Federal Reserve Announces Final Rule Updating Risk Management Requirements for Certain Systemically Important Financial Market Utilities

Regulatory Developments

Federal Reserve Announces Final Rule Updating Risk Management Requirements for Certain Systemically Important Financial Market Utilities 

On March 8, the Federal Reserve adopted a final rule amending the operational risk management requirements in Regulation HH for designated financial market utilities (DFMUs), which provide essential infrastructure to clear and settle payments and other financial transactions. The amendments represent the first substantive updates to the regulation since 2014 and apply to the two DFMUs subject to supervision by the Federal Reserve: the Clearing House Payments Company, LLC (on the basis of its role as operator of the Clearing House Interbank Payments System (CHIPS)) and CLS Bank International. The amendments provide additional clarity on requirements for incident management and notification; business continuity management and planning; third-party risk management; and review and testing of operational risk management measures.

CFPB Solicits Input on Closing Fees in the Mortgage Market

On March 8, on the premise that closing costs “all too often are full of junk fees,” the CFPB requested input from borrowers on how closing costs have affected them, including with respect to title insurance, credit report, appraisal, and origination fees that have an outsized impact on low-income borrowers, since they generally do not vary with the size of a mortgage. The CFPB characterizes certain closing costs as fees that a consumer cannot avoid in closing on a home loan, for services that benefit the lender more than the consumer, and for which the consumer has no or little choice in the provider of the services. The CFPB hints at the possibility of future rules or guidance on closing costs following public input and the CFPB’s closing cost analysis over the coming months.

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New Client Alert: SEC Climate Rules Stayed by Fifth Circuit – For Now

On March 6, the SEC adopted expansive new climate disclosure rules (the “Rules”). As noted in our March 12, 2024 client alert summarizing and analyzing the new Rules, litigation challenging the Rules was already pending. Additional litigation seeking to strike down the Rules is currently pending in four federal courts of appeals—the US Courts of Appeals for the Fifth, Sixth, Eighth and Eleventh Circuits—and we expect that additional challenges will be filed in the federal courts of appeal. In addition, the US Courts of Appeals for the Second and DC Circuits are considering challenges by environmental groups claiming that the Rules do not go far enough. To read the full alert, click here.

New Insight: Dos and Don'ts of Interacting with Bank Regulators

Supervision is a daily fact of life for bank boards and management. In this insight, Goodwin’s banking team offer strategies for how both board members and members of management can ensure that the supervisory process goes as smoothly as possible. To read the full list, click here.

Latest Fintech Flash: The CFPB’s “Junk Fees” Initiative: Recent Developments and Trends

In January 2022, the CFPB announced an initiative to “Save Americans Billions in Junk Fees.” Since then, the CFPB and other regulatory agencies have expended significant effort, through new rulemaking and increased regulatory scrutiny, on discouraging these types of fees. In this edition of Fintech Flash, we examine two new rules recently proposed by the CFPB that are aimed at curbing types of junk fees that banks and other depository institutions may levy on consumers; we also evaluate their impact on covered institutions. To read more on this initiative, click here.

Latest Consumer Finance Insights Blog Post: Chamber of Commerce Sues CFPB To Eliminate or Enjoin $8 Late Fee Cap

On March 7, the US Chamber of Commerce (Chamber) joined five other trade associations to sue the Consumer Financial Protection Bureau (CFPB) and its director Rohit Chopra in Texas Federal District Court, seeking a court order declaring a recent CFPB rule arbitrary and capricious, vacating the rule, and enjoining its enforcement. In a previous post, Goodwin reported that on March 5, the CFPB issued a rule (Final Rule) setting an $8 threshold on late fees that larger credit card issuers (those with over one million open credit accounts) may charge. The Final Rule, published in the Federal Register on March 15, 2024, will become effective 60 days later unless enjoined or vacated. To learn more about this update, read Goodwin’s latest Consumer Finance Insight blog post.

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