Category Archives: Lending

Biden Administration Releases Proposed Rule on Outbound Investments in China

by Paul D. Marquardt and Kendall Howell

Photos of authors

From left to right: Paul D. Marquardt and Kendall Howell (Photos courtesy of Davis Polk & Wardwell LLP)

The Biden administration released its proposed rule that would establish a regulatory framework for outbound investments in China, following its advanced notice of proposed rulemaking released last August.

On June 21, 2024, the U.S. Department of the Treasury (Treasury) released its long-awaited notice of proposed rulemaking that would impose controls on outbound investments in China (the Proposed Rule). The Proposed Rule follows Treasury’s advanced notice of proposed rulemaking (the ANPRM) released in August 2023 (discussed in this client update) and implements the Biden administration’s Executive Order 14105 (the Executive Order), which proposed a high-level framework to mitigate the risks to U.S. national security interests stemming from U.S. outbound investments in “countries of concern” (currently only China). Like the Executive Order and ANPRM, the Proposed Rule reflects an effort by the Biden administration to adopt a “narrow and targeted” program and is in large part directed at the “intangible benefits” of U.S. investment (e.g., management expertise, prestige, and know-how), rather than capital alone.[1]

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Wachtell Publishes Financial Institutions M&A Guide for 2024

Editor’s Note: This post contains excerpts from Wachtell, Lipton, Rosen & Katz’s Guide: “Financial Institutions M&A 2024: Seizing Opportunities, Navigating Pitfalls,” the full version of which is available here. 

by Ed Herlihy, Richard Kim, Nick Demmo, David Shapiro, Matt Guest, Mark Veblen, Brandon Price, and Jake Kling

Photos of the authors

Top left to right: Ed Herlihy, Richard Kim, Nick Demmo, and David Shapiro
Bottom left to right: Matt Guest, Mark Veblen, Brandon Price, and Jake Kling
(Photos courtesy of Wachtell, Lipton, Rosen & Katz)

KEY TRENDS IN FINANCIAL INSTITUTIONS M&A DURING 2023

I. M&A FALLS FOR A SECOND CONSECUTIVE YEAR OWING TO GEOPOLITICAL, MACROECONOMIC AND REGULATORY FACTORS

Financial institutions M&A fell for the second year in a row in 2023. Like most other sectors of the economy, financial institutions faced significant M&A headwinds during the year, including geopolitical instability, elevated inflation, high interest rates, challenging and often volatile equity markets, enhanced antitrust risks and uncertainty, and recessionary fears that softened only towards the end of the year.

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Second Circuit Holds that Term Loan Is Not a Security

by Josh A. Feltman, Emil A. Kleinhaus, Michael H. Cassel, and Mitchell S. Levy

From left to right: Josh A. Feltman, Emil A. Kleinhaus, Michael H. Cassel, and Mitchell S. Levy. Photos courtesy of Wachtell, Lipton, Rosen & Katz.

From left to right: Josh A. Feltman, Emil A. Kleinhaus, Michael H. Cassel, and Mitchell S. Levy. Photos courtesy of Wachtell, Lipton, Rosen & Katz.

The Second Circuit issued a highly-anticipated opinion recently in Kirschner v. JP Morgan Chase Bank N.A. in which it held that a syndicated bank loan was not a security under state securities law.

Kirschner concerned a $1.775 billion term loan to Millennium Health LLC (“Millennium”), which was made by a small group of banks (the “Initial Lenders”) and then syndicated to a larger group of lenders in April 2014. Continue reading →

CFPB Issues Policy Statement Taking Expansive View of “Abusive” Practices

by Susanna M. Buergel, Roberto J. Gonzalez, Brad S. Karp, Loretta E. Lynch, Elizabeth M. Sacksteder, Kannon K. Shanmugam, Alexander Beer, and O’Ryan H. Moore

Author photographs

Top row from left to right: Susanna M. Buergel, Roberto J. Gonzalez, Brad S. Karp, and Loretta E. Lynch. Bottom row from left to right: Elizabeth M. Sacksteder, Kannon K. Shanmugam, Alexander Beer, and O’Ryan H. Moore (Photos courtesy of Paul, Weiss, Rifkind, Wharton & Garrison LLP)

On April 3, 2023, the Consumer Financial Protection Bureau (“CFPB”) released a policy statement (the “Policy Statement”) outlining its broad interpretation of the “abusive” component of the prohibition on unfair, deceptive, or abusive acts and practices (“UDAAP”).[1] The Policy Statement replaces a prior statement that adopted a restrained posture towards enforcing the prohibition on abusive acts and practices, which the CFPB rescinded in March 2021.[2]

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CFPB Advisory on Placement Practices May Have Broader Market Implications

by Courtney M. Dankworth, Avi Gesser, Alexandra N. Mogul, Paul D. Rubin, and Jehan A. Patterson

Photos of the authors

From left to right: Courtney M. Dankworth, Avi Gesser, Paul D. Rubin, Alexandra N. Mogul, and Jehan A. Patterson (photos courtesy of Debevoise & Plimpton LLP)

On February 7, 2023, the Consumer Financial Protection Bureau (the “CFPB”) issued an advisory opinion (the “Advisory Opinion”)[1] on certain digital placement practices, which may have broader market implications. The Advisory Opinion provides that the prohibition on referral fees under section 8 of the Real Estate Settlement Procedures Act (“RESPA”) in real estate transactions that involve federally related mortgage loans extends to operators of websites that allow consumers to compare mortgages and other real estate settlement services.[2] Specifically, if a comparison-shopping website ranks lenders or settlement service providers (or utilizes certain design choices intended to steer consumers’ choices of providers) based on compensation received by the website operator rather than on neutral criteria, that compensation may be considered an unlawful referral fee in the CFPB’s view.

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CFPB’s Report on Buy Now, Pay Later

by Courtney M. Dankworth, Alexandra N. Mogul, Gregory J. Lyons, Courtney Bradford Pike, Zila Reyes Acosta-Grimes, and Jehan A. Patterson

On Thursday, September 16, 2022, the Consumer Financial Protection Bureau (“CFPB” or the “Bureau”) published a report (the “Report”) detailing the regulatory risks of Buy Now, Pay Later (“BNPL”) products in response to last December’s market monitoring orders to five BNPL companies.

BNPL generally refers to a credit product offered by a third-party institution that enables consumers to split the payment for a retail transaction into four equal installments: the first payment is a down payment due at checkout, and the remaining payments are made in two-week intervals over the next six weeks. BNPL lenders do not charge interest; rather, they incur revenue in the form of late fees and, in some instances, transaction fees.

This blog post first provides a brief overview of some of the unique qualities of the BNPL industry, which has been experiencing significant growth over the past few years. It then outlines the key risks to consumers posed by the BNPL industry as highlighted in the Report as well as the Bureau’s stated next steps for increasing its oversight of the industry. At least in the near term, it appears that the Bureau intends to exercise its jurisdiction over BNPL lenders through supervisory examinations and the issuance of interpretive rules or similar guidance to provide consumers with protections similar to those in the traditional credit card space. This blog post outlines steps that BNPL lenders may wish to consider taking to mitigate the potential risks to consumers that the Report identifies.

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