Weekly Rewind...News from Your Regulators

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Military Lending Act Violations

MLA Violations – The CFPB ordered TMX Finance (TitleMax) to pay a civil monetary penalty of $10 million along with $5 million in restitution to harmed consumers for violations of the Military Lending Act (MLA). The Bureau found that TitleMax violated the MLA by extending thousands of title loans to covered borrowers; extending loans that exceeded the MLA’s 36% Military Annual Percentage Rate (MAPR) cap; failing to make disclosures required under the MLA; extending loans to covered borrowers with MLA-prohibited arbitration clauses; and extending loans to covered borrowers with onerous notice requirements.

The Bureau also found that TitleMax engaged in unfair acts or practices in violation of the Consumer Financial Protection Act of 2010 (CFPA) by charging borrowers for an insurance product that provided no coverage on about 15,000 loans. The Bureau further found that in doing so, TitleMax understated the finance charges and annual percentage rates of those loans, violating the Truth in Lending Act and CFPA.

From the OCC

Updated Change in Bank Control – The OCC issued a revised Change in Bank Control booklet of the Comptroller’s Licensing Manual. Along with minor modifications and corrections, the revision removes references to outdated guidance and provides current references. 


FDIC Enforcement Actions

Enforcement Actions – The FDIC released nine Stipulated Orders and Written Agreements in January. Included in the claims were manipulating overdrafts which caused the bank to file false or misleading Call Reports, FDPA violations, falsified timecards, misuse of funds, submitting false loan applicant information, and misappropriation of customer funds.  

Crypto-Asset Market Vulnerabilities – The FDIC, OCC, and Federal Reserve issued a joint statement highlighting liquidity risks to banking organizations associated with certain sources of funding from crypto-asset-related entities and some effective practices to manage those risks.

Recent events in the crypto-asset sector have underscored the potential heightened liquidity risks presented by certain sources of funding from crypto-asset-related entities. The joint statement highlights key liquidity risks and some effective practices to monitor and appropriately manage those risks. The statement reminds banking organizations to apply existing risk management principles; it does not create new risk management principles.

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