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The Examiner

“O say does that star-spangled banner yet wave.
O'er the land of the free and the home of the brave?"


On this day in 1814, Francis Scott Key wrote the lyrics that became our national anthem, the Star Spangled Banner, after witnessing the bombardment of Fort McHenry by British ships in Baltimore Harbor. Key was inspired by the large U.S. flag, known as the Star-Spangled Banner, flying triumphantly above the fort during the U.S. victory.


In the Media:


CSBS Renews Litigation Efforts Against OCC: A number of publications reported on CSBS’ announcement this week that it will pursue litigation challenging the OCC’s special purpose charter for fintechs. In brief, CSBS believes that the OCC lacks statutory authority (see story below). “We have the same view of the OCC’s legal authority as the day we filed our original complaint,” CSBS Deputy General Counsel Margaret Liu told American Banker. The article also reported that the OCC will continue to defend its position in court. The Wall Street Journal noted that the announcement comes at a time when uncertainty colors the OCC’s requirements and industry interest.  


Meanwhile, in New York: The New York Department of Financial Services (DFS) filed its own lawsuit against the OCC in a New York federal district court. Like CSBS, the department believes that the OCC fintech charter exceeds its statutory authority. DFS calls on the court to block the OCC from proceeding. According to Bloomberg, DFS Superintendent Maria Vullo warned: “The move puts New York’s financial consumers – and often the most vulnerable ones – at great risk of exploitation by federally-charted entities improperly insulated by New York law.” 


Treasury Weighs In: In a speech at a Washington, D.C. gathering, a senior Treasury official explained more about the department’s recent report on financial innovation. Craig Phillips, counselor to Secretary Steve Mnuchin, touched on a wide range of recommendations that he believes will improve the competitive position of the United States. “There is a huge competitive threat if we don’t get the investment right,” Politico Pro reported, “There is huge risk the U.S. will fall behind.” Among many recommendations, Treasury supports the OCC’s fintech charter, CSBS’ Vision 2020 initiative to harmonize state regulation of nonbanks, and regulatory “sandbox” efforts.  


House Committee Votes to Preempt State Data Breach Regulations: By party vote, the House Financial Services Committee approved a bill that would preempt state regulation when it comes to notifying consumers affected by data breaches at financial institutions. Ranking Member Maxine Waters (D-Cal.) offered an amendment to remove the preemption provision, but committee Republicans defeated it. Politico Pro reported Waters’ said: “I believe H.R. 6743 (115) would significantly reduce and not strengthen the privacy, confidentiality and security of consumers’ non-public, personal information.” In a separate article, Politico Pro reported opposition from CSBS, state insurance commissioners, and some in industry. CSBS called on Congress to set a floor for standards upon which states can add stronger provisions, if desired (see story below). 

CSBS to Pursue Litigation Against OCC

From an announcement earlier this week: State financial regulators will renew their litigation efforts against the Comptroller of the Currency (OCC). The issue: the OCC’s recent decision to create a special purpose charter for financial technology firms.

At its August 28 meeting, the CSBS Board of Directors approved moving forward with litigation against the OCC. The case will be filed at a time deemed appropriate.A federal court had ruled prior litigation as not yet ripe for consideration. With the OCC’s July 31 announcement creating a federal fintech charter, the CSBS Board decided to reaffirm its commitment to challenge the OCC's action. 


Here is CSBS’s statement on its original court filing. 

CSBS Opposes House Bills that Would Weaken State Banking System

In separate letters to Congress, CSBS stated its opposition to House bills now being considered that would preempt state regulations regarding data breach notifications and impose a new fee on state-chartered banks.

The bills at issue: H.R. 6743, the “Consumer Information Notification Requirement Act,” and H.R. 6741, the “Federal Reserve Reform Act of 2018.” Both bills are being considered by the House Financial Services Committee. 


Under H.R. 6741, state-chartered banks would be required to pay a new fee for supervisory examinations conducted by the Federal Reserve. This provision amounts to a “tax on state-chartered banks…that will hit the smallest community banks the hardest,” said John W. Ryan, CSBS president and CEO in his letter. He added that these banks would “would pay more for the same level of supervision.” 


Under H.R. 6743, expanded federal authority would prevent state regulators from enforcing state data breach notification laws. The bill would abandon the regulatory balance, struck decades ago via the Gramm-Leach-Bliley law, that according to Ryan, “establishes a floor for data breach and data security laws and expressly reserves the right of states to enact more stringent data breach and privacy laws for the protection of their citizens.” 


CSBS’s letters are attached here and here

Handling Hurricane Florence: What Federal and State Agencies Have to Say

From an announcement today: The Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the state regulators recognize the serious impact of Hurricane Florence on the customers, members, and operations of many financial institutions and will provide appropriate regulatory assistance to affected institutions subject to their supervision.  The agencies encourage institutions operating in the affected areas to meet the financial services needs of their communities.


A complete list of the affected disaster areas can be found at


Lending: Financial institutions should work constructively with borrowers in communities affected by Hurricane Florence.  Prudent efforts to adjust or alter terms on existing loans in affected areas should not be subject to examiner criticism.  Modifications of existing loans should be evaluated individually to determine whether they represent troubled debt restructurings.  This evaluation should be based on the facts and circumstances of each borrower and loan, which requires judgment, as not all modifications will result in a troubled debt restructuring. In supervising institutions affected by Hurricane Florence, the agencies will consider the unusual circumstances these institutions face.  The agencies recognize that efforts to work with borrowers in communities under stress can be consistent with safe-and-sound practices as well as in the public interest.  


Temporary Facilities: The agencies understand that many financial institutions may face staffing, power, telecommunications, and other challenges in re-opening facilities after Hurricane Florence.  In cases in which operational challenges persist, the primary federal and/or state regulator will expedite, as appropriate, any request to operate temporary facilities to provide more convenient availability of services to those affected by Hurricane Florence.  In most cases, a telephone notice to the primary federal and/or state regulator will suffice initially to start the approval process, with necessary written notification being submitted shortly thereafter.


Publishing Requirements: The agencies understand that the damage caused by Hurricane Florence may affect compliance with publishing and other requirements for branch closings, relocations, and temporary facilities under various laws and regulations, as applicable.  Institutions experiencing disaster-related difficulties in complying with any publishing or other requirements should contact their primary federal and/or state regulator.


Regulatory Reporting Requirements: Institutions affected by Hurricane Florence that expect to encounter difficulty meeting the agencies’ reporting requirements should contact their primary federal and/or state regulator to discuss their situation.  The agencies do not expect to assess penalties or take other supervisory action against institutions that take reasonable and prudent steps to comply with the agencies’ regulatory reporting requirements if those institutions are unable to fully satisfy those requirements because of the effects of Hurricane Florence. 


The agencies’ staffs stand ready to work with affected institutions that may be experiencing problems fulfilling their reporting responsibilities, taking into account each institution’s particular circumstances, including the status of its reporting and recordkeeping systems and the condition of its underlying financial records.


Community Reinvestment Act (CRA): Financial institutions, as applicable, may receive CRA consideration for community development loans, investments, or services that revitalize or stabilize federally designated disaster areas in their assessment areas or in the states or regions that include their assessment areas.  For additional information, institutions should review the Interagency Questions and Answers Regarding Community Reinvestment at


Investments: The agencies realize local government projects may be negatively affected by Hurricane Florence.  Institutions should monitor municipal securities and loans affected by Hurricane Florence.  Appropriate monitoring and prudent efforts to stabilize such investments are encouraged.


For more information, refer to the Interagency Supervisory Examiner Guidance for Institutions Affected by a Major Disaster, which is available as follows: