October 2019 – Consumer Financial Services Watch

Federal Court Strikes Down FinTech Charter

Oct 28 2019

On October 21, Judge Victor Marrero of the United States District Court for the Southern District of New York issued an order in Lacewell v. Office of the Comptroller of the Currency (No. 18-cv-8377) striking down the Office of the Comptroller of the Currency’s (“OCC”) special purpose national bank charter for fintechs (“FinTech Charter”). After years of challenging the FinTech Charter—a charter authorizing fintechs to engage in non-depository banking activities—the New York Department of Financial Services (“NYDFS”) has, for now, succeeded in overturning the charter. The OCC defended its authority by arguing that 12 CFR Part 5.20(e)(1) is consistent with the National Bank Act (“Act”) and authorizes the OCC to issue special purpose charters to nondepository banking institutions. The Court disagreed, finding that the National Bank Act only authorizes the OCC to charter depository institutions. The Court concluded that the Act allows the OCC to charter institutions engaged in the “business of banking,” and the “business of banking” necessarily includes accepting deposits. Therefore, the FinTech Charter is beyond the OCC’s authority.

American Bankers Association, Consumer Bankers Association, and Housing Policy Council Joint Comments on HUD’s Proposed Rule on the Fair Housing Act’s Standard of Disparate Impact

Oct 24 2019

By Paul F. Hancock and Olivia Kelman

On behalf of the American Bankers Association, Consumer Bankers Association, and Housing Policy Council, K&L Gates Partner Paul F. Hancock and Associate Olivia Kelman crafted a comment that was submitted to the U.S. Department of Housing and Urban Development (“HUD”) on October 18, 2019, addressing the proposed amendments to HUD’s interpretation of the Fair Housing Act’s disparate impact standard. The preamble to the proposed rule states that HUD “proposes to amend” its disparate impact regulation “to better reflect the U.S. Supreme Court’s 2015 ruling in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc., 135 S. Ct. 2507 (2015).” [1] In that decision, the Supreme Court articulated the standards for, and limitations on, disparate impact claims under the Fair Housing Act. The comment explains that the proposed amendments properly reflect binding precedent and provide necessary guidance regarding the application of the law, and supports the amendments in HUD’s Proposed Rule, with some suggested modifications. A copy of the comment is available here.

Proposed Regulations Under the California Consumer Credit Privacy Act

Oct 14 2019

By Linda C. Odom and John ReVeal

On October 10, 2019, the California Attorney General issued proposed regulations under the California Consumer Privacy Act (CCPA). The Attorney General will hold four public hearings, on December 2 through December 5, 2019, during which statements or comments may be presented, orally or in writing. Written comments in addition to those submitted at the public hearing also may be mailed or emailed to the Attorney General’s office until 5:00 p.m. on December 6, 2019.

Archive:October 2019