Last Week, This Morning

January 12, 2026

Below you will find several key developments in the financial services industry, including related developments in information privacy and data security, from the past week. We add an "Amicus Brief(ly)¹" comment to each item, where we briefly (see what we did there?) note for friends (and again?) of CounselorLibrary the important takeaways from the developments outlined in the email. Our legal reporters - CARLAW, HouseLaw, InstallmentLaw, PrivacyLaw, and BizFinLaw - provide more comprehensive, real-time updates of federal and state laws, regulations, litigation, and other industry items of interest. For a personal guided tour and free trial of any of these legal reporters, please contact Michael Willer at 614-855-0505 or mwiller@counselorlibrary.com.

On January 7, the Consumer Financial Protection Bureau adjusted the asset-size exemption threshold for banks, savings associations, and credit unions under Regulation C, which implements the Home Mortgage Disclosure Act. Based on the 2.5 average percent increase in the Consumer Price Index for the 12-month period ending November 2025, the exemption threshold is increased to $59 million from $58 million. Therefore, institutions with assets of $59 million or less as of December 31, 2025, are exempt from collecting HMDA data in 2026. An institution's exemption from collecting data in 2026 does not affect its responsibility to report data it was required to collect in 2025.

In addition, on January 7, the CFPB adjusted the asset-size threshold for certain creditors to qualify for an exemption from the requirement under the Truth in Lending Act to establish escrow accounts for higher-priced mortgage loans. The asset-size exemption threshold will increase to $2.785 billion from $2.717 billion. Therefore, creditors with assets of less than $2.785 billion (including assets of certain affiliates) as of December 31, 2025, are exempt, if other requirements of Regulation Z also are met, from establishing escrow accounts for higher-priced mortgage loans in 2026. This asset limit will also apply during a grace period, in certain circumstances, with respect to transactions with applications received before April 1, 2027. The adjustment to the asset-size exemption threshold will also increase a similar threshold for small-creditor portfolio and balloon-payment qualified mortgages under Reg. Z. Balloon-payment qualified mortgages that satisfy all applicable criteria, including being made by creditors that have total assets below the threshold, are also excepted from the prohibition on balloon payments for high-cost mortgages.

The CFPB is required to adjust the HMDA and TILA thresholds yearly by the annual percentage increase in the Consumer Price Index.

Amicus Brief(ly): Compliance professionals are trained to watch for these and other regularly scheduled updates to ensure that their compliance programs align with the state of the law. The index-based adjustments are designed to give the government an objective, independent tool for adjusting the scope of these laws (and others that apply based on an adjustable threshold). Over the past several decades, the federal and state governments have used these adjustable thresholds as a means of ensuring that the laws based on those thresholds continue to apply to the market segments intended for regulation when they enacted those laws. But those statutory tools require compliance professionals to remain vigilant for those changes in scope so they can make necessary policy and system adjustments.

The Federal Trade Commission will host a free, public workshop on February 26, 2026, to help the agency understand and measure consumer injuries and benefits that may result from the collection, use, and disclosure of consumer data. The workshop will be held online and in person in Washington, D.C.

Specifically, the workshop panels will discuss:

• quantifying informational injuries and the potential benefits of consumer data collection and use;
• impacts of data breaches on consumers and efforts to minimize injuries;
• costs and benefits of behavioral and contextual advertising; and
• measuring consumers' privacy preferences, beliefs, and decisions.

Amicus Brief(ly): As we have mentioned in these pages over the past year or so, consumer data use and protection is at the top of regulatory and enforcement agendas across many states and the federal government. The state of affairs is unlikely to change in 2026, as evidenced by this workshop. The FTC indicates in its announcement that its last workshop on these issues was over eight years ago. A lot has happened since then in terms of market practices and the increased sophistication of bad actors, so there should be plenty to discuss on February 26.

The U.S. Court of Appeals for the Ninth Circuit recently affirmed a lower court's dismissal of a consumer's class action lawsuit against his credit card issuer, concluding that the credit card issuer's formula for calculating the interest rate for variable-rate credit cards does not violate the Credit Card Accountability Responsibility and Disclosure Act.

Under Section 1666i-1(a) of the CARD Act, credit card issuers are generally not permitted to "increase any annual percentage rate, fee, or finance charge applicable to any outstanding balance" on a consumer's credit card account. However, Section 1666i-1(b)(2) provides that the prohibition does not apply to "an increase in a variable annual percentage rate in accordance with a credit card agreement that provides for changes in the rate according to operation of an index that is not under the control of the creditor and is available to the general public."

The credit card issuer's card agreement with the consumer used the following formula to calculate the interest rate on his variable-rate credit card: "Variable Rates are calculated by adding together an index and a margin. This index is the highest U.S. Prime Rate as published in the 'Money Rates' section of the Wall Street Journal on the last publication day of each month. ... An increase or decrease in the index will cause a corresponding increase or decrease in your variable rates on the first day of your billing cycle that begins in the same month in which the index is published."

The Ninth Circuit concluded that the credit card issuer's formula for calculating the interest rate for the variable-rate credit card did not violate the CARD Act because it fell into the exception under Section 1666i-1(b)(2) of the Act. The Ninth Circuit found that the consumer's credit card agreement changes rates "according to operation of an index that is not under the control of the creditor." According to the court, the credit card issuer in this case, like other card issuers, calculates percentage rates for its variable-rate credit cards during each billing cycle by adding the value of the U.S. Prime Rate on the last day of each month to a constant margin set by the bank. Credit card issuers have no control over the Prime Rate, and it is publicly available. If the Prime Rate increases or decreases between the beginning of the billing cycle and the last day of a month, the cardholder's total interest rate will increase or decrease by the same amount. Therefore, the consumer's credit card agreement did not violate the CARD Act.

Amicus Brief(ly): It is rewarding to see a case like this come out right, as it did here. Bank of America's cardholder agreement described its process for setting the value of the variable rate based on an index. It specified the timing of changes, effective dates, balances to which interest rates apply, and everything else to allow the consumer to figure out which interest rate applied to which balances. It appears that the consumer just did not like the outcome. But kudos to Bank of America for its compliant agreement, and same to the Ninth Circuit for recognizing it. Credit card issuers are typically very careful about how their agreements describe variable-rate calculations, not just because the law requires it but also so that their programmers can figure out how to set up the system to calculate rates and corresponding interest charges and so that all parties understand how it will work. That care helped Bank of America prevail in this case.

On January 7, the New York Department of Financial Services published a final rule in the New York State Register that implements Banking Law Section 28-bb, which mandates that the Superintendent of Financial Services evaluate the record of performance of licensed mortgage bankers in helping to meet the credit needs of their communities and consider that assessment when taking action on applications to the DFS from mortgage bankers. The new rule implements this legislative mandate by establishing how the DFS will conduct performance evaluations of mortgage bankers and elaborating how the DFS will rely on assessments in taking action on covered applications.

According to the DFS's Notice of Adoption of the rule, the new rule (3 N.Y.C.R.R. Part 120) resembles 3 N.Y.C.R.R. Part 76, the regulation implementing Banking Law Section 28-b, the New York Community Reinvestment Act, but "Part 120 is tailored to the business model of mortgage banking, which differs from that of banking institutions covered by Part 76. Under Part 76, banking institutions' assessment areas include regions where they take deposits and have physical branches as well as areas where they make loans .... Like Part 76, the new Part 120 [requires the DFS to conduct assessments using] ... lending tests and service tests, but because mortgage bankers do not take deposits, mortgage bankers will be evaluated on a more limited set of investment activities than those under Part 76. Instead, mortgage bankers will be assessed based on their activities in communities where they do a substantial portion of their lending business. The new regulation includes several methods for setting an assessment area, developed to account for the most common mortgage banker business models, both branch-based and lending-based."

The DFS will use the lending test to evaluate "a mortgage banker's record of helping to meet the credit needs of its assessment area(s) through home mortgage lending activity. The [DFS] considers originations and purchases of mortgage loans as reported by the mortgage banker under [the Home Mortgage Disclosure Act]. The [DFS] may also consider any other mortgage loan data the mortgage banker may provide." The DFS will evaluate a mortgage banker's lending performance pursuant to certain criteria set forth in Part 120.

The service test will evaluate "a mortgage banker's record of helping to meet the credit needs of its assessment area(s) by analyzing both the availability and effectiveness of the mortgage banker's systems for delivering mortgage loan products and the extent and innovativeness of a mortgage banker's community development services, qualified investments, community outreach, marketing, and educational programs."

Amicus Brief(ly): The divergence in this New York rule from what is a more standard set of CRA tests for a bank under federal law makes sense as the DFS explains: licensed mortgage bankers do not take deposits or provide the more robust offerings of a full-service bank branch, so the DFS will not look at licensed mortgage bankers the same way. Conceptually, though, the impact is just about identical. Under the rule, the DFS will be looking for evidence that a licensed mortgage banker in New York (similar rules are in place in Massachusetts and Illinois) is committed to the communities where it has offices by providing its products and services consistently across them - including in low-income and moderate-income communities. Please note that the rule applies to licensed mortgage bankers with at least 200 originations in the previous year, so not all licensees are subject to evaluation under the standards described.

The Alaska Department of Law, Consumer Protection Unit, recently entered into an Assurance of Voluntary Compliance with five dealerships operating in Alaska within the same dealership group, resolving allegations that the dealerships: (1) charged customers document fees that were not included in the vehicle prices advertised by the dealerships, and (2) advertised new vehicles on third-party websites at their manufacturer's suggested retail prices when the dealerships' offering prices were above MSRP in some instances. Alaska law requires a vehicle's advertised price to "include all dealer fees and costs, except for fees, such as licensing fees, registration fees, title transfer fees, and sales taxes, actually paid to a government agency."

The settlement requires that, in every advertisement for a vehicle, the asking price must include all fees and costs that the dealership will charge a consumer to purchase the vehicle, except for fees actually paid to a government agency. This requirement applies to all advertised prices, whether in writing, online, or at the dealership. In addition, in every online advertisement where the dealership advertises the MSRP for its vehicles, and not an asking price, the fact that the dollar figure is the MSRP and not the asking price must be clear and conspicuous. At a minimum, the word "MSRP" must appear adjacent to the MSRP dollar figure and be in the same font, size, color, and boldness as the MSRP dollar figure, and each vehicle advertisement must include a conspicuous disclaimer that states that "'MSRP' is the Manufacturer's Suggested Retail Price. An advertisement and/or listing with MSRP displayed does not necessarily mean that vehicle is being offered for sale by this dealership at MSRP."

The dealerships admitted no wrongdoing in the settlement. The settlement imposes a civil penalty of $300,000 and requires the dealerships to pay restitution to affected customers, audit their advertisements every six months, and train staff annually to ensure compliance with Alaska law.

Amicus Brief(ly): The issues raised in this AVC are familiar. We frequently see some version of these claims in government settlements with vehicle dealers, where consumers claim that the dealers used "bait-and-switch" tactics to lure them into the dealership based on an advertised price or a vehicle that was not actually available. Consumers also frequently complain that dealers include substantial fees in the prices that do not appear in the advertisements or list prices of the vehicles, like the document fees at issue in this Alaska case. The advertising requirements listed in the AVC are very similar to express regulatory requirements for vehicle price advertisements in other states. This case is another useful reminder for dealers to check their advertisements and staff training to avoid costly penalties like the $300,000 civil penalty in this case.

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¹ For the unfamiliar, an “Amicus Brief” is a legal brief submitted by an amicus curiae (friend of the court) in a case where the person or organization (the “friend”) submitting the brief is not a party to the case, but is allowed by the court to file the brief to share information or expertise that bears on the issues in the case.