Photo of Jeffrey P. Taft

 

 

Legalization of certain cannabis-related activities by over 30 states has led to a surge in companies that grow and produce cannabis and related products. However, banks and other financial services companies have been hesitant to serve this growing population of potential customers due to conflicting statutes and enforcement policies under federal law. On Thursday, March 28, 2019, the Financial Services Committee in the U.S. House of Representatives took a step toward clearing some ambiguity, at least for federally insured financial institutions.

The Secure and Fair Enforcement Banking Act of 2019 (“SAFE Act”), which the Committee approved on a vote of 45-15, with 11 of the panel’s Republican members voting in favor, has been cleared for consideration by the full House. The SAFE Act would, if enacted, provide a safe harbor against retaliatory enforcement action by federal bank regulators directed at banks (including federal branches of non-U.S. banks), savings associations, and credit unions that provide services to cannabis businesses or service providers. In addition, the SAFE Act would prohibit federal regulators from discouraging depository institutions from offering financial services, including loans, to an account holder on the basis that the account holder is a cannabis-related business or service provider; an employee, owner, or operator of a cannabis-related business; or an owner or operator of real estate or equipment leased to a cannabis-related business. Furthermore, the SAFE Act would provide that officers, directors, and employees of depository institutions and the Federal Reserve Banks may not be held liable under federal law or regulations based solely on their provision of financial services to cannabis-related businesses or for investing any income derived from such businesses. The protections would apply only to cannabis-related businesses located in states, political subdivisions of states, or an Indian country where local law permits the cultivation, production, manufacture, sale, transportation, distribution, or purchase of cannabis. 
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New California legislation will impose disclosure requirements, similar to those under the federal Truth in Lending Act, on commercial-purpose loans of $500,000 or less, including arrangements such as factoring, merchant cash advances, and certain assignments of accounts and receivables. The disclosures will generally include the total cost of the financing, expressed both as a

Last week was busy for the financial technology industry (Fintechs) and non-bank regulators.

New York joined the Conference of State Bank Supervisors (CSBS) in filing a lawsuit against the Office of the Comptroller of the Currency (OCC), and announced plans to adopt a uniform licensing system for Fintechs. CSBS issued its support of the lawsuit,

Financial services providers, marketplace lenders and secondary market purchasers doing business in the state of New York can breathe at least a temporary sigh of relief this week.   Controversial changes proposed to the state’s Licensed Lender Law included in a pair of companion budget bills were dropped when these bills were amended on Monday.  Assembly Bill 3008 and Senate Bill 2008, as introduced in the legislature on January 23, 2017 would have expanded the scope of consumer and commercial loans, and types of business activities, subject to licensing by the New York Department of Financial Services (the “Department”) under the Licensed Lender Law. If enacted into law, these proposed amendments would have triggered new licensing obligations for companies doing business in the state, potentially reaching marketplace lenders, other Fintech companies and secondary market purchasers.

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Five Mayer Brown attorneys in the Financial Services Regulatory & Enforcement group presented at the American Bar Association Business Law Section Annual Meeting in Boston last week.

Ori Lev spoke on a panel discussing the CFPB’s enforcement track record.  The panel addressed a study by Professor Chris Peterson of the S.J. Quinney College of Law

Tomorrow, September 13, 2016, Mayer Brown partner Jeff Taft will be speaking at the inaugural Marketplace Lending Policy Summit in Washington, D.C.  Jeff will be on a panel covering “Hot Legal Topics in Marketplace Lending.”

David BeamKeisha Whitehall-Wolfe, and Eric Mitzenmacher also will be attending the conference.

 

The Board of Governors of the Federal Reserve System, the Consumer Financial Protection Bureau (“CFPB”), the Federal Deposit Insurance Corporation (“FDIC”), the National Credit Union Administration, and the Office of the Comptroller of the Currency (“OCC”) issued guidance on May 18, 2016 outlining the agencies’ supervisory expectations regarding customer account deposit reconciliation practices. The guidance does not impose any new requirements, but reminds institutions of the expectation that they implement policies and procedures to protect customers where there is a credit discrepancy (e.g., difference between the amount of the actual deposit and the amount credited to the customer’s account).
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