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Nutter Bank Report: April 2025
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- Federal Reserve Clarifies Process for Engaging in Crypto-Asset and Dollar Token Activities
- FDIC Modifies Failed Bank Resolution Planning Requirements for Large Banks
- SBA Announces Return to Mandatory Loan Underwriting Criteria
- Acting Comptroller: OCC Priorities Include Fintech Partnerships and Digital Asset Activities
- Other Developments: Overdraft Fees and Payday Loans
1. Federal Reserve Clarifies Process for Engaging in Crypto-Asset and Dollar Token Activities
The Federal Reserve has announced multiple decisions to rescind existing requirements for crypto-asset activities. The April 24 announcement included the rescission of a 2022 supervisory letter that required state member banks and bank holding companies to provide advance notification of current or future permissible crypto-asset activities to its supervisory point of contact at the Federal Reserve. Instead, the Federal Reserve will now monitor those activities through the normal supervisory process. The Federal Reserve also rescinded a 2023 supervisory letter that required supervisory nonobjection for any state member bank seeking to engage in certain activities involving dollar tokens. Finally, the Federal Reserve joined the OCC and FDIC in withdrawing interagency guidance relating to the crypto-asset risks to banking organizations and liquidity risks to banking organizations resulting from crypto-asset market vulnerabilities. With respect to these types of supervisory notification and nonobjection requirements, these match actions taken by the OCC and the FDIC last month (covered by Nutter’s March Bank Report).
Nutter Notes: The decision by the Federal Reserveputs banking organizations subject to Federal Reserve supervision on an equal playing field with state nonmember banks, national banks, and federal savings associations in terms of supervisory notifications and nonobjection for certain crypto-asset related permissible activities. Banks should continue to ensure that any of these novel activities are permissible and consistent with existing regulatory and legal requirements, in addition to preparing for reviews of these activities as part of their normal examination process. Notably, unlike the OCC and FDIC last month, the Federal Reservehas not announced whether it will no longer consider reputational risk as part of its supervisory framework, and it will be important to follow any steps taken by the Federal Reserve’s new Vice Chair for Supervision in that area once confirmed by the Senate, as the Federal Reservehas stated that it generally supports the principle that “the same bank activity, presenting the same risks, should be subject to the same regulatory framework, regardless of which agency supervises the bank.”
2. FDIC Modifies Failed Bank Resolution Planning Requirements for Large Banks
The FDIC has issued new guidance on resolution planning requirements for large banks (institutions with $100 billion or more in total assets) that reflects the agency’s intent to focus resolution planning “on the operational information most relevant for the FDIC to (1) resolve a large bank through a weekend sale or (2) operate the institution for a short period of time while rapidly marketing the institution.” The guidance released on April 18 includes revised answers to frequently asked questions (FAQs) about the FDIC’s resolution planning rule and a number of exemptions from certain content requirements for the upcoming resolution plan submission cycle. In particular, the FDIC has waived the requirements to use a bridge bank strategy and a hypothetical failure scenario in resolution plans. The changes echo FDIC Acting Chairman Travis Hill’s recent criticism of the bridge bank approach used to resolve bank failures in 2023. Click to access the revised FAQs and the content requirement exemptions.
Nutter Notes: While providing an update on key policy issues in an April 8 speech before the American Bankers Association, Acting Chairman Hill reiterated his view that the FDIC’s 2024 updates to its resolution planning rule 2024 “incorporated the wrong lessons from the 2023 bank failures.” Specifically, he explained that the use of bridge banks and conservatorships lead to deposit-drain on the bank while it is in resolution, “given that customers and counterparties will always question whether it is worth continuing to do business with an institution that has just failed and has a highly uncertain future.” Instead, Acting Chairman Hill favors a speedier resolution, which would ideally involve a weekend sale of the whole bank. Click to access Acting Chairman Hill’s remarks.
3. SBA Announces Return to Mandatory Loan Underwriting Criteria
The U.S. Small Business Administration (SBA) has announced the elimination of a package of Biden-era policies that allowed lenders to use their own underwriting criteria to make SBA loans. The changes contained in SBA SOP 50 10, published on April 25, include a return to mandatory underwriting criteria provided by the SBA. For example, the underwriting standards for the SBA’s flagship 7(a) loan program require a lender’s credit memorandum and analysis to address the loan applicant’s ability and likelihood to repay from the cash flow of the business and past performance by documenting the three most recent years of historical financial information for existing businesses, and certain financial projections for start-ups and new businesses, among other requirements. The new underwriting standards will become effective on June 1. Click to access the SBA’s updated underwriting standards.
Nutter Notes: The SBA also recently raised fees payable by lenders and borrowers under the 7(a) loan program for the remainder of Fiscal Year 2025. The new fees, which apply to all new loans after March 27, may result in thousands of dollars in extra costs for small-business borrowers, depending on size and maturity of the applicable loan. Click for a copy of the SBA’s fee notice.
4. Acting Comptroller: OCC Priorities Include Fintech Partnerships and Digital Asset Activities
Acting Comptroller of the Currency Rodney E. Hood recently emphasized that the OCC’s regulatory priorities include expanding opportunities for fintech partnerships and expanding digital asset activities for national banks and federal savings associations. While speaking to the Exchequer Club on April 16, Acting Comptroller Hood discussed the OCC’s rescission last month of earlier guidance on crypto-asset custody, distributed ledger, and stablecoin activities. He reiterated that national banks and federal savings associations may engage in those digital asset activities without prior notice to the agency, provided that banks do so in a safe and sound manner with appropriate risk management. In addition, Acting Comptroller Hood emphasized the work performed by the OCC’s Office of Financial Technology, which supports regulatory sandboxes, virtual office hours, and “TechSprints,” which are “initiatives designed to keep pace with the rapidly evolving financial landscape.” Click for a copy of Acting Comptroller Hood’s remarks.
Nutter Notes: Acting Comptroller Hood also mentioned that strategic areas of focus for the OCC include efforts to reduce regulatory burden and promote financial inclusion. He discussed how the agency intends to apply “a risk-based approach to supervision, tailoring oversight according to each bank’s size, complexity, business model, and risk profile.” Acting Comptroller Hood highlighted the OCC’s efforts to better serve the financial needs of unbanked and underbanked households through Project REACh—the Roundtable for Economic Access and Change—implemented by the OCC’s Office of External Relations and Strategic Partnerships.
5. Other Developments: Overdraft Fees and Payday Loans
- President Trump Expected to Sign Bill Overturning CFPB Overdraft Fee Rule
Congress has voted to overturn under the Congressional Review Act, a CFPB final rule that would have capped overdraft fees at $5 for larger banks. The House of Representatives approved the bill by a vote of 217-211 on April 9, joining the Senate which approved the bill by a vote of 52-48 on March 27. President Trump is expected to sign the bill shortly. Click for a copy of the bill.
Nutter Notes: The CFPB adopted a final rule on December 12, 2024 applicable to banks and other depository institutions with more than $10 billion in assets that would have either capped overdraft fees at $5 or required covered banks to impose a fee based on their own calculations of costs and charge-off losses for providing overdraft credit using a standard set forth in the rule. The final rule would have become effective on October 1, 2025.
- Massachusetts Division of Banks Warns Consumers About Payday Loans
The Massachusetts Division of Banks issued an alert to consumers on April 22 advising them to avoid payday loans with predatory terms, including those offered by Tribal Lenders. Instead, the Division of Banks recommended that consumers contact local insured depository institutions for help with short-term credit needs, among other alternatives to payday loans. Click for a copy of the consumer alert.
Nutter Notes: Nutter Notes: The Division of Banks’ consumer alert explained that Tribal Lenders are non-bank loan companies created under the laws of Native American Tribes. According to the agency, these lenders are not licensed in Massachusetts and may offer short-term loans over the internet “that typically charge triple-digit annual percentage rates and often high upfront fees to just obtain the loan.”
Nutter Bank Report
Nutter Bank Report is a monthly electronic publication of the Banking and Financial Services Group of the law firm of Nutter McClennen & Fish LLP. Chambers and Partners, the international law firm rating service, after interviewing our clients and our peers in the profession, has ranked Nutter’s Banking and Financial Services practice among the top banking practices in the nation. Visit the U.S. rankings at Chambers.com. The Nutter Bank Report is edited by Matthew D. Hanaghan. Assistance in the preparation of this issue was provided by Heather F. Merton. The information in this publication is not legal advice. For further information, contact:
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Michael K. Krebs Tel: (617) 439-2288 |
Matthew D. Hanaghan Tel: (617) 439-2583 |
Daniel W. Hartman |
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Kate Henry Tel: (617) 439-2304 |
Timothy J. Rennie Tel: (617) 439-2141 |
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This update is for information purposes only and should not be construed as legal advice on any specific facts or circumstances. Under the rules of the Supreme Judicial Court of Massachusetts, this material may be considered as advertising.
