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CFPB Issues Advisory on Bitcoin, Virtual Currencies

On August 11, 2014, the Consumer Financial Protection Bureau released a Consumer Advisory about virtual currencies.  The Advisory followed a directive by the U.S. Government Accountability Office for the CFPB to conduct a close examination of the world of virtual currencies.  The complete Advisory can be found here.

The Advisory includes a description of virtual currencies (which include the ubiquitous Bitcoin) and how virtual currency exchanges and investments work.  It goes on to provide multiple warnings and risk factors relating to investments in Bitcoin and similar currencies, including:

  • The lack of government and regulatory oversight and protection,
  • Volatile exchange rates and extreme price fluctuations, and
  • The dangers posed by computer hackers and investment scams. 

Even where an investment in digital money is “legitimate,” there may still be hidden costs involved.

In the Advisory, the CFPB notes that the SEC has already released warnings about fraudulent virtual currency investment schemes, including a virtual currency alert and an investor alert regarding bitcoin.

The CFPB will now be accepting consumer complaints relating to virtual currency issues.


Maine Updates Truth-In-Savings, Funds Availability Rule

Maine’s Truth-in-Savings and Funds Availability Rule is getting an overhaul. 

On August 6, 2014, Maine’s Bureau of Financial Institutions announced that changes to Chapter 118, Funds Availability and Truth-in-Savings had been finalized and will go into effect on September 1, 2014.  The final rule repeals and replaces former Chapter 18 of the Bureau’s rules.

According to the Bureau, the primary purpose of the newly revised rule is to incorporate by reference:

  • Regulation CC of the Federal Reserve Board regarding Funds Availability
  • Regulation DD of the Consumer Financial Protection Bureau regarding Truth-in-Savings
  • Part 707 governed by the National Credit Union Administration regarding Funds Availability and Truth-in-Savings.

According to Chapter 118, all of the provisions of these federal rules have been incorporated by reference into Maine regulation, with two exceptions:  (1) the definition of “business day,” and (2) the respective enforcement and liability provisions, as described in the rule.  The rule also includes model language regarding complaint resolution that should be included in the “schedule of account charges” or similar “literature” used to describe fees on an account.

The Superintendent’ Notice of the final rule is available here.  According to the notice, no interested parties filed comments on the proposed rule.


Maine's Greenleaf Decision Creates Mortgage “Insecurity” for MERS

In a decision sure to cast doubt on the validity of numerous mortgages throughout the State, Maine’s highest court invalidated the foreclosure of a mortgage held by MERS. In Bank of America v. Greenleaf, the Maine Law Court held that MERS, a Delaware corporation that acts as nominee for mortgagees around the country, did not have sufficient ownership interest in the mortgage to assign the right to foreclose. 2014 ME 89. A bank that attempts to foreclose on a mortgage received through assignment from MERS, therefore, may lack standing and have no right to foreclose on the mortgage.

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FDIC: Banks can consult with FDIC staff instead of hiring consultants

The Summer 2014 edition of the FDICs Supervisory Insights Journal is now out. This edition includes two articles: (1) an article advising banks on how to meet regulatory expectations without outside consultants; and (2) an article summarizing common risks to banks as identified through FDIC examinations. The Journal concludes with a Regulatory and Supervisory Roundup listing recent Dodd-Frank rulemakings, FAQs, seminar listings, and operational guidance.

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Financial Institutions...In the News

  • Many borrowers suspicious of Home Affordable Refinance Program (HARP).  (Portland Press Herald 7.8.14)
  • Maine in top 5 of states with highest foreclosure inventory.  (Market Watch 7.8.14)
  • NBT plans to open branch in Portland, Maine. (Bangor Daily News 7.2.14) 
  • Many states have job levels at pre-recession levels even though the nation has regained all 9 million jobs.  (Portland Press Herald 7.2.14)
  • William J. Ryan to become board chair of Berkshire Hills Bancorp (Portland Press Herald 7.1.14)
  • Maine home sales increase 7.3% while sales prices decrease 4.8%.  (Portland Press Herald 6.25.14)
  • SunTrust Mortgage settles robo-signing dispute. 185 Mainers helped, according to Attorney General Janet Mills.  (Bangor Daily News 6.19.14) 
  • The FBI, several foreign governments and security firms break up sophisticated financial crime ring.  (Portland Press Herald 6.4.14)
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