On July 27, 2023, the US banking regulators issued a proposal to significantly revise the risk-based capital requirements applicable to large banks and to banks with significant trading activity. The proposal, which is colloquially referred to as “Basel III Endgame” or “Basel IV,” includes important changes to the calculation of credit risk weights for securitization
Legal Update
The Private Fund Adviser Rule and the Kirschner Decision: An August Doubleheader
The regulatory and judicial developments of the last few days relating to the loan markets and to loan funds have been significant.
On Tuesday, lenders and borrowers were concerned about a world in which syndicated and other loans would be treated as securities. And managers of collateralized loan obligation vehicles (“CLOs”) were concerned about being…
Legal Update: Connecticut and Florida Join the Fray, Enact Commercial Finance Disclosure Laws
Following closely on the heels of a Georgia law enacted in May, Connecticut and Florida have become the latest states to enact laws requiring providers of small business financing to provide disclosures to recipients—and in Connecticut’s case, to require certain commercial finance providers to register with the state. We examine the unique and interesting provisions…
Legal Update: Electronic Trade Documents Act: Paper to Data
On 20 July 2023 the long awaited Electronic Trade Documents Act 2023 (the Act) received Royal Assent, and will come into effect in the UK on 20 September 2023.
The Act, which is largely based on the UK Law Commission’s draft Bill published in March 2022, sets out the basis upon which trade documents can…
Legal Update: Georgia Enacts Commercial Finance Disclosure Law, Extending Legislative Trend
Providers of commercial financing should take note that Georgia has become the fifth US state to enact small business financing disclosure requirements since California started the trend in 2018. Georgia Senate Bill 90 was signed by Governor Brian Kemp on May 1, 2023, and takes effect January 1, 2024. The Georgia law applies to transactions…
Legal Update: Residential Mortgage Loans: Capital Relief Through Synthetic Securitization
Banking organizations looking to reduce the amount of risk-based regulatory capital required to support residential mortgage loan portfolios can use synthetic securitization to convert the capital treatment of their exposures from wholesale or retail exposures to securitization exposures. In this Legal Update, we discuss how regulatory capital requirements impact banking organizations that hold portfolios of…
Legal Update: The CFPB Sticks to Its Guns, Finding State Commercial Finance Disclosure Laws Not Preempted in Final Determination
The US Consumer Financial Protection Bureau (CFPB) has finalized its December 2022 preliminary determination that commercial finance disclosure laws recently enacted in California, New York, Utah and Virginia are not preempted by the federal Truth in Lending Act. The CFPB’s final determination confirms for a wide range of small business financers and brokers that they…
Legal Update: The Suspense Is Over – NYDFS Adopts Final Commercial Financing Disclosure Rules, Announces Effective Date, and Provides New Exemptions
Small business financers and brokers (“providers”) active in New York are officially on notice to finalize their preparations to comply with New York’s Commercial Finance Disclosure Law (“CFDL”) by August 1, 2023, the new effective date provided in final administrative regulations just issued on February 1 by the New York Department of Financial Services (“NYDFS”). …
Legal Update: Iowa Targets Out-of-State Bank Partner for Usury, Shedding Light on State’s Interpretation of DIDMCA Opt-Out
State-chartered banks lending to Iowa residents will want to take note of an Assurance of Discontinuance entered into in December between the State of Iowa and an out-of-state bank to settle claims that the bank charged usurious rates of interest to Iowa consumers. The settlement also highlights the Iowa Attorney General’s interpretation of the state’s…
Legal Update: New York Enacts Retroactive Foreclosure Legislation
While many around the world are setting their calendars forward for the year 2023, residential mortgage loan owners and servicers may need to also look backward in time now that New York Governor Kathy Hochul signed the so-called “Foreclosure Abuse Prevention Act” (S5473) into law on December 30, 2022. The new law, which takes effect…