of Governors of the Federal Reserve System (Federal Reserve), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) the (Agencies) Community Reinvestment Act (CRA) final rule; the FDIC proposed revisions to its Statement of Policy on Bank Merger Transactions; Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra shared prepared remarks at the Peterson Institute for International Economics event on revitalizing bank merger review; and the FDIC updated its applications procedures manual. These and other developments are discussed in more detail below.
Regulatory Developments
Agencies Extend Applicability Date of Certain Provisions
of their CRA Final Rule
On March 21, the Agencies jointly issued an interim final rule granting more time before
certain provisions of the previously issued final rule regarding the CRA
come into effect. In particular, the Agencies changed the public
file provisions and facility-based assessment areas provisions
effective dates from April 1, 2024 to January 1, 2026, noting that
both provisions reference other provisions that will not yet be in
effect as of April 1, 2024. The Agencies also noted that what
constitutes a "large bank" under the facilities-based
assessment will be subject to change as of January 1, 2026.
FDIC Proposes Revisions to its Statement of Policy on Bank
Merger Transactions
On March 21, the FDIC Board of Directors sought public comment on proposed revisions to
the FDIC's Statement of Policy on Bank Merger Transactions (the
Statement). Last updated in 2008, the Statement provides guidance
on how the FDIC applies the statutory factors established in the
Bank Merger Act to bank merger applications subject to its review.
These factors relate to the competitive effects of the transaction,
the financial and managerial resources and future prospects of the
parties, the impact of the transaction on the convenience and needs
of the community to be served, the effectiveness of the parties in
combatting money laundering and, as added in the Dodd-Frank Wall
Street Reform and Consumer Protection Act (Dodd-Frank Act) in 2010,
and consideration of the impact of the transaction on the stability
of the US banking or financial system. Notably, the Statement would
provide that transactions resulting in an institution with assets
of $100 billion or more are more likely to present potential
financial stability concerns and will be subject to additional
scrutiny. Revisions to the Statement are intended to be
principles-based, identify the types of applications subject to
FDIC approval, address each statutory factor separately and
highlight other relevant matters, including statutes governing
interstate mergers, and applications from non-banks or banks that
are not traditional community banks.
The proposed revised Statement is intended to reflect legislative and other developments since it was last amended in 2008, including the inclusion of the financial stability factor added with the Dodd-Frank Act, and follows the FDIC's March 31, 2022, request for information and comment on the application of the laws, practices, rules, regulations, guidance, and Statement to merger transactions subject to FDIC approval.
Like the FDIC's recent corporate governance proposal, the proposed Statement was approved by Chairman Gruenberg and Directors Chopra and Hsu and voted against by Vice Chairman Hill and Director McKernan, with Vice Chairman Hill expressing concern that the amendments will "potentially mak[e] the process longer, more difficult, and less predictable" and Director McKernan expressing concern that the update reflects a "quite skeptical view of bank mergers."
Comments will be due 60 days after publication in the
Federal Register.
"There is a strong case to be made that given the critical
role that entrepreneurs and small businesses play in our economy
and the vast geography of our nation, the U.S. benefits more from
having a large number of small and midsized banks, rather than a
market structure with just a handful of very large banks, like in
Europe and China."
‒ Rohit Chopra, Director, CFPB
CFPB Director Issues Prepared Remarks at the Peterson
Institute for International Economics Event on Revitalizing Bank
Merger Review
On March 21, CFPB Director Rohit Chopra spoke at the Peterson Institute for
International Economics event on revitalizing bank merger review,
discussing his views on bank mergers and consolidation, agency
involvement in promoting competition, the current review regime
under the Bank Merger Act, the FDIC's proposed Bank Merger Act Policy
Statement, and areas for future reform.
FDIC Updates Its Applications Procedures Manual
The FDIC announced updates to its Applications Procedures Manual, which outlines
how the FDIC's staff processes applications and other requests
submitted to it. The FDIC updated: (1) Section 1.1
(Applications Overview) to reflect amendments to the
agency's delegations of authority regarding the review of such
filings, to describe the benefits of pre-filing meetings, and to
explain the process for requesting comments on filings pending with
other federal agencies; and (2) Section 1.2 (Summary of
Investigation) to address circumstances where an investigative
summary requires concurrence from the agency's Legal Division
and Division of Depositor and Consumer Protection.
Check Out Goodwin's Latest Industry Insights
New Client Alert: Wisconsin Becomes Third State to Enact
Law Regulating Earned Wage Access Services
Following Nevada and Missouri in 2023, Wisconsin has become the
third state (and the first in 2024) to enact a law that establishes
a financial services oversight regime for earned wage access
services, also known as on-demand pay services, which allow workers
to access earned but unpaid income before payday. The legislation
(AB 574) was enacted on March 21, 2024, and published on March 22,
2024. Wisconsin's law imposes licensing and other substantive
requirements on providers, and it provides important regulatory
certainty for these innovative financial services in the state.
Along with Nevada's and Missouri's laws, Wisconsin's
law may shape similar legislation in other states. Read more about
this new law in a recent client alert.
Latest Fintech Flash: Traps for the Unwary: Using
Alternative Credit Data to Expand Credit Access to LMI Individuals
and Underrepresented Communities
Traditional credit underwriting methods, which are generally based
on credit reports, have not always successfully captured the full
picture of a borrower's ability to repay. It is estimated that
more than 45 million US consumers lack sufficient credit history to
generate either a credit report or a credit score. Low-to
moderate-income (LMI) individuals and underrepresented communities
are disproportionally represented in that figure. Approximately 40%
of low-income individuals and about 30% of moderate-income
individuals have insufficient credit history to generate an
accurate credit score. Further, nearly 54% of Black Americans
report having no credit or a poor to fair credit score, and roughly
41% of Hispanic Americans are in the same category. To read more of
our latest Fintech Flash article, click here.
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