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 May 23, the Consumer Financial Protection Bureau (CFPB) filed a status report in the U.S. District Court for the Eastern District of Kentucky, indicating its intent to vacate the Biden-era open banking rule under § 1033 of the Dodd-Frank Act. The rule, which aimed to facilitate consumer-authorized sharing of bank account data with third parties, has been challenged by Forcht Bank, the Kentucky Bankers Association, and the Bank Policy Institute. The CFPB, now under the leadership of Russell Vought, plans to file a motion for summary judgment by May 30, asserting the rule’s unlawfulness. For more information, click here.
On May 23, the U.S. District Court for the Southern District of New York granted Avraham Eisenberg’s motion for acquittal. Eisenberg, a cryptocurrency investor, had been convicted by a jury of commodities fraud, commodities manipulation, and wire fraud related to his scheme involving Mango Markets, a cryptocurrency exchange. The court found insufficient evidence to sustain the convictions, vacating counts one and two, and entering a judgment of acquittal on count three. The case centered on Eisenberg’s alleged manipulation of the MNGO token’s price to fraudulently withdraw more than $100 million in cryptocurrency. The court found that the government didn’t clearly link Eisenberg’s alleged trades or services used to Manhattan and that there was insufficient evidence he made any misrepresentations to Mango Markets. For more information, click here.
On May 22, the CFPB issued a notice requesting public comments on the extension of its existing information collection titled “Consumer Complaint Intake System Company Portal Boarding Form.” The intake system allows companies to view and respond to complaints submitted to the CFPB. The CFPB is inviting comments on issues such as: (a) whether the collection of information is necessary for the proper performance of the functions of the CFPB, including whether the information will have practical utility; (b) the accuracy of the CFPB’s estimate of the burden of the collection of information, including the validity of the methods and the assumptions used; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. This notice, published in the Federal Register, invites comments on these issues until July 21. For more information, click here.
On May 21, Commissioner Kristin N. Johnson announced her decision to step down from the Commodity Futures Trading Commission (CFTC) after completing her full term. During her tenure, Johnson played a pivotal role in advancing regulatory frameworks for derivatives markets, emphasizing risk management, cyber resilience, and the integration of artificial intelligence. She expressed gratitude for the opportunity to serve, highlighting her commitment to developing data-driven regulatory solutions and fostering collaboration among regulators. Johnson’s leadership in initiatives such as the Market Risk Advisory Committee and her advocacy for AI policy priorities have significantly contributed to the CFTC’s mission of ensuring market integrity and stability. As she prepares to depart, Johnson reflects on her service with pride and confidence in the commission’s ongoing efforts to protect investors and maintain robust market oversight. With her announcement, Johnson joins the other three sitting commissioners in revealing their departure plans, potentially leaving former Commissioner Brian Quintenz, President Donald Trump’s nominee, to lead an empty commission. For more information, click here.
On May 21, David Sacks, Trump’s crypto czar, announced that the stablecoin legislation, known as the GENIUS Act, is expected to pass with strong bipartisan support in the Senate, potentially unlocking trillions of dollars in demand for U.S. Treasuries. The bill aims to provide a regulatory framework for stablecoins, which are cryptocurrencies tied to real-world assets like the U.S. dollar, and has already cleared a key procedural vote with backing from 15 Democrats. Despite the optimism, ethical concerns persist due to Trump’s personal and family ventures in the crypto space. For more information, click here.
On May 20, the Federal Deposit Insurance Corporation (FDIC) Board of Directors approved the rescission of the 2024 Statement of Policy on Bank Merger Transactions and reinstated the previous Bank Merger Statement of Policy. This decision follows the FDIC’s March 11 proposal to rescind the 2024 policy and reflects the agency’s intention to conduct a comprehensive reevaluation of its bank merger review process. The reinstated policy will become effective 30 days after its publication in the Federal Register and will remain in effect while the FDIC reviews the regulatory framework governing merger transactions. The FDIC plans to consider public comments received and anticipates seeking further input during its future policy review. This policy change applies to all FDIC-insured financial institutions. For more information, click here.
On May 19, the United States Government Accountability Office (GAO) released a report to congressional committees, GAO-25-107197, focusing on the use and oversight of artificial intelligence (AI) in financial services. The report highlights the increasing integration of AI in financial institutions for tasks such as automated trading, credit decisions, and customer service, citing benefits like improved efficiency and reduced costs, but also noting risks such as biased lending and cybersecurity threats. Federal financial regulators primarily oversee AI through existing laws and risk-based examinations, though some have issued AI-specific guidance. The report underscores the limitations faced by the National Credit Union Administration (NCUA) in overseeing AI use, recommending that Congress consider granting NCUA authority to examine technology service providers for credit unions and that NCUA update its model risk management guidance. The GAO emphasizes the need for robust oversight tools to manage AI-related risks effectively. For more information, click here.
On May 19, Hester M. Peirce of the Securities and Exchange Commission (SEC) delivered remarks at the SEC Speaks event in Washington, D.C., emphasizing the need for a new paradigm in the SEC’s approach to regulating crypto assets. Reflecting on the 250th anniversary of the American Revolution, she drew parallels between historical acts of rebellion and the current regulatory challenges faced by the crypto industry. As head of the SEC’s Crypto Task Force, Peirce highlighted the importance of providing clarity on the security status of crypto assets, criticizing the SEC’s past reliance on enforcement actions over clear guidance. She advocated for a rational path forward, including tailored registration regimes and safe harbors for crypto transactions, while acknowledging the broader agenda of the SEC in fostering innovation and market resilience. Peirce underscored the need for collaboration and clarity to ensure that the capital markets continue to thrive, aligning with the nation’s enduring values of freedom and independent spirit. For more information, click here.
On May 16, the CFPB issued an interim final rule rescinding the protections for borrowers affected by COVID-19 emergency under the Real Estate Settlement Procedures Act (RESPA), Regulation X. This rescission reflects the termination of the COVID-19 national emergency and the expiration of related procedural safeguards, which were initially established to assist borrowers facing hardships due to the pandemic. The rule aims to streamline regulatory requirements by removing provisions that have become obsolete following the end of the public health emergency. The CFPB invites public comments on this rule until June 16. For more information, click here.
On May 13, the Federal Housing Administration’s (FHA) Office of Single Family Housing (OSFH) announced that it had taken significant steps to enhance clarity and efficiency by archiving nearly 600 inactive mortgagee letters (MLs). These letters, some dating back to 1978, were found to be expired or superseded by Handbook 4000.1, yet remained listed in the active policy directory on the Department of Housing and Urban Development’s (HUD) Client Information Policy System (HUDCLIPS) webpages. The presence of outdated MLs had caused confusion among lenders seeking accurate FHA Single Family policy information. By archiving these documents, the OSFH aims to streamline the retrieval of policy information, leveraging advanced AI tools to improve the accuracy of both manual and AI-generated web searches related to FHA policies, programs, and technology modernization efforts. This action aligns with the Trump administration’s objective of increasing government efficiency. For more information, click here.
On May 23, the Supreme Court of Texas delivered an opinion on a certified question from the U.S. Court of Appeals for the Fifth Circuit regarding Texas usury law. The court clarified that under § 306.004(a) of the Texas Finance Code, the interest rate for a commercial loan should be calculated using the “actuarial method,” which requires basing interest calculations on the declining principal balance for each payment period, rather than the total principal amount. This decision emphasizes the importance of legislative wording, as the Texas legislature intentionally shifted from an “equal parts” approach to the “actuarial method,” reflecting a well-established meaning in financial contexts. The ruling impacts the ongoing case between American Pearl Group, L.L.C. and National Payment Systems, L.L.C., where the interpretation of this statute is crucial in determining whether the loan agreement is usurious. For more information, click here.
On May 20, Mayor Eric Adams delivered opening remarks at the inaugural NYC Crypto Summit, announcing the establishment of a digital asset advisory council aimed at positioning New York City as the global crypto capital. Emphasizing his commitment to embracing technology, Adams highlighted his personal history as a computer programmer and his symbolic gesture of taking his first three paychecks in Bitcoin. The advisory council will focus on integrating fintech jobs and investments into the city’s economy, leveraging blockchain for secure management of sensitive information, and exploring cryptocurrency payments for city services and taxes. Adams underscored the importance of collaboration with industry experts and the need to lobby for supportive state-level policies, aiming to foster a diverse and inclusive tech ecosystem that propels New York City into the future of digital finance. For more information, click here.
On May 20, Maryland Governor Wes Moore approved House Bill 765, that allows hospitals to sell medical debt to governmental units, contracted entities, or nonprofits for the purpose of debt cancellation. The bill requires hospitals to cease collection actions on sold debts and mandates that debt purchasers notify patients of the cancellation and rectify any adverse credit information. Hospitals must report annually on their debt collection practices and the specifics of sold debts. This legislation, effective from July 1, 2025, will remain in force until June 30, 2028. For more information, click here.
On May 20, Moore approved House Bill 268, a comprehensive legislative measure aimed at reforming hospital financial assistance and debt collection policies. The bill introduces significant changes, including the exclusion of certain civil actions from the statute of limitations, the specification of mandatory reductions in patient out-of-pocket expenses, and enhanced notice requirements for financial assistance policies. It prohibits hospitals from initiating civil actions against patients with debts below a specified threshold and modifies the terms for income-based payment plans, extending the period before interest on medical debt can be assessed and delaying the commencement of civil actions for debt collection to 240 days after the initial bill was provided to the patient. The act is set to take effect on October 1. For more information, click here.
On May 15, Vermont Governor Phil Scott signed S.27 into law, a bill aimed at providing medical debt relief and protecting consumer credit reports. The legislation directs the state treasurer to allocate $1 million to contract with a nonprofit entity to purchase and abolish medical debts for Vermont residents with incomes at or below 400% of the federal poverty level or those whose medical debt equals 5% or more of their household income. It prohibits consumer reporting agencies from maintaining information on medical debt and prevents health care providers from reporting such debt. Large health care facilities are restricted from selling medical debt unless it is transferred to a nonprofit for debt abolition. The act is effective from July 1. For more information, click here.
On May 14, the Georgia legislature passed House Bill 15, which amends Title 7 of the Official Code of Georgia Annotated concerning banking and finance. This comprehensive legislation updates terminology and revises procedures for incorporators of credit unions, articles of incorporation, and licensure requirements for various financial entities, including money transmissions, mortgage lenders, and foreign banking institutions. It introduces new auditing, corporate governance, and liquidity requirements for mortgage lenders and brokers, and modifies application procedures for relocating foreign banking institutions. The bill also enhances background check procedures for merchant acquirer limited purpose banks and regulates installment loans. Additionally, it establishes definitions and cross-references, repeals conflicting laws, and empowers the Department of Banking and Finance to enforce these provisions. The act goes into effect on July 1. For more information, click here.
On May 12, Arizona Governor Katie Hobbs approved House Bill 2387, which amends the Arizona Revised Statutes to introduce new regulations for cryptocurrency kiosks. This legislation mandates that operators of cryptocurrency kiosks provide clear disclosures of terms and conditions, issue receipts with detailed transaction information, and implement fraud prevention measures using blockchain analytics. The bill sets transaction limits for new and existing customers and requires operators to maintain 24/7 customer service. Additionally, it stipulates that victims of fraud are eligible for refunds, even if disclosures were provided. For more information, click here.
