FinReg Currents - Week 9 | Morrison Foerster

Keep up with the latest legal and industry insights, news, and events from MoFo

Each week of the first 100 days of the new Trump administration, we will publish updates on key federal financial services regulatory and related developments.

This week, we review the following developments as of Wednesday:

Consumer Financial Protection Bureau (CFPB) Funding Update
CFPB Military Lending Act (MLA) Cases
Status of CFPB, Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC) Probationary Employees
OCC Fintech Approval
Federal Reserve Board (FRB) Governor Bowman Nominated as Vice Chair for Supervision
Congressional Review Act (CRA) Resolutions to Nullify CFPB Medical Debt Rule
Senate Stablecoin Legislation

CFPB Funding Update

On March 14, 2025, a judge in the U.S. District Court for the District of Maryland declined to grant a temporary injunction to the City of Baltimore and the Economic Action Maryland Fund. The plaintiffs had requested an injunction in response to a February 8, 2025 letter from CFPB Acting Director Vought to the Federal Reserve requesting $0 for the third quarter of fiscal year 2025. The judge determined that CFPB leaders and the Trump administration did not take “final agency action” to defund the agency.

CFPB Military Lending Act (MLA) Cases

While the CFPB has halted much ongoing litigation, the agency has signaled that it will pursue litigation on certain matters, including alleged violations of the Military Lending Act. In particular, the CFPB reportedly has signaled its intent to continue litigating a lawsuit against MoneyLion Technologies, Inc., accusing the online lender of charging more than the legally allowable 36 percent rate cap on loans to servicemembers and their dependents. And, according to press reports, the CFPB has informed the U.S. District Court for the Northern District of Texas that the agency intends to proceed with a case filed against First Cash, Inc. and its subsidiaries for allegedly unlawfully imposing excessive charges on loans to servicemembers and their dependents.

Status of CFPB, FDIC, and OCC Probationary Employees

On March 13, 2025, a judge in the U.S. District Court for the District of Maryland ordered the CFPB, the FDIC, and the Treasury Department to temporarily rehire probationary employees fired in February 2025. Because the federal government did not individually assess employees, the judge determined that the layoffs were a “Reduction in Force” and would require advance notice. The Temporary Restraining Order stays termination of certain probationary employees until a formal notice is given for a Reduction in Force. The Order applies to 18 federal agencies, including the CFPB, the FDIC, and the Treasury Department, which includes the OCC.

OCC Fintech Approval

On March 17, 2025, the OCC announced conditional approval for a fintech company to change the business model of a bank it acquired. The OCC reviewed the fintech company and its application using the same standards applied to banks. In the release, Acting Comptroller of the Currency Rodney Hood stated that “a safe, sound and fair fintech business model has a place in today’s federal banking system.”

FRB Governor Bowman Nominated as Vice Chair for Supervision

According to press reports, on March 17, 2025, President Trump announced on social media that he intends to nominate Governor Michelle Bowman to serve as the agency’s vice chair for supervision. Governor Bowman has been a member of the Board of Governors since 2018 and has served as the community banking-designated governor. She would replace Governor Michael Barr as vice chair for supervision. Barr stepped down from the position on February 28, 2025 and remains a governor. In a statement, Governor Bowman said, “If confirmed, I will promote a safe and sound banking system through a pragmatic approach to supervision and regulation with a transparent and tailored bank regulatory framework that encourages innovation.”

Senate Banking Committee Chairman Tim Scott (R-S.C.) said in a statement that he is “hopeful that Governor Bowman will help increase transparency around the regulatory and supervisory work of the Board.” House Financial Services Committee Chairman French Hill (R-Ark.) also issued a statement, saying he looks forward to working with Bowman on “reexamining the supervision and examination policies of the Board.”

CRA Resolutions to Nullify CFPB Medical Debt Rule

Senator Mike Rounds (R-S.D.) and Representative Ralph Norman (R-S.C.) have introduced companion CRA resolutions, S.J. Res. 36 and H.J. Res. 74, to nullify the CFPB rule entitled “Prohibition on Creditors and Consumer Reporting Agencies Concerning Medical Information (Regulation V).” The rule, which was published in the Federal Register on January 14, 2025, is a so-called midnight rule, i.e., a rule issued late in the final year of an outgoing administration. The rule was scheduled to take effect on March 17, 2025. Treasury Secretary Scott Bessent, while temporarily acting director of the CFPB, ordered the CFPB to suspend the effective dates for finalized rules that have not gone into effect. No action has yet been taken on either resolution.

Senate Stablecoin Legislation

In an executive session on March 13, 2025, the Senate Banking Committee advanced a substitute version of the “Guiding and Establishing National Innovation for U.S. Stablecoins [GENIUS] Act of 2025” by an 18–6 vote. The GENIUS Act would create a federal framework for stablecoins, including requirements for a payment stablecoin issuer, regulation by the OCC and FRB, and treatment under the Bank Secrecy Act. Though the bill is bipartisan, Senator Warren (D-Mass.) voiced consumer protection and national security concerns that prevented her support.

For more details on any of these developments, or to discuss how these changes may impact your business, please reach out to our team. Stay tuned for next week’s update, where we will continue to bring you the latest in federal financial services regulatory and related developments.

You may use the following links to access our prior issues: