Author Archives: Jay Spruill

Jay Spruill

About: Jay Spruill

Jay leads the Marketplace Funding Industry Team and is a member of the Banking Industry Team. Jay has extensive experience advising financial institutions in the development of products and services, including online loan products, and on regulatory matters affecting financial institution business models.

Online Lending Legislation Fails in the 2018 Virginia General Assembly

A bill (HB 1248) to require online lenders to obtain a consumer finance company license to offer installment loans to Virginia consumers failed to advance in House of Delegates this session. Another bill (SB 625) that would have restricted the interest rate on such loans to no more than 36% likewise stalled in the House after passing the Senate with strong support. HB 1248, introduced by Delegate Terry Kilgore (R-Gate City), the Chairman of the House Commerce and Labor Committee, represented the work of a study group comprised of industry and government representatives appointed by the Virginia Bureau of Financial …

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Virginia Senate Committee Approves 36% Cap on Consumer Installment Loans

On January 29th, the Virginia Senate Commerce and Labor Committee approved legislation (SB 625) that would restrict the annual interest rate on all installment loans offered by consumer finance companies to no more than 36%. Under Virginia’s current consumer finance company statute, only loans of $2,500 or less are subject to a 36% annual interest rate restriction. For loans over $2,500, there is no restriction and a consumer finance company may charge interest at a rate established by contract. Thus, the bill would take the existing 36% cap – applicable only to loans of $2,500 or less – and extend it to all installment loans that consumer finance companies would be authorized to …

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CFPB Signals Retreat from Aggressive Regulation

The Consumer Financial Protection Bureau (“CFPB”) made significant announcements on January 16th and 17th reflecting a shift to a more industry-friendly regulatory approach under Trump-appointed acting director Mick Mulvaney. The CFPB is reconsidering existing rules and policies put in place under the previous CFPB director, Richard Cordray, with an eye toward rolling back burdensome rules and aggressive enforcement policies. In its January 16th announcement, the CFPB said it will commence a rulemaking process to reconsider the so-called “Payday Loan Rule.” The Payday Loan Rule imposes new restrictions on payday, vehicle title, and certain installment loans under the CFPB’s authority to curb unfair, deceptive, or …

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Virginia Bureau of Financial Institutions Reports to General Assembly on Internet Lending Study and Plans for Legislation in the 2018 Session

The Virginia Bureau of Financial Institutions (the “Bureau”) recently sent members of the House and Senate Commerce and Labor Committees a letter reporting on the work of the legislative working group that met this year at the request of the legislature to examine issues related to consumer finance companies, internet lending, and open-end credit lenders. The letter states that the Bureau plans to develop proposed legislation for the 2018 session convening in January based on the study group meetings. The key takeaways from the Bureau’s letter are as follows: The Bureau states that a “vast majority” of the study group …

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Virginia Study on Internet Lending Concludes

The working group of the Virginia Bureau of Financial Institutions (the “Bureau”), which was established to consider potential legislation for the licensing and supervision of online lenders, held its last meeting on September 14th. The Bureau will now prepare a report, possibly with proposed legislation, to submit to the Virginia General Assembly for its consideration in the 2018 session. At the September 14th meeting, it was established that there is consensus (no opposition) among the working group members to recommending legislation to amend Virginia’s consumer finance company statutes to require the licensing of online lenders and to subject such lenders …

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Virginia Study Group Considers Licensing and Supervision of Internet Lenders at Second Meeting

The working group of the Virginia Bureau of Financial Institutions (the “Bureau”), which was established at the direction of the Virginia General Assembly to consider potential legislation to regulate internet lending, held its second meeting on July 15th. The focus of the group is primarily on online closed-end and open-end loans made by non-depository lenders, particularly out-of-state lenders.  Such lenders are not subject to the licensing and other requirements under Virginia’s current consumer finance statutes. At the outset of the meeting, representatives from both the Bureau and the Virginia Attorney General’s office expressed their view that all non-depository lenders making …

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Virginia Bureau of Financial Institutions to Study Internet Lending Issues for Legislative Recommendations

The 2017 Virginia General Assembly tabled a number of bills (HB 1443, HB 1817, HB 2310, HB 2310, HB 2445, and SB 1126) dealing with consumer finance companies, Internet lenders, and open-end credit with the understanding that the issues raised in such bills would be studied by a working group of the Virginia Bureau of Financial Institutions this year. The Bureau study group is tasked with making legislative recommendations for consideration by the Virginia General Assembly in its 2018 session, which convenes in January. The Bureau study will give particular attention to the licensing and supervision of Internet lenders making …

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Virginia General Assembly to Consider Legislation Impacting Online Lending in 2017 Session

Legislation affecting online lending will be among the bills the 2017 Virginia General Assembly considers when it convenes on January 11th for its regular session. Delegate Peter Farrell has prefiled two bills that would impose new licensing requirements and fee limitations on such loans. Similar bills are expected to be introduced by other members of the General Assembly. These measures have the support of the Virginia Bureau of Financial Institutions (the “Bureau”), the Virginia Attorney General’s office, and Legal Aid organizations, among others. With respect to Delegate Farrell’s bills, HB 1443 would subject any lender making consumer loans over the …

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National Bank Charter Will Be Available to Fintech Companies in the New Year

Financial technology companies will soon have a new business model to consider – one that will allow them to avoid the various licensing and other regulatory requirements in the states where they do business. The Office of Comptroller of the Currency (“OCC”), the federal banking agency responsible for the supervision of national banks, announced on December 2nd that it will start granting limited or special purpose national bank charters to fintech companies. There are, however, strings attached. A fintech company electing such a charter will be subject to many of the same rigorous safety and soundness standards that currently apply …

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DC Court of Appeals Rules CFPB’s Structure is Unconstitutional

On October 11, 2016, the United States Court of Appeals for the District of Columbia Circuit ruled that the Consumer Financial Protection Bureau’s (CFPB) structure is unconstitutional. PHH Corporation v. Consumer Financial Protection Bureau, No. 15-1177, 2016 WL 5898801 (D.C. Cir. Oct. 11, 2016). Unlike most independent agencies, which contain multi-member structures to check against arbitrary decision-making and abuse of power, the CFPB is an independent agency lead by a single Director subject only to for-cause removal by the President of the United States under the Dodd-Frank Act. The Court of Appeals observed that this structure “represents a gross departure …

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