December 6, 2023

The Office of the Comptroller of the Currency (OCC) is issuing a bulletin to assist banks in effectively managing risks associated with “buy now, pay later” (BNPL) lending and in offering BNPL loans in a responsible manner. The bulletin provides background information on BNPL loans, discusses risks associated with BNPL lending, and provides guidance to banks offering or considering offering BNPL loans.

Federal Reserve Board (FRB) Governor Michelle Bowman delivered a speech at the Aspen Institute entitled, “Building a More Inclusive Financial System through Collaboration and Action.” Governor Bowman discussed why financial inclusion is important and Federal Reserve activities and developments.

Department of the Treasury (Treasury) Secretary Janet Yellen delivered a speech on new Treasury actions to counter illicit financing tied to fentanyl in Mexico City, Mexico. Secretary Yellen announced that the Treasury is designating 15 individuals and two entities in a network that has been involved in importing fentanyl into the United States. Secretary Yellen also mentioned the role that digital assets have in the illicit drug trade.

The Federal Deposit Insurance Corporation (FDIC) published their FDIC State Profiles, a quarterly summary of banking and economic conditions in each state. The profiles can be found here.

The Special Committee of the FDIC Board of Directors established to oversee an independent third-party review of the agency’s workplace culture issued a statement that the Special Committee has begun an expedited solicitation of law firms to conduct the independent review and is committed to  finalizing the selection of the third-party reviewer as soon as practicable and completing the onboarding process soon thereafter.

The Financial Industry Regulatory Authority (FINRA) published a notice discussing guidance and other resources available to assist members with their compliance efforts in connection with the Securities and Exchange Commission’s (SEC) Regulation Best Interest (Reg BI). In particular, FINRA highlights the SEC’s series of Staff Bulletins (Bulletins) reiterating standards of conduct for broker-dealers (BDs or members) and investment advisers (IAs).

The Conference of State Bank Supervisors’ (CSBS) Board of Directors announced the appointment of Brandon Milhorn, currently Deputy to FDIC Vice Chairman Travis Hill and previously Chief Operating Officer, Chief of Staff, and Deputy to FDIC Chairman Jelena McWilliams, as its next President and CEO, effective Dec. 4.

Sen. Jack Reed (D-RI) sent a letter to Federal Reserve Vice Chairman of Supervision Michael Barr, FDIC Chair Martin Gruenberg, and Acting Comptroller of the Currency Michael Hsu, urging the financial regulators to evaluate systemic risk associated with synthetic risk transfers. Read the letter here.

The House Financial Services Committee and Senate Banking Committee held hearings with Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra. Throughout the hearings, members of both committees discussed a myriad of issues ranging from the Bureau’s rulemakings to so-called “junk fees,” student debt, the CFPB’s funding structure, overdraft protection, and the CFPB’s authority over stablecoins. Read our summary of the House Financial Services Committee hearing here and the Senate Banking Committee hearing here.

Treasury is proposing establishing a new crypto-related category of “financial institution” under the Bank Secrecy Act that would subject exchanges, token trading platforms, wallet providers, DeFi and certain blockchain validators to rules designed to counter money laundering and terrorist financing.

Treasury is also requesting explicit authority under its sanctions regime to designate nodes and individual blockchain networks, and wants a tailored, secondary sanctions tool that would allow it to sever fintech and crypto operators from U.S. relationships without placing a full stop on their other activity. Treasury is further requesting that the Office of Foreign Assets Control (OFAC) receive jurisdiction over dollar-denominated stablecoins.

Two other legislative proposals included in the term sheet would extend Treasury’s authority under the BSA and the International Emergency Economic Powers Act to foreign entities with defined “U.S. touchpoints.”

Deputy Secretary of the Treasury Wally Adeyemo delivered remarks at the 2023 Blockchain Association’s Policy Summit and elaborated on Treasury’s proposals. In his remarks, he called on industry to build new tools that help prevent money laundering while continuing to provide legitimate protections to individuals and cutting off firms that are failing to take steps to prevent illicit finance.

Need to catch up on what happened last week? Check out our December 1 End of Week Wrap Up here