Legal Seminar

Legal Seminar

July 21-23, 2020

Legal Seminar Schedule of Events

July 21, 2020 Fintech Legal Updates

1:00 PM-2:00 PM

Margaret Liu Senior VP and Deputy General Counsel Conference of State Bank Supervisors Michael Townsley Policy Counsel Conference of State Bank Supervisors Break

2:00 PM-2:15 PM

State Law Challenges for State-Chartered Banks

2:15 PM-3:15 PM

Greg Omer Executive Vice President and General Counsel Central Bancompany, Inc. Joy Phillips Executive Vice President, General Counsel, and Corporate Secretary Hancock Whitney Joelle Weltzin Senior Vice President and Division General Counsel Truist Bank Jim Cooper (moderator) Senior Vice President, Policy Conference of State Bank Supervisors Break

3:15 PM-3:30 PM

Consumer Finance Legal and

3:30 PM-4:30 PM

Regulatory Developments during COVID-19

John C. Redding Partner Alston & Bird Stefanie H. Jackman

Partner Ballard Spahr LLP

Alejandra Krasnow (moderator) Director, SES Business Services Conference of State Bank Supervisors July 22, 2020

Docket Review & Regulatory Updates

1:00 PM-2:00 PM

John Geiringer Partner Barack Ferrazzano Kirshbaum & Nagelberg LLP Stanley F. Orszula Partner Barack Ferrazzano Kirshbaum & Nagelberg LLP Break Ethics and Professional Responsibility for State Government Attorneys Bruce Weinstein, Ph.D. CEO The Ethics Guy Break Ethics and Professional Responsibility for State Government Attorneys Bruce Weinstein, Ph.D. CEO The Ethics Guy

2:00 PM-2:15 PM

2:15 PM-3:15 PM

3:15 PM-3:30 PM

3:30 PM-4:30 PM

July 23, 2020

M&A Activities and Challenges

1:00 PM-2:00 PM

Bo Fears Deputy Commissioner for Legal Affairs Georgia Department of Banking and Finance

Tom Fite Director Indiana Department of Financial Institutions Kara Hunter Deputy State Bank Commissioner

Colorado Division of Banking Shauna Shields (moderator) Bank Bureau Chief Iowa Division of Banking Break

2:00 PM-2:15 PM

Information Sharing: Legal Elements and Challenges

2:15 PM-3:15 PM

Jedd Bellman Assistant Commissioner for Non-Depository Supervision Maryland Office of Financial Regulation Lucinda Fazio Director, Division of Consumer Services Washington Department of Financial Institutions Alejandra Krasnow Director, SES Business Services Conference of State Bank Supervisors Buz Gorman (moderator) General Counsel Conference of State Bank Supervisors

Break

3:15 PM-3:30 PM

COVID19-Related Legal Issues

3:30 PM-4:30 PM

Facilitated group discussion

Legal Seminar July 21-23, 2020

Attendees Alabama State Banking Department Lindsey Ward

lindsey.ward@banking.alabama.gov

205-987-3534

Arkansas State Bank Department John Ahlen

jahlen@banking.state.ar.us

501-324-9019

California Department of Business Oversight Mark Ahn

mark.ahn@dbo.ca.gov mary.audick@dbo.ca.gov david.bae@dbo.ca.gov

916-445-6351 916-445-6351 916-445-6351 916-445-6351 916-445-6351 916-445-6351 916-445-6351 619-525-4043 860-240-8299  860-240-8299  860-240-8182 860-240-8299  860-240-8152 860-240-8185 860-240-8299 860-240-8299  860-240-8299 

Mary Audick

David Bae

Pamela Hernandez

pamela.hernandez@dbo.ca.gov

Julie Jacob

julie.jacob@dbo.ca.gov

Christopher Merrill Brian Pendleton

christopher.merrill@dbo.ca.gov brian.pendleton@dbo.ca.gov

Joyce Tsai

joyce.tsai@dbo.ca.gov

Connecticut Department of Banking Paul Bobruff

paul.bobruff@ct.gov emily.bochman@ct.gov anthony.conway@ct.gov melissa.desmond@ct.gov amy.lachance@ct.gov matthew.saunig@ct.gov jeffrey.schuyler@ct.gov stacey.serrano@ct.gov mary.oneill@ct.gov

Emily Bochman Anthony Conway Melissa Desmond Amy LaChance Mary Ellen O'Neill

Matt Saunig

Jeffrey Schuyler Stacey L. Serrano

Delaware Office of the State Bank Commissioner Frank Broujos

frank.broujos@delaware.gov lisa.collison@delaware.gov robert.glen@delaware.gov

302-739-4235 302-739-4235 302-739-4235

Lisa Collison Robert Glen

Georgia Department of Banking and Finance Elizabeth Harris

eharris@dbf.state.ga.us bfears@dbf.state.ga.us apatterson@dbf.state.ga.us

770-986-1649 770-986-1633 770-986-1633

Oscar Fears

Amy Patterson

Hawaii Division of Financial Institutions

Tara Murphy James Paige Laura Sasaki

tmurphy@dcca.hawaii.gov james.c.paige@hawaii.gov lsasaki@dcca.hawaii.gov bryan.c.yee@hawaii.gov

808- 586-2820 808-586-1500 808-586-2820 808-586-2820

Bryan Yee

Idaho Attorney General's Office Thomas Donovan

208-334-2400 208-334-2400 208-334-2400

tom.donovan@finance.idaho.gov loren.messerly@idaho.finance.gov brian.nicholas@finance.idaho.gov

Loren Messerly Brian Nicholas

Idaho Department of Finance Robert Moore

208- 332-8042

robert.moore@finance.idaho.gov

Illinois Department of Financial & Professional Regulation John Crees john.crees@illinois.gov

217-785-0820 217-785-0820 217-785-2900 217-524-2860 312-814-3163 217-785-0820 217-785-0820 217-785-0820 217-785-0820

David DeCarlo

david.decarlo@Illinois.gov kerri.doll@illinois.gov deborah.hagan@illinois.gov hunter.wiggins@illinois.gov paul.isaac@illinois.gov helen.y.kim@Illinois.gov knoxfamily@sbcglobal.net michael.morthland@illinois.gov

Kerri Doll

Deborah Hagan

Charles Hunter-Wiggins

Paul Isaac Helen Kim

Deborah Johnson Knox Michael Morthland

Illinois Division of Banking Robert Stearn

robert.stearn@illinois.gov

312-793-1454

Indiana Department of Financial Institutions Nicole Buskill

nbuskill@dfi.in.gov lmiller@dfi.in.gov dthompson@dfi.in.gov

317-232-3955 317-232-3955 765- 449-9832

Lyndsay Miller

J. Deron Thompson

Iowa Division of Banking Zak Hingst

zak.hingst@idob.state.ia.us

515-281-4014

Kansas Office of the State Bank Commissioner Brock Roehler

brock.roehler@osbckansas.org matt.shoger@osbckansas.org

785- 296-2266 785- 296-2266 785-296-1687

Matthew Shoger

Melissa Wangemann

melissa.wangemann@osbckansas.org

Kentucky Department of Financial Institutions Justin Burse

justin.burse@ky.gov

800-223-2579

Maine Bureau of Financial Institutions John Barr

john.a.barr@maine.gov

207-624-8561 207-624-8574 207-624-8567

David Gordon-Laurendeau

david.g.laurendeau@maine.gov lloyd.p.lafountain@maine.gov

Lloyd LaFountain

Massachusetts Division of Banks Ruth Barry

ruth.barry@mass.gov

617-956-1563 617-956-1516 617-956-1552 617-956-1564 617- 956-1514 617- 956-1500 617- 956-1500 617- 956-1500

Heather Bennett Valerie Carbone Aimee Desai Kehoe

heather.bennett@mass.gov valerie.carbone@mass.gov aimee.desai@mass.gov merrily.gerrish@mass.gov amanda.loring@mass.gov brenda.miller@mass.gov brian.morecraft@mass.gov

Merrily Gerrish Amanda Loring Brenda Miller Brian Morecraft

Michigan Department of Insurance and Financial Services Karen Lawson lawsonk1@michigan.gov

517-284-8834 877-999-6442 517-284-8611

David Toy

toyd@michigan.gov

James Westrin

westrinj1@michigan.gov

Minnesota Department of Commerce Kathleen Finnegan

sara.payne@state.mn.us

651-539-1500

Mississippi Department of Banking & Consumer Finance Charles Plunkett

charles.plunkett@dbcf.ms.gov bridgette.wiggins@dbcf.ms.gov

601- 321-6944 601-321-6924

Bridgette Wiggins

Montana Division of Banking and Financial Institutions Kelly O'Sullivan kosullivan@mt.gov

406-841-2935

Nebraska Department of Banking and Finance Ann Divis

ann.divis@nebraska.gov tag.herbek@nebraska.gov

402-595-2407 402-471-2171 402-595-2407 402-471-4933

Tag Her

Patricia Herstein William Lawrence

patricia.herstein@nebraska.gov william.lawrence@nebraska.gov

New Hampshire State Banking Department Chiara Dolcino

chiara.dolcino@banking.nh.gov john.r.dewispelaere@banking.nh.gov emelia.galdieri@banking.nh.gov lauren.m.warner@banking.nh.gov

603- 271-3561 603- 271-3561 603- 271-3561 603- 271-3561

John DeWispelaere

Emelia Galdieri Lauren Warner

New Mexico Financial Institutions Division Kevin Graham

kevin.graham@state.nm.us

505-476-4562

New York State Department of Financial Services Kevin Bishop North Carolina Office of Commissioner of Banks Katherine Bosken kbosken@nccob.gov kevin.bishop@dfs.ny.gov

212-480-6400

919-715-0082 919-715-1194

Ashley Holmes

aholmes@nccob.gov

Kristin Rice

krice@nccob.gov

919-733-1823

North Dakota Department of Financial Institutions Ryan Spah rrspah@nd.gov

701- 328-9933

Ohio Division of Financial Institutions Sheila Schroer

614-644-6228 614-644-7541 614-728-8400 614-644-7501

sheila.schroer@com.ohio.gov matthew.walker@com.state.oh.us jennifer.whitehurst@com.ohio.gov

Matthew Walker Jennifer Whitehurst

Ingrid White

ingrid.white@com.ohio.gov

Oklahoma State Banking Department Dudley Gilbert

dudley.gilbert@banking.ok.gov

405-521-2782

Oregon Division of Financial Regulation TK Keen

tk.keen@state.or.us

503-947-7980

Pennsylvania Department of Banking and Securities Robert Lopez rolopez@pa.gov

717-783-8240 717-783-8240

Brian Pendleton

brian.pendleton@dbo.ca.gov

Rhode Island Division of Banking Jenna Giguere

jenna.giguere@dbr.ri.gov

401-462-9593

South Carolina Department of Consumer Affairs Logan Brown l2@scconsumer.gov

803-734-4200   803-734-4200  

Connor Parker

cjparker@scconsumer.gov

South Dakota Division of Banking Michael Dummer

michael.dummer@state.sd.us brock.jensen@state.sd.us

605-773-3421 605-773-3421

Brock Jensen

Tennessee Department of Financial Institutions Sarah Branch

sarah.branch@tn.gov denise.e.cole@tn.gov daniel.espensen@tn.gov rachel.gatlin@tn.gov greg.gonzales@tn.gov mark.kilpatrick@tn.gov troy.mcpeak@tn.gov

615-741-2236 615-532-1028 615-741-2236 615-741-2236 615-289-4738 615-741-2236 615-741-2236 615-741-2236 615-741-2236

Denise Cole

Daniel Espensen Rachel Gatlin Greg Gonzales Mark Kilpatrick Troy McPeak

Eric Rogers Todd Staley

eric.rogers@tn.gov todd.staley@tn.gov

Texas Department of Banking Marcus Adams

marcus.adams@dob.texas.gov

512-475-1300 512-475-1300 512-475-1300

Everette Jobe

ejobe@dob.texas.gov

Elisha Polk

elisha.polk@dob.texas.gov

Texas Office of the Consumer Credit Commissioner Matthew Nance

matthew.nance@occc.texas.gov michael.rigby@occc.texas.gov

512-936-7639 512-936-7639

Michael Rigby

Utah Attorney General's Office Perri Babalis

801-366-0364

pbabalis@agutah.gov

Utah Department of Financial Institutions Paul Allred

pallred@utah.gov drude@utah.gov

801-538-8761 801-538-8836

Darryle Rude

Vermont Department of Financial Regulation Steven Knudson

steven.knudson@vermont.gov ethan.mclaughlin@vermont.gov

802-828-3301 802-828-3301 802-828-3301

Ethan McLaughlin

Karla Nuissl

karla.nuissl@vermont.gov

Virginia Bureau of Financial Institutions Anna Dimitri

anna.dimitri@scc.virginia.gov todd.rose@scc.virginia.gov

804-371-9657 804-371-9107

Todd Rose

Washington Department of Financial Institutions Brett Carnahan

brett.carnahan@dfi.wa.gov jeanju.choi@dfi.wa.gov

360-902-8700 360-725-7821 360-902-8800 360-902-8700 360-902-8730 360-902-8700 360-902-8700 360-902-0522 360-902-8700 360-902-8700 360-902-0523 360-902-8792 360-902-8726 360- 902-8704

Jeanju Choi Lucinda Fazio Kendall Freed

lfazio@dfi.wa.gov

kendall.freed@dfi.wa.gov amanda.herndon@dfi.wa.gov robert.jones@dfi.wa.gov catherine.mele@dfi.wa.gov barbara.penttila@dfi.wa.gov devon.phelps@dfi.wa.gov kristina.shenefelt@dfi.wa.gov amanda.starnes@dfi.wa.gov drew.stillman@dfi.wa.gov kenneth.sugimoto@dfi.wa.gov deborah.taellious@dfi.wa.gov

Amanda Herndon

Robert Jones

Catherine Mele-Hetter

Barbara Penttila Devon Phelps Kristina Shenefelt Amanda Starnes Kenneth Sugimoto Deborah Taellious Drew Stillman

West Virginia Division of Financial Institutions Kathy Lawson

klawson@wvdob.org

304-558-2294

Speakers Alston & Bird  John C. Redding

john.redding@alston.com 

858-692-2631 

Ballard Spahr LLP  Stefanie H. Jackman

jackmans@ballardspahr.com 

404-683-0613

Barack Ferrazzano Kirshbaum & Nagelberg LLP John Geiringer

312-984-3217 312-629-7483

john.geiringer@bfkn.com stan.orszula@bfkn.com

Stanley F. Orszula

Central Bancompany, Inc.  Greg Omer

greg.omer@centralbank.net 

573-469-8978 

Colorado Division of Banking   Kara Hunter

kara.hunter@state.co.us

303-894-7575

Georgia Department of Banking & Finance Bo Fears

770-986-1633

bfears@dbf.state.ga.us

Hancock Whitney  Joy Phillips

joy.phillips@hancockwhitney.com 

228-323-6744 

Indiana Department of Financial Institutions  Tom Fite tfite@dfi.IN.gov

317-232-3955

Iowa Division of Banking Shauna Shields

shauna.shields@idob.state.ia.us

515-281-4014

Maryland Office of Financial Regulation Jedd Bellman

jedd.bellman@maryland.gov

410-230-6100

The Ethics Guy Bruce Weinstein

917-593-1195 

bruce@theethicsguys.com

Truist Bank  Joelle Weltzin 

joelle.weltzin@truist.com 

515-314-5171 

Washington Department of Financial Institutions  Lucinda Fazio 

lucinda.fazio@dfi.wa.gov 

360-789-0185 

CSBS Staff James Cooper Paul Ferree John Gorman Elizabeth Haines Esther James Jennifer Jarmin Alejandra Krasnow Sebastien Monnet

jcooper@csbs.org pferree@csbs.org bgorman@csbs.org ehaines@csbs.org ejames@csbs.org jjarmin@csbs.org akrasnow@csbs.org smonnet@csbs.org lnaiman@csbs.org mpfaff@csbs.org asears@csbs.org tthompson@csbs.org

202-808-3557 202-558-6093 202-808-3558 202.802.9557 202-728-5700 202-728-5704 202-728-5725 202-549-2017 202-728-5700 202-728-5748 202-759-9403 202-759-9401

Louis Naiman Mary Pfaff Alisha Sears

Tarcy Thompson

Lisa Tinsley

ltinsley@csbs.org

202-559-1966

Fintech and the OCC Mike Townsley Margaret Liu

Presentation Outline

Fintech Charter Litigation

OCC Payments/Trust Charter

OCC/FDIC Valid When Made Rulemaking

Possible OCC True Lender Rulemaking

OCC Payments Charter

Fintech Charter Litigation

CSBS Challenge

Southern District  of New York

NYDFS Brief Due  July 23

NYDFS Challenge

Second Circuit

Briefs of Amici  Curiae Due      July 30

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OCC Payments Charter

Can They Do That?

“For those companies looking for a national licensing platform for their payments business, Brooks announced that in the Fall of 2020, the first version of a potential ‘Payments Charter’ would be unveiled by the OCC. Such a Charter would grant the institution a federal pre-emption, or a federal money transmitter license, eliminating the need to go to all 50 states and obtain a license to operate in each state.”

- “Acting Comptroller of the ‘Cryptocurrency’ Brian Brooks to Unveil New Payments Charter,” Forbes, June 26, 2020

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OCC National Trust Charter & Payroll Processors

ADP License  Rescission/Trust  Structure 

Background and  Timeline of  Events 

Legal Basis &  Challenges  Ahead 

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OCC/FDIC Valid When Made Rulemaking

“Interest on a loan that is permissible under [federal law] shall not be affected by the sale, assignment, or other transfer of the loan.” The regulations do not address the question of whether a bank is a real party in interest with respect to a loan or has an economic interest in the loan under state law, e.g. which entity is the “true lender.”

• Proposal • CSBS Position • Final Rules

OCC “True Lender” Rulemaking

“… while courts have relied on a multitude of factors to evaluate which party has the predominant economic interest in a loan, the OCC believes that such a fact-specific analysis is unnecessarily complex and unpredictable.”

• Proposal • Background • CSBS Position

Questions?

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CSBS Legal Seminar  Consumer Finance Legal and Regulatory  Developments during Covid‐19 John Redding, Alston & Bird Stefanie Jackman, Ballard Spahr LLP

July 21, 2020 Location: Your Computer 

Remote vs. In‐Person Work • Considerations in determining whether to continue offering remote work: – Branch/licensed location requirements (lending and servicing) – Voluntary vs. mandatory return to in-person work – Phasing back workforce with continued balance between remote work and in-person work – Remote work policies if continuing and accommodation requests – Workplace screening and testing

Extensions, Deferrals, Other Accommodations • Voluntary implementation of accommodations is widespread, including with those who may refuse contact: – Programs are designed with an eye toward maintaining status quo • Auto: Keep the customer in the vehicle where possible and avoid acceleration or repossession • Unsecured Consumer: Allow customers time to get back to work – Permitted fees are typically waived • Deferrals and extensions also used to help bring the customer current, having positive credit reporting implications • Continued mandates should be considered with care as they may have unintended consequences

Leasing Considerations in Auto Finance • Vehicle lease costs are based on the lease term and expected depreciation • Lease return process – Leases may be subject to holdover (i.e., extension) at the consumer’s option – Traditional lease return occurs through the dealer sales process • COVID created some unique challenges – Dealer sales operations were largely closed, affecting returns and consumers’ ability to obtain a new vehicle – Many in the industry offered automatic extensions, subject to consumer decline – Some implemented at-home pickup • Post-lease sales were impacted, affecting ability to sell and sale values • Implications of inability to repossess on disclosure requirements

Vehicle Repossessions • Auction values held in the near term, so did not impact customers whose vehicles were previously repossessed initially • Repossessions effectively ended during initial phase of COVID – The vast majority of the industry voluntarily suspended repossessions – it simply didn’t make sense – A number of states also prohibited repossessions, and some are considering further prohibitions • Unlimited prohibitions have negative consequences for everyone – Industry remains focused on avoiding repossessions when they can

Issues in Unsecured Consumer Lending • Concerns over new loans

– Consumers continue to seek unsecured credit through multiple channels at the same time – Use of funds to pay past creditors may result in “musical chairs” approach to consumer credit, increasing risk and cost of credit – Underwriting of loans significantly more challenging given limitations on credit reporting and potential risks on use of information • Impact on servicing-related activities – Industry has largely implemented voluntary extensions / deferrals without requiring proof of need or charging fees

– Concern over mandated requirements without evidence of future ability to pay – What is the impact of mandated, unilateral extensions on statute of limitations

State Collection Impacts  • Outbound collection efforts prohibited/limited

– E.g., DC, Massachusetts, Nevada, North Carolina, D.C.; many other regulators encouraging accommodations of impacted consumers – Wide variety of accommodations are being offered to consumers: extensions, deferrals, interest waivers/adjustments, fee waivers • Collection-related legal activity on hold in many jurisdictions, either by regulation or court restriction/closure (e.g., repossessions, foreclosures, garnishments, etc.) – Impact on statutes of limitation is unclear in many jurisdictions – Avoiding garnishment of stimulus funds

CARES Act Furnishing Requirements • CARES Act reporting requirements for persons in COVID-related extensions or deferments: use pre-enrollment delinquency status • What if creditors use extension/deferment data to inform underwriting decisions, either internally or using data from CRAs? – Potential violation of CARES Act? – Potential ECOA claim? – Necessity of taking ability to repay into account? • Likely wave of FCRA litigation following the crisis

NYC DCA’s New LEP Rules • Effective June 27, 2020 but enforcement delayed until August 26 • Imposes requirements on creditors, first-party servicers, and third-party agencies • Applicable to all (6 RCNY 5-77): – Must request and record the consumer’s language preference after starting “debt collection procedures” – Prohibits false/inaccurate/partial translations – Prohibits false representation/omissions of a consumer’s language preference when returning, selling, or placing an account for litigation – Must disclose on public websites: (i) the extent of any language services that are provided; and (ii) translations of debt terms available on DCA’s website • Applicable only to third-party agencies/debt buyers: – 6 RCNY 2-193: must provide annual report on the number of accounts serviced in a language other than English and the number of employees who did so – 6 RCNY 5-77(f)(2): must disclose in validation letters: (i) the extent of any language services that are provided; and (ii) translations of debt terms available on DCA’s website

Looking Forward • Continuing efforts to protect consumers, without careful thought, may end up hurting those same consumers due to job losses – Companies are looking out for customers, but business prohibitions have consequences for everyone • Continuing legislative efforts to ease collection activities during and after the pandemic • Anticipated uptick in FCRA, TCPA, and collection-related claims under state law in the coming months • Predictions for the impact of the 2020 election consumer protection regulation

Looking Forward • CFPB’s final collection rule expected October 2020, presumably effective October 2021 – How will the rule impact creditors (directly or indirectly)? – What are the implications for consumers if creditors are negatively impacted? • Seila Law decision and the future of the CFPB (single director vs. commission) – Nobody likes the single director structure . . . when out of power – How does reaffirmation by Director Kraninger affect the CFPB and ongoing challenges?

Questions?

CSBS 2020 Legal Seminar Docket Review & Regulatory Update

July 22, 2020

John M. Geiringer john.geiringer@bfkn.com

Stanley F. Orszula stan.orszula@bfkn.com

Chicago, Illinois (312) 984-3217

Chicago, Illinois (312) 629-7483

Regulatory Update

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Supervisory Approach

• Private sector experience • Regulatory rightsizing • Sympathy and empathy for banks • Pandemic-related flexibility

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Pandemic Guidance

• Different from business continuity planning • Preparing for the next wave – External coordination – Employee-customer protection – Remote access – Business impact analysis

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© 2020 Barack Ferrazzano Kirschbaum & Nagelberg LLP

Examinations

• Challenges with off-site environment • Increased importance of documentation • Balancing customer needs and safety and soundness • Examination ratings acknowledge pre- COVID posture

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© 2020 Barack Ferrazzano Kirschbaum & Nagelberg LLP

Lessons from the Last Crisis

• Board engagement • Stress testing • Fortress capital • Effective risk ratings and acknowledging credit issues • Resolving troubled assets

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© 2020 Barack Ferrazzano Kirschbaum & Nagelberg LLP

Fintech Relationships

• Analysis of new activities • Third-party vendor management • Broader customer base • BSA/AML Issues • Licensure challenges

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© 2020 Barack Ferrazzano Kirschbaum & Nagelberg LLP

Cannabis-Related Banking

• Engagement decision • Practical issues • Customer due diligence • Hemp guidance • Enforcement actions

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© 2020 Barack Ferrazzano Kirschbaum & Nagelberg LLP

State Laws

• Lending limits • Insider transactions • Affiliate transactions • Change in control • Privacy

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© 2020 Barack Ferrazzano Kirschbaum & Nagelberg LLP

Docket Review

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Regulatory Litigation

• Seila Law LLC v. Consumer Fin. Protection Bureau — CFPB constitutional, but with limits • Rotkiske v. Klemm — FDCPA statute of limitations runs on occurrence, not discovery • Lacewell v. Office of the Comptroller of the Currency — NYDFS challenge of OCC SPNB charter current status • American Bankers Association (ABA) v. National Credit Union Administration (NCUA) — NCUA field of membership challenges • AER Advisors Inc. v. Fidelity Brokerage Services LLC — safe harbor for SAR filing remains intact • Clark v. Bank of America, N.A. — National Bank Act does not preempt state mortgage escrow interest law • Washington Bankers Association v. State of Washington — State of Washington’s 1.2% surtax on banks with at least $1 billion a year in net revenue found unconstitutional • Madden —where are we now?

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Regulatory Enforcement

• In re: Standard Chartered Bank —OFAC violation, $1.1 billion fine • In re: Wells Fargo & Co. — Sales Practices Act violation, $3 billion fine • Bureau of Consumer Financial Protection v. Fifth Third Bank, N.A. — CFPB alleges unauthorized bank accounts opened to promote cross-selling • U.S. v. U.S. Bancorp. — $200 million False Claims Act penalty for mortgage underwriting issues • United Community Bank — PPP Agent fee subpoena

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Paycheck Protection Program Litigation

• Panda Group, PC v. Bank of America Corporation — class action over non-payment of PPP agent fees • Profiles, Inc. v. Bank of America Corp. — class action over PPP loan priority for preexisting customers • Scherer v. Wells Fargo — class action over PPP loan priority for pre-existing customers • Guofeng Ma v. Wells Fargo & Co. — securities class action over PPP loan priorities • DV Diamond Club of Flint LLC v. Small Business Administration — adult entertainment businesses are eligible for PPP loans • Bankruptcy Restriction Cases — various challenges that a bankruptcy debtor is ineligible for PPP • United States v. Butziger and United States v. Staveley — PPP fraud criminal prosecution • The PPP double payment case — recipient arrested; money returned upon filing of civil suit

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Curated Bank Litigation

• Principle Solutions Group, LLC v. Ironshore Indemnity, Inc. — insurance coverage for bank wire fraud • In re Interlogic Outsourcing, Inc. et al. — $200 million alleged check kiting scheme • Wells Fargo Bank, N.A. v. M.S. Wholesale Plumbing, Inc. — failure to respond to garnishment order results in $21 million state court judgment • ACA International v. Healey — COVID-19 emergency debt collection regulation unenforceable

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Questions?

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John M. Geiringer (312) 984-3217 john.geiringer@bfkn.com

John M. Geiringer leads the Financial Institutions Group’s regulatory practice area. John is a well-known banking attorney who handles regulatory issues for banks across the country, including those involving corporate governance, mergers and acquisitions, consumer compliance and operations, enforcement actions, and internal investigations. John is a Vice Chairman of the American Bar Association’s Banking Law Committee and the former Chairman of its Enforcement, Insider Liability and Troubled Banks Subcommittee and its Bank Secrecy Act/Anti-Money Laundering Subcommittee. Prior to joining the Firm, he served as legal counsel for the Illinois bank regulatory agency and was in the bank regulatory compliance area of a major accounting firm. He is an Adjunct Professor at Chicago-Kent College of Law’s Graduate Program in Financial Services Law and is a Co-Director of its Center for National Security and Human Rights Law. He also served as a Faculty Advisor for the Illinois Bankers Association, is a past Chairman of the Chicago Bar Association’s Financial Institutions Committee, and serves as a member of the Advisory Board of The Anti-Money Laundering Association. John is a frequent speaker at seminars for bankers, lawyers, and regulators on issues of financial institutions law. He is the co-editor of a two-volume banking law handbook and is the author of the chapter “Supervisory Enforcement Actions and Related Civil Liability”. He is also the co-author of the chapter, “Bank Examination and Enforcement” in The Keys to Banking Law: A Handbook for Lawyers . He received his B.A. from American University and his J.D. from DePaul University College of Law. The Financial Institutions Group was again named as one of the top financial institution groups in the nation in the U.S. News & Best Lawyers 2020 report.

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© 2020 Barack Ferrazzano Kirschbaum & Nagelberg LLP

Stanley F. Orszula (312) 629-7483 stan.orszula@bfkn.com

Stanley F. Orszula has extensive experience providing strategic counsel to banks on compliance and regulatory issues, general banking corporate matters, government lending, secured lending, distressed loans and assets, failed bank receiverships, FinTech agreements and partnerships, and Banking-as-a- Service (BaaS). Stan's background includes experience as a counsel with the FDIC, sitting on the board of a financial institution, and representing banks in private practice for 15+ years. He has gained a unique perspective which banks rely on to navigate today's complex regulatory environment and in implementing new technology, products, and services.

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© 2020 Barack Ferrazzano Kirschbaum & Nagelberg LLP

CSBS 2020 Legal Seminar Docket Review & Regulatory Update

July 22, 2020

John M. Geiringer john.geiringer@bfkn.com

Stanley F. Orszula stan.orszula@bfkn.com

Chicago, Illinois (312) 984-3217

Chicago, Illinois (312) 629-7483

Sale of Colorado State Chartered Bank to a Colorado State Chartered Credit Union

Kara Hunter Deputy State Bank Commissioner

Request before the Colorado State Banking Board

Cache Bank & Trust, Greeley, Colorado requests authorization under § 11-102-104(5) C.R.S. to engage in banking activity in which state banks could engage were they operating as national banks .

Colorado Revised Statues

11-103-709. Sale of all assets of bank, branch, or department (1) Any state bank may sell to any other bank all, or substantially all, of the selling bank's assets and business, or all, or substantially all, of the assets and business of any department or branch of the selling bank.

11-101-401. Definitions (5) "Bank" or "banking institution" means a state bank or bank with trust powers chartered by this state or another state, a national bank, or a national bank with trust powers, but does not include a credit card national bank; except that, for the purpose of part 2 of article 104 of this title, "bank" means any bank organized or chartered under articles 101 to 107 of this title, any bank organized or chartered as a bank under the laws of any other jurisdiction, or any bank organized or chartered under chapter 2 of title 12 of the United States Code. 11-102-104. Powers and duties of banking board (5) The banking board has the power to authorize such banks to engage in any banking activity in which state banks could engage were they operating as national banks at the time such authority is granted, so long as such activity is not prohibited elsewhere in this code and to the extent permissible under rules of the banking board promulgated pursuant to subsection (1) of this section consistent with the policies set forth in section 11-101-102, or under any other provision of this code.

11-103-801. Voluntary liquidation and dissolution (1) With the approval of the banking board, a state bank may liquidate and dissolve. The banking board shall grant such approval if it appears that the proposal to liquidate and dissolve has been approved by a vote of two-thirds of the outstanding voting stock at a meeting called for that purpose and that the capital of the state bank is adequate and such state bank has sufficient liquid assets to pay off depositors and creditors immediately.

The proposed sale posed several issues. First, the relevant Colorado Banking Code statutory provision for the sale of a bank, § 11-103-709, C.R.S., specifies that a state bank may sell its assets to “any other bank. ” The definition of “bank” in the statute does not encompass credit unions, which are defined in another article of Title 11. Second, the parties propose liquidating the bank under the provisions of § 11-103-801, C.R.S., with the credit union simultaneously acquiring all of the bank’s assets. Because § 11-103-801, C.R.S. requires that deposits and the contents of the bank safety deposit boxes must be returned to depositors during a liquidation, and all creditors must be paid off, the credit union cannot simply take control of these assets. Bank’s counsel contended that a Colorado credit union’s acquisition of a Colorado bank is allowed by § 11-102-104(5), C.R.S., which gives the Banking Board the discretion to authorize a state bank to engage in any banking activity that a national bank may engage in, so long as the banking activity is not prohibited elsewhere in the Banking Code.

Section 11-102-104(5) C.R.S. grants the Banking Board the discretion to allow a state bank to engage in otherwise unauthorized “banking activity,” but only as state law permits. The Banking Code contains a “wild card” statute that allows the Banking Board to grant permission to a state bank to “to engage in any banking activity in which state banks could engage were they operating as national banks.” § 11-102-104(5) C.R.S. Colorado’s wild card statute, like that of most states, requires approval before a bank can engage in activity that would be permitted to a national bank. The Banking Board may approve such activity “ so long as such activity is not prohibited elsewhere in this code .” While some states’ wild card statutes allow for the regulatory approval of a banking activity that would contradict state law, § 11-102- 104(5) C.R.S. does not. Even though the Banking Board may authorize a state bank to take an action that a national bank could, the Board is limited by the rest of the Banking Code.

The Office of the Comptroller of the Currency (“OCC”) has approved credit union purchases of bank assets that result in the surrender of the bank’s charter and the transfer of the bank’s deposits to the credit union. Bank’s counsel took the position that because the OCC has approved such mergers under the federal rules, the Banking Board has the power to approve a Colorado credit union’s acquisition of a Colorado bank using its wild card power granted in § 11-102-104(5), C.R.S. But § 11-102-104(5), C.R.S. only grants the Banking Board discretion to allow a state bank to conduct banking activity a national bank would if that activity is not prohibited elsewhere in the Banking Code. Bank’s counsel contended that the Banking Board has properly exercised in the past its mandate to seek such regulatory parity, evidenced by the fact that the Banking Board has rightfully approved the purchase of thrift institution assets by banks because the Banking Board construed C.R.S. § 11-103-709(2) liberally as required under C.R.S. § 2-4-212.

However, these Banking Board approvals were approved under § 11-105-403 C.R.S. Sale of assets - A bank chartered in this or another state may sell any asset in the ordinary course of business or, with the approval of the banking board, in any other circumstance. The sale of all, or substantially all, of the assets of a bank or of a department thereof is governed by § 11-103-709. Bank’s counsel also focused on statutory construction of the Code. Based on Colorado statutory construction, the word "may" as contained in § 11-103-709 C.R.S. must be construed to mean permissible. "The legislature's use of the term 'may' is generally indicative of a grant of discretion or choice among alternatives. In contrast, 'shall' is generally mandatory. And where both mandatory and directory verbs are used in the same statute . . . it is a fair inference that the legislature realized the difference in meaning, and intended that the verbs should carry with them their ordinary meanings. This inference strengthens where 'shall' and 'may' are used in close juxtaposition. Of course, we presume that the legislature does not use language idly." People v. Garcia, 382 P.3d 1258, 1261 (Colo. App. 2016) (internal citations omitted). This subsection uses the word "may" when referring to what a bank can do. It does not use restrictive words such as "shall," "must," or "only." However, the word "shall" does appear in subsections (3) and (6) of C.R.S. § 11-103-709.

The proposed purchase of the bank’s assets by a credit union violates both § 11-103-709 and § 11-103- 801, C.R.S. as structured in the proposed Purchase and Assumption Agreement (“Agreement”) and the Plan of Complete Liquidation and Dissolution (“Liquidation”) of the bank because the credit union is acquiring the bank’s deposits under both the Agreement and the Liquidation. That acquisition violates § 11-103-709, C.R.S. which does not allow a credit union to purchase bank deposits, and § 11-103-801, C.R.S. which requires the bank to return deposits to deposit holders.

Banking Board Decision At its January 16, 2020 meeting, Banking Board denied the request of Cache Bank & Trust, Greeley, Colorado for authorization under § 11-102-104(5) C.R.S. to engage in banking activity in which state banks could engage were they operating as national banks at the time such authority is granted, so long as such activity is not prohibited elsewhere in this code and to the extent permissible under rules of the banking board promulgated. The Banking Board found that the proposed transaction of Cache Bank & Trust’s, Greeley, Colorado sale to Elevations Credit Union, Boulder, Colorado is prohibited under § 11-103-709(1) C.R.S. Because other provisions of the Banking Code do not allow the sale of Cache Bank & Trust, Greeley, Colorado to Elevations Credit Union, Boulder, Colorado, therefore, the wild card statute, § 11-102-104(5) C.R.S., does not authorize the Banking Board to approve the transaction as presented.

Questions

Feel free to contact me with any questions or comments. Kara Hunter Deputy State Bank Commissioner kara.hunter@state.co.us (303) 894-7586

GEORGIA STATUTORY PROVISIONS DIRECTLY IMPACTING THE COMBINATION OF A BANK INTO A CREDIT UNION § 7-1-114. Voluntary dissolution after commencement of business (a) A financial institution which has commenced business may elect to dissolve voluntarily upon: (1) Adoption by the vote required of its shareholders under subsection (b) of this Code section of: (A) A plan of dissolution involving both a provision for assumption of its liabilities by another financial institution and a provision for continuance of its business if such assumption of its liabilities is not effected; or (B) Any other plan of dissolution providing for full payment of its liabilities; and (2) Approval by the department of the plan of dissolution after application for approval thereof in a manner prescribed by the department. … (c) Upon receipt of an application for approval of a plan of dissolution, the department shall conduct such investigation as it may deem necessary to determine whether: (1) The plan satisfies the requirements of this chapter; (2) The plan adequately protects the interests of depositors, other creditors, and shareholders; and (3) If the plan involves an assumption of liabilities by another financial institution, such assumption would be consistent with adequate and sound banking and in the public interest on the basis of factors substantially similar to those set forth in Code Section 7-1-534. (d) Within 90 days after receipt of the application, the department shall approve or disapprove the application on the basis of its investigation and shall immediately give to the financial institution written notice of its decision and, in the event of disapproval, a general statement of the reasons for its decision. The decision of the department shall be conclusive, except as it may be subject to judicial review under Code Section 7-1-90. ____________________________________________________________________________ § 7-1-530. Authority to merge or consolidate; merger, consolidation, or share exchange across state lines; required provisions of the merger plan (b) A corporation other than a bank or trust company may be merged into or consolidated with, or may enter into a share exchange with, a bank or trust company, provided that: (1) The resulting institution of the merger or consolidation is a bank or trust company; (2) The resulting institution of the merger or consolidation, or the acquired bank or trust company in a share exchange, holds only assets and liabilities and is engaged only in activities which may be held or engaged in by a bank or trust company; and (3) The merger, share exchange, or consolidation is not otherwise unlawful. _____________________________________________________________________________

§ 7-1-534. Approval or disapproval by department (a) Upon receipt of the articles of consolidation, share exchange, or merger and the filings required by Code Section 7-1-533, the department shall conduct such investigation as it may deem necessary to ascertain whether: … (4) The merger, share exchange, or consolidation would be consistent with adequate and sound

banking or fiduciary practice and in the public interest on the basis of: (A) The financial history and condition of the parties to the plan; (B) Their prospects; (C) The character of their management; and

(D) The convenience and needs of the area primarily to be served by the resulting institution, or by the acquiring corporation and the acquired bank or trust company in a share exchange. ______________________________________________________________________________ § 7-1-651. Membership; shares (d) Customers of a bank that have been acquired by a credit union as a result of a merger or purchase and where the bank will cease to exist, due to a voluntary or involuntary dissolution, shall become members of the credit union upon the effective date of the underlying transaction; provided, however, that nothing herein shall be deemed as permitting a public body to be a member of a credit union. As used in this subsection, the term "public body" shall have the same meaning as provided in Code Section 45-8-1.

Information Sharing: Legal Elements and Challenges

CSBS Legal Seminar July 23, 2020

Presentation Outline

Networked Supervision

State Requirements - Freedom of Information

Information Sharing

Intersection of the Safe Act, Join Exams and State Disclosure Laws

State Examination System (SES)

 SES is an important component of CSBS Vision 2020  Goal: supports networked supervision

• Allows agencies to share information in an easy, secure, and controlled manner • Standardizes information requested from financial institutions subject to state examinations

To Learn More about SES:  https://www.csbs.org/aboutSES  https://www.csbs.org/examiner-101  Podcast: SES Consumer Complaints Function

SES by the Numbers

As of 7/22/20:

 134 Exams  15 state agencies using SES

 200+ Agency Users  5 multistate exams

SES Activity

Exam Milestones

Completed 9%

Scheduled/Planned 28%

In Progress  63%

Scheduled/Planned In Progress

Completed

*July activity reflects the first two weeks of the month

SES Activity

Exams by Business Type 

3%

14%

1%

Multistate Exams: • 4 Mortgage • 1 Money Service

7%

75%

Consumer Finance Combined (2 industry types)

Debt

Money Service Mortgage

Information Sharing in SES For agency SES users: Action:

An agency rep in my  agency

An agency rep from another  agency

An agency rep participating on an exam of my agency

View basic information of an exam by my agency Basic information: company name, start date, EIC name, exam milestone, scope View the details of an exam by my agency Details includes all content and data on the exam, with document limitations listed  below Take an action on an exam in my agency The types of actions a user can take depend on his/her role on the exam. For  example, EICs have more authority to take some actions.

Yes

Yes

Yes

Yes

Yes

No, requires permission from the  owning agency No, requires participation from  the owning agency

Yes

Yes, limited to  certain users

Yes

No, must be a  participant

No, must be a participant

View documents associated to an exam by my agency Note: excludes the ROE

View the ROE

Yes

Yes

No, requires permission from the  owning agency

For company SES users: Company users can only view information about the exams or investigations of their company. They cannot see information about exams or investigations of any other company and cannot view the company records of other companies.

Thank You!

Alejandra Krasnow akrasnow@csbs.org Questions about SES:

May 4 th , 2020

Sarah Pratt Public Access Counselor Office of the Attorney General 500 S. 2nd Street Springfield, Illinois 62701

Re: FOIA – Request for Review by Public Access Counselor by Ann H. Rubin, Esq.

Dear Ms. Pratt, The Conference of State Bank Supervisors (“CSBS”) 1 has prepared this letter to provide its opinion, As administrator of the Nationwide Mortgage Licensing System and Registry (“NMLS”), regarding whether the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, Pub. L. No. 110-289, 122 Stat. 2810 (the “SAFE Act”) prevents the disclosure of information requested on February 11 th , 2020 by Ann H. Rubin on behalf of John Dilorio pursuant to the Illinois Freedom of Information Act, 5 ILCS 140 (“FOIA”). For the reasons set out herein, it is CSBS’s opinion that the SAFE Act prevents the disclosure of the requested information in this instance and, to the extent that the Illinois FOIA does not exempt or otherwise requires disclosure of the requested information, the Illinois FOIA is preempted by the SAFE Act. On February 11 th , 2020, Ms. Rubin, on behalf of John Dilorio, submitted a FOIA request to the Illinois Department of Financial and Professional Regulation (the “Department”), pursuant to the Illinois FOIA, requesting: 1. All correspondence to, from or between John Prendergast or Alex Accala (Conference of State Banking Supervisors) and/or Mark Clayton, containing or referencing any of the following terms: 1A, 1st Alliance, 1st Alliance Lending, LCC, John Diiorio, Diiorio, NMLS ID # 2819, #2819, 2819 On February 27 th , 2020, Lisa Schlessinger, Assistant General Counsel for the Department denied access to the records requested, in part, on the grounds that the documents requested constitute confidential supervisory information and are exempt from disclosure pursuant to Section (7)(1)(a) of FOIA 2 , Section 1 CSBS is the nationwide organization of state banking and financial regulators from all 50 states, American Samoa, the District of Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands. CSBS supports the state banking agencies by serving as a forum for policy and supervisory process development, by facilitating regulatory coordination on a state-to-state and state-to-federal basis, and by facilitating state implementation of policy through training, educational programs, and exam resource development. 2 7(1)(a) of the Illinois FOIA states: Sec. 7. Exemptions. (1) When a request is made to inspect or copy a public record that contains information that is exempt from disclosure under this Section, but also contains information that is not exempt from disclosure, the public body may elect to redact the information that is exempt. The public body shall make the remaining information available for inspection and copying. Subject to this requirement, the following shall be exempt from inspection and copying: (a) Information specifically prohibited from disclosure by federal or State law or rules and regulations implementing federal or State law.

1-4(ii) 3 and Section 4-8.1A(b) of the Residential Mortgage License Act of 1987 4 [5 ILCS 140/7(1)(a); 205 ILCS 635/1-4(ii), 4-8.1A(b)].” On April 3 rd , 2020, Ms. Rubin filed a request for review of the Department’s determination with the Public Access Counselor in the Illinois Attorney General’s Office. In the letter accompanying the request for review, Ms. Rubin asserted that the Department failed to provide any legal or factual basis to support its allegation that any of the exemptions cited above are, in fact, applicable to these records. Without addressing the adequacy of the Department’s response to the FOIA request, as explained below, it is the opinion of CSBS that, in light of the confidentiality provisions of the SAFE Act, the Department acted properly in relying on Section (7)(1)(a) of FOIA, Section 1-4(ii) and Section 4-8.1A(b) of the Residential Mortgage License Act of 1987 [5 ILCS 140/7(1)(a); 205 ILCS 635/1-4(ii), 4-8.1A(b)] to deny the FOIA request. In 2008, Congress enacted the SAFE Act to, as stated in section 1502 [12 U.S.C. 5101], encourage “. . . the States, through the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators, . . . to establish a Nationwide Mortgage Licensing System and Registry for the residential mortgage industry.” The purpose of establishing the NMLS was “. . . to increase uniformity, reduce regulatory burden, enhance consumer protection, and reduce fraud . . .”. Section 1502 lists several objectives that NMLS was intended to accomplish, including “(3) Aggregat[ing] and improv[ing] the flow of information to and between regulators.” To accomplish this information sharing objective, in section 1512 [12 U.S.C. 5111], the SAFE Act permitted federal and state agencies to share information about mortgage licensing without the loss of privilege or confidentiality and also preempted state laws that would provide a weaker privilege or less confidentiality. Section 1512(a) provides for the continued application of any requirement under Federal or State law regarding the confidentiality of any information provided to the NMLS and any privilege arising under Federal or State law with respect to such information after such information has been disclosed to the NMLS or shared with any State or Federal regulatory officials with mortgage or financial services industry oversight authority. 5 3 Section 1-4(ii) of the Residential Mortgage License Act of 1987 states: (ii) “Confidential supervisory information” means any report of examination, visitation, or investigation prepared by the Commissioner under this act, any report of examination visitation, or investigation prepared by the state regulatory authority of another state that examines a licensee, any document or record prepared or obtained in connection with or relating to any examination, visitation, or investigation, and any record prepared or obtained by the Commissioner to the extent that the record summarizes or contains information derived from any report, document, or record described in this subsection. “Confidential supervisory information” does not include any information or record routinely prepared by a licensee and maintained in the ordinary course of business or any information or record that is required to be made publicly available pursuant to State or federal law or rule. 4 Section 4-8.1A(b) of the Residential Mortgage License Act of 1987 states in pertinent part: (b) In order to promote more effective regulation and reduce regulatory burden through supervisory information sharing, the Director is authorized to enter agreements or sharing arrangements with other governmental agencies, the Conference of State Bank Supervisors, the American Association of Residential Mortgage Regulators or other associations representing governmental agencies as established by rule, regulation or order of the Director. The sharing of confidential supervisory information or any information or material described in subsection (a) of this Section pursuant to an agreement or sharing arrangement shall not result in the loss of privilege or the loss of confidentiality protections provided by federal law or state law. 5 Section 1512(a) of the SAFE Act [12 USC 5111] states: