To keep you informed of recent activities, below are several of the most significant federal and state events that have influenced the Consumer Financial Services industry over the past week.
Federal Activities
State Activities
On March 28, the Consumer Financial Protection Bureau (CFPB) was ordered by the U.S. District Court for the District of Columbia to reinstate its employees and resume its operations. This decision comes after the CFPB allegedly attempted to shut down its activities, leading to the National Treasury Employees Union filing a lawsuit questioning the legality of the shutdown. The court held that the CFPB’s actions to halt its operations and terminate its employees were not consistent with its statutory obligations under Title X of Dodd-Frank. As a result, the court granted a preliminary injunction requiring the CFPB to reverse its shutdown efforts, reinstate its workforce, and continue performing its statutory duties. On March 29, CFPB filed its notice of appeal of the preliminary injunction. For more information, click here.
On March 28, the Federal Deposit Insurance Corporation (FDIC) announced the rescission of Financial Institution Letter (FIL-16-2022) and issued new guidance clarifying the process for FDIC-supervised institutions to engage in crypto-related activities. The new Financial Institution Letter (FIL-7-2025) clarifies that institutions may engage in these activities without prior FDIC approval. Institutions are encouraged to engage with their supervisory team as appropriate. They should consider the associated risks, including market and liquidity risk, operational and cybersecurity risks, consumer protection requirements, and anti-money laundering requirements associated with the crypto-related activity. For more information, click here.
On March 28, the CFPB announced that it will not prioritize enforcement or supervision actions related to penalties or fines associated with the Payment Withdrawal and Payment Disclosure provisions of the Payday, Vehicle Title, and Certain High-Cost Installment Loans Regulation, which become operative on March 30. This decision aims to focus CFPB’s resources on more pressing threats to consumers, particularly servicemen and veterans. The CFPB emphasized its commitment to supporting hard-working American taxpayers, servicemen, veterans, and small businesses. Additionally, CFPB is considering issuing a notice of proposed rulemaking to narrow the scope of the rule. For more information, click here.
On March 28, President Donald Trump granted pardons to three co-founders of the BitMEX cryptocurrency exchange as well as to a former high-ranking employee. The four individuals had previously pled guilty to violating the Bank Secrecy Act for failing to maintain anti-money laundering and know-your-customer programs. Prosecutors had accused them of operating BitMEX as a “money laundering platform” and misleadingly claiming to withdraw from the U.S. market. The pardons come after the co-founders received probation sentences and were ordered to pay civil fines totaling $30 million, while the former employee received 12 months of probation and agreed to pay $150,000 in fines. For more information, click here.
On March 27, online cash advance company Cleo AI agreed to pay $17 million to settle Federal Trade Commission (FTC) allegations that it deceived consumers about the amounts and timing of available cash advances and obstructed efforts to cancel subscriptions. The FTC’s complaint, filed in federal district court, charged that Cleo’s advertisements misled consumers by promising access to hundreds of dollars in cash advances and same-day or instant availability, which were rarely delivered as advertised. Additionally, Cleo allegedly made it difficult for consumers to cancel subscriptions, often continuing to charge monthly fees despite cancellation requests. The settlement prohibits Cleo from misleading consumers about the terms of its advances and requires clear disclosure of subscription terms, obtaining express consent before charging for subscriptions, and providing a simple cancellation process. The $17 million will be used to refund consumers harmed by Cleo’s practices. For more information, click here.
On March 26, the CFPB and Townstone Financial, Inc. (Townstone) jointly moved to vacate the stipulated final judgment previously entered in the CFPB’s enforcement action against the mortgage lender alleging redlining practices. In November 2024, the CFPB reached a settlement with Townstone in what was the first redlining case brought against a nonbank mortgage lender and broker. The settlement followed a pivotal decision by the Seventh Circuit Court of Appeals, which held that the provision in Regulation B that prohibits creditors from discouraging prospective applicants was permissible under the language of the Equal Credit Opportunity Act (ECOA). The CFPB had accused Townstone of discouraging prospective African American applicants from applying for mortgages in the Chicago metropolitan area through derogatory statements made in podcasts and radio shows. The settlement required Townstone to pay a $105,000 penalty to the CFPB’s victims relief fund and prohibited the mortgage lender from engaging in any actions that violate ECOA. The CFPB and Townstone jointly filed a motion to vacate the stipulated final judgment citing significant problems with the CFPB’s treatment of the case, including unmerited investigation and litigation and the infringement of the defendants’ First Amendment rights. For more information, click here.
On March 26, U.S. Representative Zach Nunn (R-IA) and Jim Himes (D-CT) introduced the bipartisan Financial Technology Protection Act to combat illicit finance and terrorist financing on digital platforms. The legislation aims to establish an interagency working group, including representatives from key federal agencies and industry experts, to disrupt the misuse of emerging financial technologies by bad actors. The bill focuses on researching transactions related to terrorism and illicit financial technology, proposing measures to prevent money laundering, and enhancing counter-terrorist activities. For more information, click here.
On March 26, the CFPB announced its intention to revoke the interpretive rule that subjected “Buy Now, Pay Later” (BNPL) transactions to provisions of Regulation Z applicable to credit cards. This decision was communicated through a joint motion to stay litigation filed in the U.S. District Court for the District of Columbia. The interpretive rule, issued in May 2024, had classified BNPL transactions as “credit cards,” requiring BNPL lenders to extend similar legal protections to consumers. The rule faced significant opposition from the BNPL industry, which argued that the classification was overly broad and imposed burdensome changes. A lawsuit was filed challenging the rule, leading the CFPB to reconsider its stance. For more information, click here.
On March 26, the U.S. District Court for the District of Massachusetts issued a temporary restraining order in favor of the Massachusetts Fair Housing Center and other plaintiffs against the Department of Housing and Urban Development (HUD) and its secretary, Scott Turner. The order mandates that HUD immediately reinstate any Fair Housing Initiatives Program (FHIP) grants terminated by a February 27, 2025, termination letter and temporarily enjoins HUD from implementing or reinstating the termination letter under any name. The court’s decision aims to maintain the status quo while further proceedings are conducted to determine the propriety of a preliminary injunction. For more information, click here.
On March 25, the new Federal Housing Finance Agency (FHFA) Director Bill Pulte issued an order terminating special purpose credit programs (SPCPs) supported by the government sponsored enterprises, Fannie Mae and Freddie Mac (together, the GSEs). SPCPs are programs through which financial institutions may consider prohibited-basis information when determining whether to extend credit to economically or socially disadvantaged groups. In February 2022, multiple federal agencies issued interagency guidance strongly encouraging the use of SPCPs by financial institutions. However, according to the order, the FHFA now has determined that the current level of support for SPCPs is “inappropriate for regulated entities in conservatorship,” a reference to the FHFA’s conservatorship of the GSEs. The order mandates the immediate termination of SPCPs supported by Fannie Mae and Freddie Mac. Those GSEs are permitted to comply with any contractual provisions regarding prior written notice to lenders, however. For more information, click here.
On March 24, the Office of the Comptroller of the Currency (OCC) released its Mortgage Metrics Report for the fourth quarter of 2024, revealing that 97.3% of first-lien mortgages in the federal banking system were current and performing, a slight increase from 97.2% a year earlier. The report also noted a decrease in the percentage of seriously delinquent mortgages compared to the fourth quarter of 2023. Additionally, servicers initiated 6,647 new foreclosures, showing a decline from the previous quarter and the same period the previous year. The report highlighted that 7,332 mortgage modifications were completed, with 93.7% being combination modifications that included actions like interest rate reductions and term extensions. The first-lien mortgages in the report represent 20.2% of all residential mortgage debt in the U.S., totaling approximately 11.1 million loans and $2.7 trillion in principal balances. For more information, click here.
On March 24, the U.S. District Court for the Northern District of California ruled that it has subject-matter jurisdiction over claims brought by the American Federation of Government Employees and other public-sector unions against the U.S. Office of Personnel Management (OPM). The unions allege that OPM acted beyond its authority by directing mass terminations of probationary federal employees under the guise of performance issues. The court concluded that these claims, which include allegations of ultra vires actions and violations of the Administrative Procedure Act, are not the type Congress intended to be channeled exclusively through the Merit Systems Protection Board or the Federal Labor Relations Authority. Therefore, the district court can hear and decide these claims. For more information, click here.
On March 24, Acting Comptroller Rodney E. Hood delivered remarks at the Homeownership and Housing Policy Conference hosted by the National Association of Hispanic Real Estate Professionals (NAHREP). Celebrating NAHREP’s 25th anniversary, Hood emphasized the OCC’s commitment to financial inclusion and regulatory developments impacting homeownership. He highlighted the importance of homeownership in building generational wealth and economic stability, particularly for underserved communities. Hood also discussed the OCC’s Project REACh initiative, which aims to dismantle systemic barriers and promote affordable homeownership through collaboration with leaders from various sectors. He expressed appreciation for NAHREP’s efforts in promoting sustainable homeownership and looked forward to further discussions on advancing financial inclusion and generational wealth. For more information, click here.
On March 27, New York Attorney General Letitia James announced that Galaxy Digital Holdings Ltd. and its affiliates have agreed to a $200 million settlement following an investigation into market manipulation under the Martin Act and New York Executive Law. The investigation alleged that Galaxy Digital engaged in deceptive practices by promoting and selling the cryptocurrency Luna without disclosing its intent to sell, which significantly inflated Luna’s market price. The Assurance of Discontinuance requires Galaxy Digital to implement stringent compliance measures, including transparent public statements about cryptocurrency investments and adherence to New York securities laws. The settlement funds will be paid in installments over three years. For more information, click here.
On March 26, Utah Governor Spencer Cox signed S.B. 70, the Consumer Reporting Amendments, into law. This new legislation establishes limitations on the information that consumer reporting agencies can provide. The definition of “consumer reporting agency” was amended to include entities that for a monetary fee assemble or evaluate consumer credit information for the purpose of furnishing credit or consumer reports to third persons The law prohibits these agencies from reporting information related to arrests not resulting in a conviction, criminal charges not resulting in a conviction, expunged convictions, and pardoned convictions. However, it allows the reporting of pending criminal charges and arrests that have not reached a final disposition. The law will take effect on May 7. For more information, click here.
On March 25, Utah Governor Spencer Cox signed H.B. 99, the Residential Mortgage Loan Amendments, into law. This new legislation specifically targets the use of “prescreened trigger leads” in the residential mortgage industry, which is defined as information derived from a consumer report that is given to a third party that is not affiliated with the consumer. The law grants the Division of Real Estate the authority to issue citations to individuals or entities that violate standards related to trigger leads. It prohibits the use of information derived from consumer reports to solicit consumers who have applied for mortgage loans with other financial institutions unless specific conditions are met. These conditions include clearly stating that the solicitor is not affiliated with the consumer’s original mortgage lender, complying with state and federal laws regarding consumer report solicitations, and avoiding misleading offers that are subsequently changed to the consumer’s detriment. The law will take effect on May 7. For more information, click here.
On March 24, Kentucky enacted an act relating to blockchain digital assets, which introduced comprehensive definitions and regulations for various blockchain-related terms and activities. The act defines key concepts such as blockchain, blockchain network, blockchain protocol, cryptocurrency, digital assets, and smart contracts, among others. It allows individuals to accept digital assets for payment without additional taxes and ensures that the operation of nodes and staking services are permitted activities. The act also amends existing statutes to exempt certain blockchain-related activities from licensure and securities regulations, thereby fostering a more favorable environment for blockchain technology and digital asset transactions within the state. For more information, click here.
On March 24, Idaho enacted the Transparency in Financial Services Act, which amends Title 26 of the Idaho Code by adding a new Chapter 38. This to ensure transparency and prohibit discrimination in the provision of financial services based on social credit scores. “Social credit score” is defined as any analysis, rating, scoring, list, or tabulation that evaluates a person’s (i) exercise of religion; (ii) speech, expression, or association protected by the First Amendment; (iii) failure or refusal to adopt targets or disclosures related to greenhouse emissions; (iv) failure or refusal to conduct any racial, diversity, or gender audit or disclosure; (v) failure to facilitate employees obtaining abortions or gender reassignment services; or (vi) participation in activities related to fossil-fuels or firearms. It mandates that financial institutions provide specific reasons for service denial upon request. The act also outlines enforcement mechanisms, including actions by the attorney general and civil remedies for affected individuals. The provisions apply to national banks and take effect on July 1. For more information, click here.
On March 17, Wyoming enacted SF95 allowing for the conversion of special purpose depository institutions into public trust companies and amending various requirements related to capital startup, deposits, and depositor qualifications. The act repeals certain limitations on depositors, removes the supervision fee for banks providing digital asset custodial services, and addresses the use of unexpended fees. Additionally, it mandates rulemaking by the banking commissioner and provides for most provisions becoming effective July 1, while sections related to rulemaking take effect immediately. For more information, click here.
