What started with Bitcoin in 2009 has developed into a market of over 6,500 digital assets increasingly competing with traditional products offered by financial institutions. The rapid expansion of digital assets, including cryptocurrencies, has led to increased regulatory scrutiny in which the key question is whether these assets should be classified as currencies or securities. […]
Is Crypto a Currency or Security? Litigation Involving the SEC May Provide Guidance.
Proposed Legislation Would Require Financial Institutions to Report Data for Accounts with Annual Activity of $600
In May 2021, as part of the American Families Plan, the Biden Administration proposed that financial institutions should report consumer and business account activity exceeding $600 annually. Proponents of the legislation claim that it will give the Internal Revenue Service (“IRS”) additional information to assist with audits while the proposed legislation has raised compliance and […]
Do Banks Owe Their Borrowers a Fiduciary Duty?
There has been a recent trend in Texas litigation of borrowers asserting claims or counterclaims against their lenders for breach of fiduciary duty. The first thing that a plaintiff has to establish in such a claim is that the lender actually owed it a fiduciary duty—a serious legal relationship that only arises in certain defined […]
Nuts and Bolts of Funding a Main Street Loan
By Gordon Russell and Kathleen Thompson A Lender has two choices for funding a Main Street Loan. A Lender may fund a Main Street Loan and then seek to sell a participation interest in said Main Street Loan to the Main Street SPV. A Lender may condition its extension of credit to the Eligible Borrower […]
UPDATED: July 31 Changes to Main Street Lending FAQs
By Gordon Russell and Kathleen Thompson The following documents were updated by the Federal Reserve Friday, July 31st: (1) Lender Registration Certifications and Covenants; (2) Loan Participation Agreement Transaction Specific Terms; (3) Loan Participation Agreement Standard Terms and Conditions; (4) Servicing Agreement; (5) Assignment-in-Blank; (6) Co-Lender Agreement Transaction Specific Terms; (7) Co-Lender Agreement Standard Terms […]
KRCL CARES: MAIN STREET LENDING TASK FORCE – A Comparison of the June 26, 2020 FAQs to the June 20, 2020 FAQs
By Gordon Russell and Kathleen Thompson On Friday, June 26th, the Federal Reserve circulated a revised version of its Frequently Asked Questions (FAQs) for the Main Street Lending (“MSL”) Program. This blog reviews the five new FAQs that were added and the two minor changes that were made. Specifically, the new FAQs include H.12-H.14 relating […]
Appraisal Requirements Deferred for 120 Days for Certain Real Estate Transactions Due to COVID-19
On April 14, 2020, the Office of the Comptroller of Currency, Board of Governors of the Federal Reserve System and Federal Deposit Insurance Corporation (collectively, the “Agencies”) issued an interim final rule (the “Interim Rule”) deferring requirements for appraisals and evaluations for certain real estate transactions for 120 days. Title XI of the Financial Institutions […]
Warning Paycheck Protection Program Lenders! Limitations on Permissible Loan Applicants Lead To Class Action Lawsuits
In an effort to manage the huge volume of loan applications being received under the Paycheck Protection Program (“PPP”) created under the Coronavirus Aid, Relief, and Economic Security Act, H.R. 748 (“CARES Act”), some banks have placed limitations on those eligible to apply for PPP loans. Commonly, banks are requiring that PPP applicants have a […]
Five Years Later: Madden v. Midland Funding, LLC’s Limited Impact on the Valid-When-Made Doctrine
The “valid-when-made doctrine” is an important component of usury law. It provides that a loan that has a non-usurious interest rate when it is made cannot become usurious if the loan is subsequently transferred to a third party, even if the third party is in a different state with different lending laws. For example, if […]
Acceleration Notices Can Be Unilaterally Withdrawn Despite Borrower’s Claim of Detrimental Reliance
Every lender that has accelerated a note in order to pursue foreclosure has likely faced the argument from a borrower at one time or another that foreclosure proceedings were filed too late because of a prior acceleration that started the statute of limitations. The U.S. Court of Appeals for the Fifth Circuit has attempted to […]