Bank Law Monitor

Bank Law Monitor

A Legal Blog for the Financial Services Industry

The Future of the CFPB Under the Trump Administration

Posted in CFPB, Trending News, UDAAP

Update (2/16/17):  The U.S. Court of Appeals for the District of Columbia granted the CFPB’s request to reconsider its earlier ruling with respect to the President’s ability to remove the Director of the CFPB. This ruling provides a glimmer of hope for the continuity of the CFPB’s leadership. Oral argument is set for May 24, 2017.

Ever since its inception as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Consumer Financial Protection Bureau (CFPB) has faced heavy criticism. Many believe the CFPB lacks accountability and engages in improper “regulation-through-enforcement” tactics. One of the CFPB’s biggest critics, House Financial Services Committee Chairman Jeb Hensarling (R-Texas), has stated:

“The CFPB undoubtedly remains the single most powerful and least accountable Federal agency in all of Washington. When it comes to the credit cards, auto loans, and mortgages of hardworking taxpayers the CFPB has unbridled, discretionary power not only to make those less available and more expensive, but to absolutely take them away.” Continue Reading

The Tension Between Financial Institutions and Recreational Marijuana Businesses

Posted in Banking, Marijuana

To date, eight states and the District of Columbia have legalized recreational marijuana. As you might expect, there are countless key players and businesses involved in the marijuana supply chain, including producers, processors, transporters, retailers, and in some jurisdictions, distributors. In Washington State alone, total sales since the state’s legalization of recreational marijuana have exceeded $1.5 billion.

Generally speaking, the financial services industry has expressed mixed feelings about offering financial services to marijuana businesses. For one, the federal Controlled Substances Act prohibits everyone, including financial institutions, from dealing with controlled substances (which includes marijuana) or the proceeds from them, which could include any cash collected from the retail sale of recreational marijuana. However, where states have legalized recreational marijuana, many marijuana businesses have excess cash on hand, with nowhere (or limited options) to deposit it. This inconsistency between federal and state law has resulted in a barrier to entry for many marijuana businesses trying to secure traditional banking services (such as a business account, business loan, line of credit, etc.). Continue Reading

Continued Uncertainty Regarding Proof of Water Availability Necessary to Obtain a Permit Follows Whatcom County v. Hirst

Posted in Trending News, Washington Legislation

Last October in Whatcom County v. Hirst, the Washington Supreme Court held that each county must ensure that there is an adequate water supply before it approves a project permit. The Hirst decision upset the existing process by which a county would assume an adequate water supply, including for projects served by “permit exempt wells,” so long as the Department of Ecology had not closed the area in which the project is located to all water uses. After Hirst a county must independently conclude that water is available before it issues a permit for single family or small development construction, which often rely on permit exempt wells as a water source, regardless what Ecology says about water availability. Continue Reading

Is High Noon Coming for Fintech Regulation? State Regulators Prepare to Do Battle Over the OCC’s Special Charter Proposal

Posted in Banking

In the wild west of fintech, state banking regulators have been called to act as the keepers of the peace and the primary enforcers of the law. That is, until the Office of the Comptroller of Currency (OCC) offered to become the new sheriff in town.

The OCC unveiled its plan in December to offer special purpose national bank charters to fintech companies. The OCC argues its intervention is necessary to promote innovation that would otherwise be stifled by the patchwork quilt of inconsistent state regulations. But to state regulators—them’s fightin’ words. Continue Reading