Industry & Regulation

Jan. 17, 2025: Industry & Regulation

CFPB Issues a Roadmap for States Days Before Trump Takes Office 

Jason Cover, Mark Furletti, Stefanie Jackman, James Kim, Caleb Rosenberg & Chris Willis; Consumer Financial Services Law Monitor

As the Consumer Financial Protection Bureau (CFPB or Bureau) anticipates a shift in its leadership with the incoming administration of President Trump, the Bureau has released a report titled “Strengthening State-Level Consumer Protections.”

This report appears to be a strategic move by the CFPB to influence state-level consumer protection laws before the anticipated shift in federal regulatory policy, and the Bureau’s recommendations appear to be items that would need to be the subject of legislation, if they are to occur. As detailed below, the changes advocated by the CFPB would strengthen the position of both state regulators and private plaintiffs in actions against industry participants.

The report provides a detailed historical context, highlighting the long-standing partnership between federal and state authorities in consumer protection. The report also highlights instances where the CFPB actively supported state-level consumer protection through joint investigations, information sharing, and removing obstacles to state enforcement. For instance, the CFPB points to its creation of a Nonbank Registry to help track repeat offenders and identify trends in the consumer financial marketplace, fostering deeper partnerships with state and local agencies.

The CFPB’s report and compendium can be seen as a last-minute effort to preserve its legacy and influence state-level consumer protection laws before the anticipated shift under President Trump’s incoming administration. The recommendations outlined in the report aim to empower states to take a more aggressive stance on consumer protection, potentially leading to increased regulatory burdens on businesses, as well as continuing the trend of an ever-increasingly complex state legal and regulatory landscape. Read more 

Supreme Court to Determine What Constitutes ‘Truth’ in Banking

Claire Williams, American Banker

The U.S. Supreme Court heard oral arguments on Tuesday that could redefine the boundaries of criminal liability for false statements in dealings with banks or financial regulators.

Former Chicago alderman Patrick Daley Thompson, a member of one of Chicago’s most prominent political dynasties, served four months in federal prison for making false statements to the Federal Deposit Insurance Corp. about bank loans.

His counsel argued that, under federal law, Thompson should not have been convicted for at least one of the statements he made to the FDIC because the statement was misleading — not literally false, as federal law would have demanded.

Prosecutors argued successfully in 2020 that Thompson took out three loans from Washington Federal Bank for Savings, a local bank in Chicago’s Bridgeport neighborhood, and that when Washington Federal Bank for Savings failed, Thompson told the FDIC that he had borrowed $110,000, the amount of the first loan, but omitted the second two loans for which he never filled out paperwork.

Chris Gair, who represented Thompson in the Supreme Court on Tuesday, argued that this statement was technically true, but misleading. He said that the statute prohibiting false statements to the FDIC does not specify that it bars both false and misleading statements, as it does elsewhere in the law. Read more 

State Regulators Issue $80 Million Penalty to Block, Inc., Cash App for BSA/AML Violations

Conference of State Bank Supervisors

In a coordinated enforcement action by 48 state financial regulators, Block, Inc. will pay an $80 million fine and undertake corrective action for violations of the Bank Secrecy Act (BSA) and anti-money laundering (AML) laws that safeguard the financial system from illicit use.

More than 50 million consumers use Cash App, Block’s mobile payment service, to spend, send, store, and invest money.

In the multistate settlement signed this week, Block agreed to pay the assessed penalty to the state agencies, hire an independent consultant to review the comprehensiveness and effectiveness of its BSA/AML program, and submit a report to the states within nine months. Block then will have 12 months to correct any deficiencies found in the review after the report is filed.

State regulators in Arkansas, California, Massachusetts, Florida, Maine, Texas, and Washington State led the multistate enforcement effort. Block cooperated with the states in the settlement.

Under BSA/AML rules, financial services firms are required to perform due diligence on customers, including verifying customer identities, reporting suspicious activity, and applying appropriate controls for high-risk accounts. State regulators found Block was not in compliance with certain requirements, creating the potential that its services could be used to support money laundering, terrorism financing, or other illegal activities. Read more

New Section 1071 Rules Put Banks Under the Compliance Microscope 

Matt Kunkel, Payments Journal

Federal regulators have targeted unfair lending practices for more than a decade, with the fallout from the 2008 financial crisis prompting the introduction of numerous new rules designed to protect consumers from predatory lenders.

Now, these regulators are shifting their focus from consumer-facing loans to small business loans—specifically, those issued to businesses with under $5 million in revenue.

Section 1071 of the Dodd-Frank Act requires lenders to document information about their lending practices to underrepresented groups, including women-owned businesses and minority-owned businesses. This data must be reported to the Consumer Financial Protection Bureau (CFPB) for analysis.

The final 1071 rule was revealed in 2023 and will be rolled out on a tiered basis. While enforcement has not begun yet, that date is approaching: for large banks, the first filing deadline with the CFPB will be on June 1, 2026, meaning they must begin collecting data and demonstrating compliance with the rule’s provisions by July 18, 2025. Small and mid-sized banks and financial institutions have a bit more time. They need to start collecting data by January 16, 2026, with a filing deadline of June 1, 2027.

While 2027 may seem far off, implementing the data collection and compliance practices required by Section 1071 can be time-consuming, especially if starting from scratch. It’s critical for financial institutions to have an implementation plan in place well before the rule officially goes into effect. Read more 

Jan. 10, 2025: Industry & Regulation

18 Credit Union Associations Unite in Defense Against CFPB’s Harmful Overdraft Rule, Supporting Financial Well-Being for All Members

Tennessee Credit Union League

Late Tuesday, 18 credit union leagues and associations filed an amicus brief in support of America’s Credit Unions’ recent federal lawsuit challenging the Consumer Financial Protection Bureau’s (CFPB) final rule that sets a fee cap on overdraft protection programs.

Collectively, leagues and associations that filed the amicus brief represent 3,237 credit unions and 105 million credit union members from 29 states.

“Tennessee credit unions should be the ones to decide how to serve their members and what programs to offer, not a federal government agency,” said Fred Robinson, president and CEO of the Tennessee Credit Union League. “Tennessee credit union members are served well by their credit unions and appreciate programs, like overdraft protection, that they are offered.”

The amicus brief highlights the significance of credit unions’ unique member-owner relationship that is fundamental to their mission of serving their communities. The CFPB’s final rule focuses on calculating costs and assessing fees, failing to account for credit unions’ unique capital and operational realities. The final rule was developed with data from five financial institutions that does not represent the diversity of the financial services industry. Read more

The 18 state credit union leagues/associations represented by the amicus brief include:

California Credit Union League; Carolinas Credit Union League; Cooperative Credit Union Association; Cornerstone League; Illinois Credit Union League; Kentucky’s Credit Unions; Luminate Louisiana Credit Unions; Michigan Credit Union League; Minnesota Credit Union Network; Mississippi Credit Union Association; Nebraska Credit Union League; Nevada Credit Union League; New York Credit Union Association; Ohio Credit Union League; Tennessee Credit Union League; The League of Credit Unions & Affiliates; Utah’s Credit Unions; and The Wisconsin Credit Union League

The Bank Regulatory Items That Are Open for Public Comment

American Banker Editorial Staff

Public comment openings are an essential part of any well-rounded legislative process, but it can be hard to keep track of all the different agencies and governance alerts that are published across the banking industry.

Using data provided by American Banker’s regulatory data partner, RegAlytics, American Banker will provide up-to-date governance and regulatory notices from agencies including the Federal Deposit Insurance Corp., Federal Reserve, Consumer Financial Protection Bureau and more.

Each listing includes the name of the publishing entity, the category of notice, what matter is open for public comment, a summary providing further details on the topic and a link to the announcement on each agency’s website. Summaries are taken directly from the agencies. See the full description at the link under each listing. Read more

FinCEN Seeks SCOTUS Ruling on Corporate Transparency Act Injunction

Kiernan L. Ignacio, Kathleen M. Porter of Robinson & Cole LLP, National Law Review

As reported in our prior alerts, the case of Texas Top Cop Shop, Inc., et al. v. Garland, et al., has taken business owners on a roller coaster ride over the past month.

  • December 3, 2024: The U.S. District Court for the Eastern District of Texas ruled in favor of the plaintiffs and granted a nationwide injunction that halted enforcement of the Corporate Transparency Act (CTA) reporting rules for all reporting companies.
  • December 23, 2024: A motions panel of the Fifth Circuit Court of Appeals granted a motion of the Financial Crimes Enforcement Network (FinCEN) to lift that injunction and reinstate the CTA reporting rules with modified deadlines.
  • December 26, 2024: A separate panel of the Fifth Circuit Court of Appeals (the panel slated to hear the appeal on its merits in March 2025) reversed the December 23rd ruling and once again halted immediate enforcement of the CTA reporting rules for all reporting companies.
  • December 31, 2024: FinCEN sought relief from the Supreme Court of the United States (SCOTUS), seeking again to have the injunction lifted or, alternatively, have it narrowed to only apply to the plaintiffs in the Texas Top Cop Shop case. FinCEN also asked that SCOTUS consider taking the appeal away from the Fifth Circuit and decide the merits itself.

Even if SCOTUS does not decide the merits at this time, it may ultimately determine the constitutionality of the CTA. This is because, at present, there are three other pending federal cases challenging the constitutionality of the CTA. District courts in Oregon and Virginia have denied preliminary injunction motions raising constitutional claims similar to those raised in the Texas Top Shop case. Read more

Credit Unions Wary of Regulatory, Liquidity Pressures As 2025 Commences

Tyfone

What are the primary issues that credit union CEOs are keeping a close eye on as 2025 unfolds?

John Holt, CEO of $690 million-asset Nutmeg State Financial Credit Union in Rocky Hill, Connecticut, said heightened regulatory and compliance pressure is chief among them. Holt said increased focus on data security, along with greater scrutiny of fees and other sources of noninterest income, will place additional pressure on credit unions this year.

“The disproportionate regulatory burden imposed by the CFPB on credit unions, compared to larger financial institutions, may force these institutions to raise loan rates to cover the added costs of compliance,” Holt said.

Other potential impacts could include making credit less accessible for those who need it most and forcing smaller credit unions to look for merger partners.

Nutmeg State Financial and First Bristol Federal Credit Union in Hartford completed their merger in June. In fact, Holt said Nutmeg state is currently working on two other potential mergers. He also said that liquidity pressure for credit unions bears watching.

Economic trends – whether positive or negative – are likely to impact credit unions in 2025. In the event of a recession, consumers may struggle to make loan payments while unemployed, putting pressure on credit unions’ liquidity, Holt said. Read more

Dec. 20, 2024: Industry & Regulation

Bankers Associations, Financial Entities File Lawsuit Against CFPB To Block Overdraft Rule

Dave Kovaleski, Financial Regulation News

The Consumer Bankers Association (CBA) is among a group of entities taking legal action against the Consumer Financial Protection Bureau’s (CFPB) final rule on overdraft services.

The American Bankers Association (ABA), America’s Credit Unions, Mississippi Bankers Association, and banks directly affected by the rule are also part of the suit.

The rule in question amends Regulations E and Z to update regulatory exceptions for overdraft credit provided by very large financial institutions. The CFPB said the overdraft rule seeks to adhere to consumer protections required of similarly situated products, unless the overdraft fee is a small amount that only recovers estimated costs and losses. Further, the CFPB says the rule allows consumers to better comparison shop across credit products.

However, CBA and the other entities say that the CFPB exceeds its regulatory authority with this new rule. Further, they say the CFPB fails to appropriately consider how its actions will harm the consumers who most benefit from the access to the liquidity enabled by overdraft services.

“The CFPB’s rule on overdraft services harms Americans who need it most – including the 26 million Americans who don’t have access to credit and thus stand to lose the most if overdraft services are restricted,” CBA President and CEO Lindsey Johnson said. “Overdraft services are an essential lifeline for consumers when they experience unexpected expenses. Research shows that overdraft services provide much-needed liquidity during a short-term budget shortfall so consumers can put food on the table, keep the lights on, and make other important payments on time. Without overdraft services, consumers on the margins are more likely to turn toward worse, less-regulated non-banking services to fill the gap.” Read more

The Banking Industry Should Take the Lead on Modernizing Regulation 

Eugene Ludwig, American Banker

The incoming administration has already made several public statements suggesting a desire to reduce financial services regulation. And many in the industry have specific regulations or regimes they’d like to see eliminated.

The incoming administration’s influence over Congress, at least over the next two years, presents a unique opportunity for those who want to modernize bank regulation.

But what does this mean in practice? Having modernized regulation during my time in government, I suggest steps that, when taken responsibly, can benefit all stakeholders, including the regulatory agencies. Some regulations are redundant. Some outdated. Others miss the mark entirely.

By streamlining and refining current regulations, we can create a less-burdensome regulatory environment without compromising essential safeguards. A responsible approach to regulatory modernization can be durable. “Deregulation” can often lead to unintended consequences and invite the swing of the pendulum in years to come. Instead, a modern, simplified regulatory framework can be of lasting benefit to all stakeholders.

First, the industry itself should take the lead in this effort. By collaborating through its trade associations, the industry can define specific parameters for regulatory modernization, compiling a list of the rules it most wants to see streamlined or eliminated. For rules that cannot or should not be just eliminated, each trade association should establish or enhance its existing regulatory modernization group to suggest refinements. Ideally, each financial institution and trade association should designate a “regulatory modernization czar” to identify areas for improvement, draft specific proposals and present them to the relevant agencies, where appropriate. Read more

Corporate Transparency Act Update – Effect of Recent Court Action

Hill Ward Henderson, National Law Review

The Corporate Transparency Act (together with its implementing regulations, “CTA”) is a federal law that became effective at the beginning of this year. The CTA imposes new reporting duties on most companies and their owners.

On December 3, 2024, a United States District Court in Texas temporarily enjoined enforcement of the CTA and stayed the January 1, 2025 reporting deadline for companies formed prior to 2024. It determined that the preliminary injunction should apply nationwide.

The court concluded that plaintiffs had shown a substantial likelihood of success on the merits with respect to their claim that the CTA facially violates the federalism principle enshrined in the Tenth Amendment to the U.S. Constitution.

On December 5, 2024, the Department of Justice, on behalf of the Department of the Treasury, filed a notice of appeal. The Department of Justice is also seeking a stay of the preliminary injunction pending appeal. If the stay is granted, the CTA could once again become enforceable while the appeal is pending.

On December 9, 2024, FinCEN released a statement on its website acknowledging that in light of the preliminary injunction, reporting companies are not currently required to file beneficial ownership information (“BOI”) reports with FinCEN and are not subject to liability if they fail to do so while the injunction remains in force. However, a reporting company may choose to voluntarily submit beneficial ownership information reports during this time. Read more

FDIC Authorizes Potential Legal Action Against Former SVB Executives

Pymnts.com

The Federal Deposit Insurance Corporation (FDIC) board of directors reportedly votedunanimously to authorize potential legal action against six former officers and 11 former directors of Silicon Valley Bank (SVB).

This authorization was approved by both Democrats and Republicans on the board, Reuters reported Tuesday (Dec. 17). In past legal actions taken against executives at failed banks, the FDIC recovered $4.48 billion between 2008 and 2023, according to the report.

The failure of SVB cost the Deposit Insurance Fund an estimated $23 billion, FDIC Chairman Martin J. Gruenberg said in a statement released Tuesday in conjunction with the board meeting. The request for authority to sue SVB followed the FDIC’s investigation of the bank’s failure, Gruenberg said.

The FDIC found that the former directors and officers of the bank mismanaged its held-to-maturity securities portfolio by purchasing long-dated securities when interest rates were rising, allowed an over-concentration of these assets, mismanaged the bank’s available-for-sale securities portfolio by removing interest rate hedges, and permitted an “imprudent payment” of a dividend to the bank’s holding company while the bank was experiencing financial distress, according to the statement.

“As a result of the mismanagement of the held-to-maturity securities portfolio, the termination of interest-rate hedges on the available for sale securities portfolio, and the issuance of the bank-to-parent dividend, SVB suffered billions of dollars in losses for which the FDIC as Receiver has both the authority and the responsibility to recover,” Gruenberg said.

Gruenberg added that he supported the request for authority to sue because “it is vital that Bank leadership be held accountable for their failures.”

SVB was taken over and closed by a California state financial regulator in March 2023 after customer withdrawals and plummeting stock prices beset the bank amid investor concerns about its liquidity. The regulator then appointed the FDIC as the bank’s receiver. Read more

Dec. 13, 2024: Industry & Regulation

New Scorecard Demonstrates Federal Financial Regulators’ Progress in Addressing Climate Risk

A new scorecard shows how 10 federal financial regulators have implemented hundreds of actions in the last 18 months to address the systemic financial risks of climate change.

Credit Union Connection

However, U.S. regulators have much more work to do to address these risks as the frequency and severity of weather disasters continue to increase.

The 2024 Climate Risk Scorecard: Assessing U.S. Financial Regulator Action on Climate Financial Risk found most of the assessed regulators have made meaningful strides in producing research and data on climate risk and incorporating these risks into their oversight of regulated entities. However, urgent action is required to improve climate-related disclosures, increase transparency in climate-related risk management practices, including within regulatory frameworks, implement climate-related scenario analysis, and assess climate risks on financially vulnerable communities.

Among those assessed include the Federal Reserve Bank (the Fed), the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), the National Credit Union Administration (NCUA), the U.S. Securities and Exchange Commission (SEC), the Municipal Securities Rulemaking Board (MSRB), the Public Company Accounting Oversight Board (PCAOB), the Commodity Futures Trading Commission (CFTC), the Federal Housing Finance Agency (FHFA), and the U.S. Department of the Treasury.

Notable progress in this year’s scorecard includes:

  • The Federal Reserve System (Fed), the Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC) published the final interagency guidance Principles for Climate-Related Financial Risk Management for Large Financial Institutions.
  • The three banking regulators adopted a historic interagency update to the Community Reinvestment Act (CRA) regulations, incorporating climate resiliency and disaster preparedness provisions for the first time, and representing the most significant changes to the CRA in 20 years. Read more
The NGFS’s New Climate Damage Function: A Flawed Analysis with Massive Economic Consequences

Bank Policy Institute

The Network of Central Banks and Supervisors For Greening the Financial System (NGFS) is a supranational consortium of central banks and financial regulators; the United States is represented by the Federal Reserve, the OCC, the FDIC and the FHFA. The NGFS develops climate scenarios that are then used by its members to measure the resiliency of the banking system to climate risks. Thus, the Federal Reserve employed NGFS climate scenarios in its 2023 climate scenario exercise for large U.S. banks, and the ECB employed NGFS scenarios in its 2022 climate risk stress test of the Eurosystem balance sheet.

In early November this year, the NGFS updated the “damage function” component of its climate scenario, which projects the effect of rising temperatures and precipitation on global real income. The new damage function was based entirely on an academic paper published this year in the journal Nature.

The updated damage function predicts that global real income will be 19 percent lower by 2050 than it would have been with no climate change, regardless of whether current CO2 emission trends improve or worsen. The damage function projects 60 percent lower global real income by 2100 if current CO2 emission trends worsen. Going forward, these extreme economic assumptions in the scenarios would be used in climate stress tests of banks, practically ensuring that those tests will conclude that all global banks face material climate risks that would require higher capital levels.

This paper reviews the new damage function in the Nature paper and finds no basis for its projections. The statistical procedure used to justify the new damage model is arbitrary and could easily have produced a damage function that would have predicted much smaller losses of global real income. Those much smaller loss projections should not be taken seriously either. In our assessment of the damage function, we found very limited statistical evidence for any causation between the climate variables and material economic damage and no statistical evidence for the purported influence of the temperature variables that drive almost all the economic damage. Read more

Federal Lawmaker Aims to Stall FinCEN’s Ability to Enforce BOI Reporting Requirements

Kim Riley, Financial Regulation News

Though a federal court previously issued a preliminary injunction against the beneficial ownership information (BOI) reporting requirements issued in January, a newly proposed bill in Congress would prohibit enforcement of the rule until the Financial Crimes Enforcement Network (FinCEN) meets specific criteria.

FinCEN on Jan. 1 launched its BOI E-Filing website so that companies may report their information digitally to comply with the Corporate Transparency Act. However, while an online method works well for many companies across the United States, the system alienates the many rural businesses unable to access a reliable broadband connection, according to U.S. Sen. Jerry Moran (R-KS), who on Dec. 3 sponsored the currently unnamed S. 5414.

“Kansans have voiced their concerns regarding the new federal reporting requirements for businesses, particularly in rural areas,” said Sen. Moran on Thursday. “This legislation would help provide additional time, clarity and flexibility for businesses in Kansas to comply with federal standards without facing burdensome and unnecessary penalties.”

If enacted, S. 5414 would prohibit federal funds being used to enforce the BOI reporting requirement until the effective date for all BOI requirements is delayed by a minimum of one year, according to a bill summary provided by the lawmaker.

Additionally, FinCEN would have to first finalize all outstanding BOI rulemakings, and allow rural businesses to file their information via mail, the summary says. Read more

The New Administration’s Impact on Banking Begins to Take Form

Steve Cocheo, The Financial Brand

Republicans will be painting the nation’s capital red for at least the next two years. But, as one observer says, Democrats and Republicans don’t stay in their traditional boxes anymore, and while the new Trump administration will be pro-business, it might not always be pro-banking. Key areas to watch will include BaaS, chartering, enforcement, and crypto.

The volume of news, speculation and conjecture about the presidential transition rivals the flow of Niagara Falls. But as far as experts in financial services’ status in Washington are concerned, the biggest initial shift will be a major … pause.

Prudential banking regulators already put it on the record during a post-election hearing of the House Financial Services Committee hearing that they would not be pushing anything new through before the second Trump administration takes office. But experts expect the pause to last beyond that.

There’s a good deal of change that banks, credit unions and fintech companies expect to see in at least two years of a Republican White House and a Republican Congress that just isn’t going to happen very quickly, in spite of all the noise from Washington and Florida and the anticipation of the industry.

Further, expectations may not take a straight line from point A to point B. Lurking in the background is the incoming Trump administration’s populist streak. This may produce regulatory and legislative twists that rival some of the nominations made to major federal posts for unexpectedness — and even audacity.

There’s also a degree of intrigue worthy of an old-fashioned political novel. The announced nominee for Treasury Secretary, Scott Bessent, was quoted by Barron’s regarding the continuing role of Jerome Powell as Federal Reserve Board chairman. Bessent said that Powell could be left in to finish his term — he’s already established that he will put up a fight against removal — but that a “shadow chairman” pick, announced, would render Powell’s role increasingly moot. Read more

Dec. 6, 2024: Industry & Regulation

New Year, New AML and Compliance Approach for Financial Institutions

PYMNTS.com

It’s almost 2025, but many businesses are still facing the same old anti-money laundering (AML) and know your customer (KYC) concerns, among other compliance requirements.

With the news that Wise, the money transfer giant, has implemented a European regulator’s recommendations to bolster its AML programs, AML is emerging not merely as a regulatory obligation but as a strategic priority for the year ahead.

Particularly as financial services become increasingly faster and more accessible through technology, the risks of financial crimes are growing just as quickly, and regulators are demanding heightened vigilance.

Against this backdrop, AML which has traditionally been viewed as a cost center — a necessary burden to satisfy regulators — is becoming a cornerstone of competitive differentiation for financial institutions (FIs) in an era where trust is increasingly a marketable asset.

After all, Wise is far from alone. TD Bank reportedly is working to select compliance monitors to track its progress on risk and controls and report to regulators, as ordered by the U.S. government in October; while the U.S. Office of the Comptroller of the Currency (OCC) this past September signed a formal agreement with Wells Fargo to rectify deficiencies in its anti-money laundering (AML) and financial crimes risk management practices.

As a result of its past compliance failures, TD Bank is expected to pay a roughly $3 billion penalty and agree to limits on its growth in the U.S. And government agencies are reportedly also investigating Citigroup’s AML policies and its ties to a sanctioned Russian official.

With 2025 approaching, among the best ways for businesses to avoid penalties that erode both the bottom line and end-user trust is to embrace a proactive approach to AML/KYC. And next-generation technologies and artificial intelligence (AI) tools can help financial institutions detect and prevent AML anomalies better and faster than they ever could before. Read more

Trump Is In: Will Pro-Cannabis Reform Be In or Out?

Noelle Skodzinski, Cannabis Business Times

What will the new administration and a Republican-controlled Congress mean for cannabis policy? Could we see movement on SAFER Banking before the transition? National Cannabis Roundtable Policy Director David Mangone shares his insights.

President-elect Donald J. Trump’s recent campaign positions on adult-use cannabis legalization present a stark contrast from his first term in the Oval Office. And what a Trump administration and Republican-controlled Congress will mean for the still federally illegal U.S. cannabis industry is the question on the minds of many business owners, patients and advocates around the country, especially as the fate of cannabis rescheduling still hangs in the balance, and after the SAFER Banking Act finally saw some movement in the U.S. Senate.

During Trump’s first term, he appointed a staunch cannabis prohibitionist, Jeff Sessions, as U.S. attorney general­­. Sessions’ anti-cannabis remarks while serving as a U.S. senator became well-known throughout the fledgling cannabis industry. “We need grown-ups in charge in Washington who say that marijuana is not the kind of thing that ought to be legalized. … This drug is dangerous,” Sessions said during a 2016 Caucus on International Narcotics Control hearing, adding that “Good people do not smoke marijuana.”

And when Sessions became Trump’s attorney general, he rescinded the Cole Memo, written by former President Barack Obama’s Deputy Attorney General James M. Cole, directing all U.S. attorneys to essentially leave state-legal cannabis businesses alone, despite federal law.

Prior to his 2016 presidential campaign, Trump himself voiced support for medical cannabis but opposition to adult-use cannabis legalization. “At the Conservative Political Action Conference in March 2015, Trump said he was leery of legalizing marijuana for recreational use, but ‘medical marijuana is another thing,’” Reason reported. “He said he was ‘100 percent’ in favor of medical use.” Read more

Why Community Banks Are Struggling to Expand Loan Portfolios

Jim Dobbs, American Banker

Community banks barely grew loans in the third quarter — and the struggle for momentum could drag into 2025, despite interest rate cuts and post-election clarity on regulation.

Median sequential loan growth for banks under $10 billion of assets was 1.2% in the third quarter, down from 1.7% the previous quarter and 1.9% a year earlier, according to S&P Global Market Intelligence data. Total gross loans and leases for the group reached $2.45 trillion as of Sept. 30.

Of the 20 largest community banks, however, 13 posted declines in quarter-over-quarter loan balances, the S&P data show. While inching ahead, the overall pace of growth has slowed throughout 2024. It fell below 1% for the current quarter through mid-November, weekly data from the Federal Reserve showed. “Bank lending has been a chronic disappointment for the past several periods,” Piper Sandler analyst Scott Siefers said.

He noted that, with the Fed cutting rates twice this fall, lower borrowing costs could boost demand, especially if policymakers follow through with more reductions early in 2025. What’s more, the incoming Trump Administration promises lower corporate taxes and deregulation. With a “more business-friendly backdrop,” Siefers said, “we’re hopeful that customers will feel emboldened to re-engage and resume borrowing.”

All of that noted, analysts say headwinds linger and new challenges lurk. Many community bankers said during the recently culminated third-quarter earnings season they are seeing signs of increased commercial loan demand as business owners prepare for a New Year in which costs could decline or at least hold steady across taxes, regulation and debt. Read more

Agencies Issue Statement on Elder Financial Exploitation

Five federal financial regulatory agencies, the Financial Crimes Enforcement Network (FinCEN), and state financial regulators issued a statement today to provide supervised institutions with examples of risk management and other practices that may be effective in combatting elder financial exploitation.

Older adults who experience financial exploitation can lose their life savings and financial security and face other harm. A FinCEN financial trend analysis of Bank Secrecy Act reports over a one-year period ending in June 2023 found that about $27 billion in reported suspicious activity was linked to elder financial exploitation.

Banks, credit unions, and other supervised institutions play an important role in combatting elder financial exploitation and supporting their customers who experience these crimes. The statement provides examples of risk management and other practices that supervised institutions may use to help identify, prevent, and respond to elder financial exploitation, including but not limited to:

  • Developing effective governance and oversight, including policies and practices to protect account holders and the institution
  • Training employees on recognizing and responding to elder financial exploitation
  • Using transaction holds and disbursement delays, as appropriate, and consistent with applicable law
  • Establishing a trusted contact designation process for account holders
  • Filing suspicious activity reports to FinCEN in a timely manner
  • Reporting suspected elder financial exploitation to law enforcement, Adult Protective Services, and other appropriate entities
  • Providing financial records to appropriate authorities where consistent with applicable law
  • Engaging with elder fraud prevention and response networks
  • Increasing awareness through consumer outreach

Attachment: Interagency Statement on Elder Financial Exploitation