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To keep you informed of recent activities, below are several of the most significant federal events that have influenced the Consumer Financial Services industry over the past week.
Federal Activities:
On October 8, the Federal Trade Commission (FTC) filed a complaint and simultaneous Stipulated Order for Permanent Injunction and Other Relief against the Greenway Auto Group, a dealership network operating more than 35 locations, resolving allegations that the dealerships violated § 5 of the FTC Act by advertising vehicles online at artificially low “Greenway Price” figures and then refusing to honor those prices, instead inflating the actual purchase price through stacked and disguised dealer-imposed fees, conditional rebates presented as universally available, mandatory add-on packages marketed as optional, inflated government charges, and unexplained price increases that together overcharged consumers in more than 92% of analyzed transactions by an average of over $3,350. The complaint further alleges Greenway used deceptive prize mailers to lure consumers into its dealerships and continued its pricing practices even after receiving an FTC warning letter in March 2026, merely adding new “transparency” messaging to its website while the underlying conduct persisted. Without admitting or denying the allegations, Greenway agreed to a Stipulated Order imposing a permanent injunction against misrepresenting vehicle costs or fees, an affirmative requirement to clearly and conspicuously disclose a single “Total Price” as the most prominent advertised figure, a limited carve-out for third-party advertisements, and standard FTC compliance infrastructure, including order acknowledgments, ongoing compliance reporting, five-year recordkeeping obligations, and broad monitoring rights. The case reinforces the FTC’s continued enforcement focus on “junk fees” and deceptive pricing in auto retailing, offering a clear signal of what the agency currently considers unacceptable practices in vehicle advertising, from buried fine-print disclaimers to undisclosed loyalty fees and mandatory packages. For more information, click here.
On October 6, Federal Reserve Vice Chair for Supervision Michelle W. Bowman delivered remarks at the 2026 Community Banking Research Conference in St. Louis, announcing a major structural overhaul of the Federal Reserve’s (the Fed) bank supervision function, reorganizing it into five regions modeled on the Conference of State Bank Supervisors’ (CSBS) own regional structure and aligned to state boundaries rather than the traditional 12 Federal Reserve District lines, a change intended to fix a long-standing mismatch between decision-making authority and the actual conduct of supervision while reducing the delay and diffused accountability created by a “complex web of dozens of committees.” Bowman also previewed plans to index outdated fixed-dollar regulatory thresholds (such as Regulation O’s insider-lending limits, unchanged since 1979) to inflation and economic growth, and signaled the Fed will reconsider the $10 billion asset threshold that has defined “community bank” status for 15 years. She further flagged three ongoing community bank priorities: reforming the Fed’s merger competitive-analysis framework, improving de novo bank formation standards, and streamlining Call Report requirements, alongside continued work through the Federal Financial Institutions Examination Council to revise the CAMELS rating system so the “Management” component no longer single-handedly drives a bank’s composite rating. Taken together, these remarks signal the Fed is simultaneously restructuring its internal supervisory apparatus, recalibrating size-based regulatory burden, and advancing tailoring reforms that began with the Fed’s Statement of Supervisory Operating Principles roughly a year earlier, changes that could materially affect how community and regional banks are categorized and examined going forward. For more information, click here.
On October 5, the Office of the Comptroller of the Currency (OCC) and Comptroller Jonathan V. Gould moved to dismiss a lawsuit brought by Oregon and nine other states challenging the OCC’s May 2026 Powers Rule and related preemption determination, which together recognized national banks’ authority to decide whether and how much interest to pay on mortgage escrow accounts and preempted 14 conflicting state interest-on-escrow laws. The OCC argued the case should be dismissed under Rules 12(b)(1), 12(b)(3), and 12(b)(6), or alternatively transferred to the District of Columbia, contending that the states lack standing and present an unripe claim because none allege that any national bank has actually withheld interest required under state law, that three of the states (New York, Connecticut, and Vermont) face traceability and redressability problems given the Second Circuit’s intervening decision in Cantero II upholding preemption of New York’s escrow law on independent grounds, that venue in Oregon is improper and inconvenient given that all relevant OCC decision-making occurred in Washington, D.C. (with the suit amounting to what the OCC characterized as forum shopping by the Second Circuit states), and that the states in any event fail to state a claim because the OCC’s Powers Rule falls squarely within its longstanding authority under the National Bank Act to clarify national banks’ business powers, consistent with the Barnett Bank preemption standard as codified by Dodd-Frank and discussed by the Supreme Court in Cantero I. For more information, click here.
On October 2, the Fed announced it would extend, until November 4, the public comment period on its proposal to modernize Regulation O, the rule governing extensions of credit by a bank to its “insiders,” including bank executives, board members, and major shareholders who could potentially influence a bank’s lending decisions. The extension, which pushed back the original October 5 deadline, was granted to give interested parties additional time to analyze the proposal and prepare comments. The proposal itself was previewed by Bowman in her earlier remarks, where she noted Regulation O had not been comprehensively updated since 1979 and that its existing transaction limits created administrative burden disproportionate to any safety-and-soundness benefit. For more information, click here.
On October 1, the Consumer Financial Protection Bureau (CFPB) released its Fair Lending Report for 2025, documenting a significant overhaul of the Bureau’s fair lending program under current leadership, including a complete cessation of disparate impact theories in supervision and enforcement (codified through an April 2026 Regulation B rule), a narrowing of Special Purpose Credit Program eligibility to prohibit race, color, national origin, or sex as eligibility criteria, and a new emphasis on combating unlawful “debanking” tied to political or religious beliefs. The report also details a May 2026 final rule substantially narrowing the CFPB’s § 1071 small business lending data collection requirements (reducing compliance costs by an estimated $100 million one-time and $166 million to $181 million annually), alongside a broader campaign to unwind prior enforcement actions and withdraw 67 guidance documents issued under previous leadership. Supervisory and enforcement activity dropped dramatically, with the CFPB closing 76% of its supervisory actions and reporting no new fair lending violations cited, no Department of Justice referrals under the Equal Credit Opportunity Act (ECOA), and, across all 11 federal agencies with ECOA enforcement authority, no public enforcement actions for ECOA violations in 2025. For more information, click here.
On September 30, the OCC issued OCC Bulletin 2026-49, releasing version 3.0 of the “Concentrations of Credit” booklet of the Comptroller’s Handbook, which replaces version 2.0 and rescinds OCC Bulletin 2020-90, the bulletin that transmitted the prior version. The booklet is designed to inform and educate examiners about concentrations of credit at banks of all sizes, with emphasis on ranges of practices for varying sizes, complexities, and risk profiles, and examiners determine which expanded procedures to use, if any, based on risk. The revised booklet continues to define a concentration of credit as the sum of direct, indirect, or contingent obligations exceeding 25% of a bank’s tier 1 capital plus the allowance for credit losses. It also reorganizes the content to keep similar information together, expands the discussion of risks associated with concentrations of credit, clarifies the relationship between correlations and concentrations, adds new information on securitizations and their relationship to concentration levels and risk, and provides more clarity on risk management practices for determining aggregate risk. The bulletin was addressed to the chief executive officers of all national banks, federal savings associations, and federal branches and agencies, as well as examining personnel and other interested parties. For more information, click here.
On September 29, the CSBS announced the formation of the Nonbank Industry Advisory Council (NIAC), a new forum intended to promote dialogue between industry experts and state supervisors on matters involving the Nationwide Multistate Licensing System, its State Examination System component, and the broader state system of nonbank supervision. The council will give state supervisors a venue to seek industry input on major policy and system development issues. CSBS President and CEO Brandon Milhorn said the NIAC reflects state supervisors’ commitment to informed oversight and to building trust between regulators and regulated institutions. The NIAC will be led by two co-chairs, one industry member and one regulator liaison, who will serve two-year terms. Its membership will include 30 industry representatives from the mortgage, money services, consumer finance, and debt collection sectors, up to five members from industry organizations, and up to seven additional state regulators appointed by CSBS in consultation with four regulator associations: the American Association of Residential Mortgage Regulators, the Money Transmitter Regulator Association, the National Association of Consumer Credit Administrators, and the North American Collection Agency Regulatory Association. For more information, click here.
State Activities:
On October 6, the Colorado Department of Law released a revised draft of its proposed rules implementing the state’s Automated Decision-Making Technology Act and Chatbot/Conversational AI Act, ahead of an October 26 public rulemaking hearing, with the apparent goal of finalizing rules before the laws’ January 1, 2027, effective dates. Among the most significant changes, the revised draft introduces a rebuttable presumption framework for determining when a system’s output “materially influences” a consequential decision, generally triggered when a decision-maker reviews or relies on an output (such as a score or recommendation) that aligns with the ultimate outcome, while allowing deployers to rebut that presumption by showing the output was merely a “de minimis factor,” and clarifying that purely summarization or organizational tools fall outside the statute’s scope. The revised draft also meaningfully reworks the consumer-facing rules, scaling back earlier adverse-outcome disclosure requirements (eliminating the need to state the “principal reasons” behind a decision in favor of a more general description of the technology’s role), adjusting the timing and channels for responding to consumer information requests, allowing certain disclosures to piggyback on existing federal ECOA/Fair Credit Reporting Act notices, and recasting the consumer access and correction rights while removing the prior requirement to pause adverse outcomes pending correction or human review. Businesses subject to the act should review the revised draft closely and consider submitting comments before the October 26 hearing. For more information, click here.
On September 30, Governor Gavin Newsom approved Assembly Bill 801 (Chapter 871), the California Fair Lending Examination Act, which requires the commissioner of Financial Protection and Innovation to examine certain state-chartered banks and credit unions at least once every four years for compliance with nondiscrimination laws applicable to mortgage lending. Covered institutions are those meeting at least one of the criteria in 12 C.F.R. § 1003.2(g)(1)(v). The laws in scope include the federal ECOA and Fair Housing Act, the California Fair Employment and Housing Act, the Holden Act, and the Unruh Civil Rights Act. For residential mortgage lender and servicer licensees under the California Residential Mortgage Lending Act, the law adds nondiscrimination review to the existing examination required at least every 48 months. The law makes a violation of an applicable nondiscrimination law a violation of the relevant financial code division, which gives the commissioner enforcement authority. The commissioner may examine officers, directors, employees, or agents under oath. The commissioner must also issue written findings and take steps to correct violations, including a discriminatory effect under the Fair Employment and Housing Act that is not attributable to a legitimate business interest. The commissioner has discretion to accept examinations by other agencies, to exempt or examine less frequently institutions that demonstrated full compliance in their most recent exam, and to conduct targeted or off-schedule exams for due cause. The commissioner must also align these exams with other scheduled exams and seek to reduce total exam costs billed to institutions. Examination findings and reports are confidential and may be shared only with the examined institution, law enforcement, or other state or federal regulators. For more information, click here.