OCC

If it’s approved, the charter is expected to lower the fintech’s cost of funds and allow for more product offerings. It comes nearly three years after SoFi pulled the plug on an earlier effort to open an industrial bank.

The new regulation is intended as a workaround for banks affected by the 2015 decision that created legal uncertainty for loans sold across state lines.

The agencies issued a rule to better enable banks to participate in two of the Federal Reserve’s lending facilities and “support the flow of credit to households and businesses.”

The OCC and FDIC are holding off on easing debt limits in response to the coronavirus pandemic, leaving billions of dollars locked up at banking subsidiaries that could be used for lending amid the deepening economic crisis.

The agencies will give the industry another month to submit feedback on the so-called covered fund portion of the rule "in light of potential disruptions resulting from the coronavirus.”

Accommodations for borrowers affected by the coronavirus pandemic, such as payment delays and fee waivers, are "positive and proactive actions that can manage or mitigate adverse impacts," the regulators said.

Sen. Mark Warner led a group of Democratic senators in calling on bank, credit union and GSE regulators to give detailed instructions on helping consumer and commercial borrowers hurt by the COVID-19 outbreak.

The agencies recommend steps banks should take to proactively prevent disruption of operations, minimize contact between staff and customers, and plan for how affected employees reenter the workplace, among other things.

Most states have some kind of pricing limit on consumer loans. But proposals for a national usury law divide even Democrats, some of whom are concerned about restricting credit.

A proposed change could resurrect bond buckets, but loan industry observers also point to "covered fund" changes shielding loans from a potentially disruptive court decision.

Nonbanks hold a disproportionate percentage of the worst-rated loans, but banks hold a majority of the market, and risk management safeguards are largely untested, according to an interagency report on shared national credit.

With fintech firms appearing stuck in neutral in their efforts to seek bank charters from federal regulatory agencies, observers say state licensing options could be in vogue again in 2020.

Marketplace consumer loan ABS volume is expected to rise in 2020, aided by strong 2019 economic tailwinds benefiting originations as well as favorable federal regulatory proposals that could encourage more securitizations.

In October, U.S. District Judge Victor Marrero ruled against the OCC in a case brought by the New York State Department of Financial Services.

The agency’s semiannual report warned institutions to be mindful of operational risks from the innovation in core banking systems, and detailed supervisory steps to monitor the adoption of a new reference rate.

Alternative data "may improve the speed and accuracy of credit decisions and may help firms evaluate the creditworthiness of consumers," the agencies said.

The agency’s director previewed a policy for companies under enforcement action to have their orders terminated if they comply ahead of schedule.

The agency’s director previewed a policy for companies under enforcement action to have their orders terminated if they comply ahead of schedule.

The 2015 decision posed new legal challenges for institutions trying to sell loans to third parties, but the federal regulatory agency proposed steps Monday for banks and debt parties to evade state interest rate caps.

Many in the space are seeking the creation of a "flexible" supervisory regime that relies on existing authorities and a hands-off approach from state agencies, but such a plan faces an uphill battle.