This article is the second in a three-part series addressing a seminal Fifth Circuit case now pending before the U.S. Supreme Court. The case, CFSA v. CFPB, is scheduled for oral argument on October 2, 2023. In last week’s post, Myth No. 1, we explained more than a decade of history, both legislative and regulatory, displaying controversy over the constitutionality of the CFPB. As discussed last week, these legal arguments have deep implication for financial regulation and arose in vibrant debates between consumer financial and appellate law experts in trial courts, Congress, and the Supreme C ..read more

This article is the first in a three-part series addressing a seminal Fifth Circuit case that is now pending before the U.S. Supreme Court. Each week, we will debunk each myth and address the implications for consumer finance regulation going forward. Myth No. 1: CFSA’s matter presents a novel attack on the Bureau’s constitutionality Background As many readers are aware, the plaintiffs in Consumer Financial Services Association of America, Ltd, et al. v. Consumer Financial Protection Bureau et al. challenged the Consumer Financial Protection Bureau’s (“CFPB or Bureau”) new regulation concernin ..read more

We recently had a chance to speak to The Independent and Forbes for articles on the impending regulatory response to the FTX bankruptcy, which will undoubtedly affect the entire crypto sector. A couple of additional thoughts worth mentioning are as follows: The extended Crypto Winter is likely to hasten regulatory clarity with respect to crypto. While the Congressional bills introduced thus far have favored the Commodities Futures Trading Commission (CFTC) as the chief crypto regulator, the extended crisis in the crypto sector have punched up serious concerns regarding inve ..read more

FINRA’s 2023 Priorities and Examination Findings was the topic of discussion at SIFMA’s first monthly luncheon of 2023. Reed Smith sponsored this luncheon and provided a full report from the panel presentation by Robert Cook (President and CEO of FINRA) and Greg Ruppert (EVP of Member Supervision at FINRA), and moderated by Saima Ahmed, SIFMA’s EVP and General Counsel. Read our detailed client alert summarizing the event on reedsmith.com ..read more

Where plaintiffs assert civil claims alleging violations of the Fair Debt Collection Practices Act (the “FDCPA”), 15 U.S.C. §§ 1692-1692p, against mortgage lenders and their servicers, the defendants should assess the claims to determine whether they are subject to immediate dismissal. The first question that should be considered is whether the lender or servicer even qualifies as a “debt collector” pursuant to the FDCPA. If the answer to that question is “yes,” then the next question needing an answer is “what are the most effective available defenses?” To establish a violation of the FDCPA ..read more

A new CFPB advisory opinion drills down on what consumer reporting agencies must do to address discrepancies in consumers’ credit reports, in order to protect consumers and remove obstacles to them getting credit. And while the Bureau gives specific examples of items requiring correction, the opinion emerges in the bigger context of a heightened interest in expanding the categories of businesses that could constitute a consumer credit company and clarifies the work required of such companies vis-à-vis other actors in the consumer credit ecosystem such as furnishers or users of consumer data re ..read more

In the wake of the Court of Appeals’ landmark decision in Freedom Mortgage v. Engel, 2021 NY Slip Op 01090 (2021), the Second Department has subsequently followed the guidance in Engel in modifying a lender’s burden in rebutting statute of limitation challenges.  In Engel, the Court of Appeals, reversing contrary Second Department holdings, held that a voluntary dismissal, by itself, constituted an affirmative act to revoke a lender’s acceleration of a mortgage loan, thus resetting the six-year statute of limitations to commence a mortgage foreclosure action.  Now, the Second Departm ..read more

On November 17, 2021, on its review en banc of its prior decision, the United States Court of Appeals for the Second Circuit changed its course in Maddox v. The Bank Of New York Trust Company, N.A., docket number 19-1774, and held that the plaintiffs’ allegations “fail to support their Article III standing, and that they may not pursue their claims for statutory penalties imposed by the New York Legislature in federal court.”  Notably, the rehearing decision was issued by Judge Dennis Jacobs, who issued the sharp dissent of the panel’s May 10, 2021 decision. The changed ruling is credited ..read more

In a 7-2 decision, the Supreme Court of the United States ruled that the Federal Housing Finance Agency’s (“FHFA”) statutory structure, which protected its director from being removed from position “only for cause”, violated the Constitution’s separation of powers.  Writing for the majority in Collins, et al. v. Yellen, et al., Nos. 19-422 and 19-563, Justice Alito found that “the Constitution prohibits even ‘modest restrictions’ on the President’s power to remove the head of an agency with a single top officer.”  The Supreme Court found this structure to violate the Constitution and ..read more

Late Thursday evening, the Supreme Court of the United States issued an opinion to reinstate a court order blocking the Centers for Disease Control and Prevention’s (“CDC”) nationwide moratorium on residential evictions. In March 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act, which, in part, imposed a 120-day eviction moratorium on properties subject to federally backed mortgage loans.  Congress did not renew the eviction moratorium after its 120-day term.  Instead, the CDC promulgated a more expansive administrative eviction moratorium covering all res ..read more