Regulatory & Legal Affairs


Legal and Regulatory Advocacy
Following new laws and regulations

New laws and regulations are constantly being proposed for the banking industry, both in Washington, D.C. and Sacramento. As well-intended as some of these proposals are, many of them contain language that conflicts with current law or conflicts with current regulatory requirements. Decision-makers need to better understand how their proposals translate into the real-world workings of California’s financial institutions, which is where our legal and regulatory advocacy unit is intrinsically valuable.

Our legal and regulatory advocacy unit works to identify potential legal and regulatory conflicts, make those conflicts known and secure a reasonable solution for the industry. CBA’s legal and regulatory advocacy unit works closely with bank regulators and elected officials alike to ensure that the banking industry’s perspective is known, understood and considered in the decision-making process.

In addition to the work done on the legislative and regulatory fronts, CBA’s legal and regulatory advocacy unit also gives a voice to the banking industry in important legal matters affecting the banking industry. Among the many legal services CBA provides on behalf of the industry is the filing of amicus, or “friend of the court,” briefs on legal proceedings critical to the industry. Through the filing of these briefs, CBA is able to provide the industry’s perspective without signing on as a participant in a given case or lawsuit. Our members understand that we are providing end-to-end advocacy services through our legal and regulatory advocacy unit, affecting both policy decisions and key court decisions that affect our members’ ability to do business.

Press release

CFPB finalizes policy statement regarding “Abusive” Practices under UDAAP

Last Friday, CFPB issued a policy statement clarifying what constitutes “abusive” conduct for purposes of supervision and enforcement under Unfair Deceptive or Abusive Acts or Practices as compared to conduct that is unfair or deceptive.  The policy is effective immediately.  In determining whether an act or practice is  “abusive” under UDAAP, the CFPB will consider whether the harm outweighs the benefits to consumers.  In addition, the CFPB will generally avoid alleging that an act or practice that meets the unfairness or deceptive standard would also trigger a violatio

Press release

Ask Your Lawmaker to Co-Sponsor Important Legislation to Delay the Implementation of CECL

The Financial Accounting Standard Board’s new Current Expected Credit Loss standard poses significant operational challenges for the banking industry. CECL, which goes into effect January 2020 for some banks and later for others, will change the economics of lending and the unintended consequences are likely to result in changes to credit availability, product mix and cost of credit, particularly for consumers and small businesses. CECL will change the way your bank accounts for credit/loan losses.

Press release

New Report Finds Credit Unions Operate with ‘Scant Regard’ for Statutory Mission

On the eve of the 85th anniversary of the Federal Credit Union Act’s enactment, new research released today found that credit unions are falling short of their mission to serve households of “small means.” In fact, according to the research by respected analyst Karen Shaw Petrou, credit union members are disproportionately from middle- and upper-income households, and credit unions’ lack of “mission compliance” deepens U.S. economic inequality.

Press release

Resource Available at the Federal Reserve Bank of San Francisco to Assist with Fintech

Do you need help navigating the regulatory and supervisory system in support of your business model or involvement with financial technologies? SF Fed Navigate fintech analysts can assist.

Their goal is simple: to help facilitate responsible innovations while protecting consumers and ensuring the safety and soundness of banks. SF Fed Navigate fintech analysts are available to help answer questions from fintech companies and banks to build an understanding of the financial regulatory environment so innovative ideas thrive.

Press release

Reminder: Comments on Volcker Rule Exception for Qualifying Community Banks Due April 9

The financial regulatory agencies have issued a proposed rule to implement a section of S.2155 that grants an exemption from the Volcker rule for community banks that meet certain qualifications; for instance, banks that have $10 billion or less in total consolidated assets as well as trading assets and liabilities of 5 percent or less of total consolidated assets.

Press release

Federal Reserve Seeks Comments on Faster Payment System

The Federal Reserve is considering the creation of the first new payment system in more than 40 years and it is important for your bank to be heard. The Federal Reserve issued a Request for Comment on whether it should consider creating a new, faster settlement infrastructure to support real time payments in the United States. The Fed seeks comment on the benefits of it creating a new Real Time Gross Settlement System (RTGS) that would operate 24/7/365 enabling payments to clear and settle on a real time basis at any time.

Press release

ACTION NEEDED! Community Reinvestment Act Reform and Modernization:  OCC Request for Public Comment

On August 28, 2018, the Office of the Comptroller of the Currency (OCC) issued an Advance Notice of Proposed Rulemaking (ANPR) concerning modernization of the Community Reinvestment Act (CRA). CRA modernization can become a reality, but achieving it requires the involvement of as many financial institutions as possible. The first step is to comment on the ANPR. The ANPR can be reviewed here

General information

FinCEN Extends Temporary Exception to Application of Customer Due Diligence/Beneficial Ownership Rule

Last Spring, The Federal Financial Institutions Examination Council (FFIEC) issued examination procedures for the Financial Crimes Enforcement Network (FinCEN) rule that requires banks, as part of their anti-money laundering program, to develop and implement appropriate risk-based policies, procedures and processes  for (1) conducting ongoing customer due diligence and (2) that are reasonably designed to identify and verify beneficial owner(s) of  legal entity customers. In response to banker concerns, FinCEN issued an administrative ruling to provide a 90-day limited excepti

General information

Law Firms Respond to CBA’s Request to Retract ADA Website Access Demand Letters

Last month the CBA, via representation from the law firm of Bryan Cave LLP, sent a letter to two law firms in Pennsylvania that had sent a number of legally questionable demand letters to CBA member banks, alleging violations of the Americans With Disabilities Act with respect to website access. In the letter we raised a number of serious concerns we had about their firms’ allegations and tactics, and called upon the firms to retract the threats of legal action made against our member banks, and to cease and desist from making any future threats or demands.

General information

California Supreme Court Allows Waiver of Class Action in Employment Arbitration Agreement

The California Supreme Court invalidated one of its own opinions, the 2007 Gentry v. Superior Court (Circuit City) decision, which held that class action waivers in employment agreements are unconscionable and thus unenforceable. The continued viability of Gentry has been in doubt since the U. S. Supreme Court’s 2011 decision in AT&T Mobility LLC  v. Concepcion, which held that arbitrating on a class-wide basis frustrates the fundamental purposes of the Federal Arbitration Act. In the current case, Iskanian v.

General information

Comment Letters Needed for Proposed New Accounting Standards

The Financial Accounting Standards Board and the International Accounting Standards Board are jointly proposing new standards for accounting of ALLL and Other Than Temporary Impairment of debt securities (OTTI) called the Current Expected Credit Loss model (“CECL”). The proposal is intended to address the overstatement of assets caused by delayed recognition of credit losses under existing standards, which recognize a credit loss that is probable or has already incurred.

General information

Court Signals it Will Not Halt Richmond’s March Toward Eminent Domain

Last week the federal district court judge in San Francisco during oral argument indicated he is likely to dismiss the case against the City of Richmond, which has already approved a plan to use its eminent domain powers to take underwater mortgages to reduce loan principal and then resell the mortgages to other investors. While Judge Charles Breyer acknowledged that the plan raises serious legal issues, the law suit by certain trustees of mortgage backed securities was not “ripe” for consideration because the city council of Richmond has yet to adopt a resolution of necessity.

General information

CBA Requests Publication of Opinion that Counters Recent Trend Toward Lender Liability

The financial crisis has spawned a raft of litigation arising from loan defaults and modifications, and courts have responded by judicially imposing on creditors heighted duties of care to borrowers. A court of appeal decision came down that bucked the trend but, unfortunately, the opinion was not published. Last week CBA requested that the opinion, Aspiras v. Wells Fargo Bank, N.A., be published so that it may be used as precedent. The case arose from the bank’s foreclosure on a defaulted home mortgage loan as modification negotiations faltered.

General information

CBA Files Friend of the Court Brief in Richmond Eminent Domain Suit

In a rare departure from our practice of not getting involved in judicial matters at the trial court, CBA filed an amicus brief in the U.S. District  Court last week asking the judge to grant a request for an injunction against the City of Richmond, California. The city had taken the first steps to seize mortgages by the exercise of its eminent domain authority when it sent letters to loan servicers asking them “voluntarily” to sell selected loans in portfolios at large discounts from face value.

General information

Supreme Court Declines to Review Reporting Privilege Case

The California Supreme Court declined to review one of the few judicial cases that refused to enforce banks’ privilege for reporting suspicious activities to law enforcement. The court of appeal in Greene v. Bank of America refused to recognize the reporting privilege provided in 31 U.S.C. 5318(g) (Annunzio-Wylie Anti-Money Laundering Act) that protects banks from liability for filing suspicious activities reports and other reports of crime.

General information

Treasury Department Provides Helpful Notice About the Federal Garnishment Rule

In previous edition of the Monday Courier, we alerted banks about a potential conflict between the federal garnishment rule and criminal seizure orders. Banks’ need to comply with the rule could frustrate law enforcement’s efforts to seize assets held in banks because enforcement agencies expect banks to turn over assets immediately and without offset.

General information

California Supreme Court Threatens Enforceability of Contracts
January 22, 2013

In January this year, the California Supreme Court overturned a case that had been decided by the same court in 1935.The two cases, rendered 83 years apart, involved remarkably similar facts. A borrower, falling behind in payments, works out an arrangement with the creditor to modify the terms of repayment, which are memorialized in a subsequent written agreement.The borrower defaults again and the creditor enforces the revised agreement as written.The borrower claims that the creditor made promises different from what was memorialized in the agreement.The dispute, at issue in both