This podcast episode discusses the alarming rise of cyber fraud in financial institutions, highlighting that global losses exceeded $1 trillion in 2025 and AI-powered attacks increased by 93%, including deepfake videos, voice cloning, and sophisticated phishing campaigns. The hosts explain that financial institutions are investing heavily in fraud prevention technologies such as AI fraud detection, predictive analytics, Open APIs with Agentic AI, and solutions like Glassbox that analyze user sessions for anomalies. They emphasize that combating this crisis requires a collaborative approach between financial institutions, tech companies, law enforcement, regulators, and third-party providers—noting that no single entity can win this fight alone and that information sharing, best practices, and enhanced training are essential for protecting customers while maintaining a positive user experience.

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Cyber Fraud Risk

Len Suzio explains that although President Trump’s Executive Order 14281 aims to limit disparate impact liability, the legal status of disparate impact remains unsettled. The Supreme Court upheld disparate impact under the Fair Housing Act in Inclusive Communities but imposed strict limits requiring a clear causal link between a specific practice and disparities—limits often downplayed by regulators in recent enforcement actions.

Despite legal uncertainty and shifting enforcement priorities between administrations, Len advises compliance professionals to continue using disparate impact statistical analysis as a risk-management tool. Regardless of its legal future, it remains a practical way to identify potential discrimination, prompt further review, and demonstrate good-faith compliance.

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Disparate Impact

This episode provides a high-level recap of the major regulatory compliance themes covered in 2025. Dean highlights intense regulatory volatility, especially around CRA and Section 1071, including rule freezes, proposed repeals, litigation, delayed compliance dates, and the CFPB’s move toward an interim final rule for small-business lending data collection.


The discussion also revisits key fair lending, redlining, and data-analysis topics, along with rising operational risks such as BSA/AML/KYC modernization, third-party risk management, and expanding concerns around AI, data governance, cybersecurity, and privacy. Consumer protection issues featured prominently, particularly Regulation E error-resolution failures, elder financial exploitation, and recurring flood compliance violations.


The takeaway for compliance and risk officers: conduct a CMS health check, document lessons learned from 2025, and proactively brief senior management and the board with a clear 2026 risk and compliance plan focused on these evolving priorities.

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2025 Recap

This episode focuses on common compliance problems under Regulation E, which governs electronic fund transfers and is designed to protect consumers using electronic channels such as ATMs, debit cards, online banking, and phone-initiated transfers. As electronic usage and fraud increase, regulators are finding frequent violations—especially around how financial institutions handle error resolution and consumer liability. A key issue is the improper application of liability limits when consumers report unauthorized transactions, particularly misunderstanding the 60-day rule tied to periodic statements, which can expose consumers to unlimited liability for later transactions if they delay reporting. Another major concern is failures in the provisional credit process—institutions often delay investigations beyond allowed timeframes without issuing timely provisional credit (including interest), despite clear requirements to begin investigations promptly and credit the consumer if more time is needed. The takeaway is that financial institutions must have clear, accurate procedures and well-trained staff to ensure timely investigations, proper liability determinations, and full compliance with Regulation E’s consumer protections.

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Electronic Funds Transfers Issues

This podcast highlights sweeping changes proposed for Section 1071 Rule that would dramatically shrink the volume of reportable small business lending and the number of institutions required to report in comparison to the lenders reporting under the CRA Rule. The most significant shift is redefining a “small business” from $5 million to $1 million in gross annual revenue, a change that would eliminate nearly half of currently reported (compared to CRA reporters) small business loans, which is magnified even further when combined with the proposal to exclude renewals (unless the loan amount increases). 

The Section 1071 Rule's reporting threshold for "covered" lenders would jump from 100 to 1,000 small business originations in each of the prior two calendar years. Under the current CRA Rule about 700 lenders are required to report. In comparison, under the proposed Section 1071 Rule only about 80 of those lenders have enough loan volume to be required to report under that Rule. In fact, among those potential Section 1071 lenders, the top10 would generate more than 91% of the reported small business lending activity under Section 1071. The Section 1071 proposal would also drop agricultural loans from being reported and eliminate dozens of discretionary data points, greatly reducing transparency and regulatory insight. With such far-reaching implications, the presenters urge stakeholders to actively comment before the December 15, 2025 deadline rather than remain passive.

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The New Section 1071

This podcast explains how statistical significance is used in redlining allegations based on disparate impact, despite potential deemphasis under the Trump Administration, as regulators may shift accusations from disparate impact to disparate treatment while still relying on statistical analysis. The hosts clarify that statistical significance measures the probability that a bank's below-average performance in majority-minority census tracts occurred by chance rather than discriminatory practices, using a 5% significance threshold, and that larger banks with more loan volume must perform closer to market averages to avoid being flagged (ranging from 5% for 100 applications to 9.5% for 10,000 applications when the market average is 10%). However, the analysis emphasizes that statistically significant results can be misleading due to "lurking" or "confounding" variables, particularly when regulators use unrealistic market definitions (UREMAs) that include areas where banks lack branches or competitive presence, or when peer comparisons inappropriately mix different institution types like banks and mortgage companies—situations that have resulted in the majority of actual peer banks failing the statistical test, demonstrating the data was fundamentally skewed and making the statistical significance analysis unreliable.

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Statistical Significance

This podcast discusses the persistent compliance challenges financial institutions face with flood insurance requirements. The hosts explain that while the statutory requirements seem straightforward—including determining if property is in a Special Flood Hazard Area (SFHA), providing proper notices, requiring adequate coverage, escrowing premiums, and force-placing insurance when necessary—many institutions struggle due to the lack of specific written regulations and varying interpretations from regulators. Key compliance issues include problems with contents coverage (especially when security documents contain blanket provisions securing all contents), timing delays in ordering determinations and notifications, failure to provide proper return receipt proof of notices, inadequate coverage calculations, insufficient ongoing monitoring, untimely force-placement, and improper vetting of private insurance policies. These violations can result in significant civil money penalties, making it essential for financial institutions to take flood insurance provisions seriously and ensure consistent compliance across all aspects of the program.
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Flood remains compliance challenge

Hosts Dean Stockford and Len Suzio welcome back attorney Lori Sommerfield, a partner at Troutman Pepper Locke LLP, to continue their two-part discussion of Executive Order 14-281 and its effort to curb disparate impact theory in fair lending enforcement.

The episode covers the legal landscape post-EO, including the Supreme Court’s history, lingering federal versus state authority, private litigation risks, and practical steps lenders should take—retain strong fair lending programs, document business justifications, test for less discriminatory alternatives, and prepare for future reversals.

Listeners get clear, practical guidance for compliance teams navigating uncertainty as enforcement shifts between federal agencies, state regulators, and private plaintiffs.

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Disparate Impact Derailed? What EO 14-281 Means for Fair Lending

Hosts Dean Stockford and Len Suzio welcome Lori Sommerfield, a partner at Troutman Pepper Locke LLP, to discuss and explain President Trump’s Executive Order 14281 (April 23, 2025), which directs federal agencies to limit use of the disparate impact theory in fair lending enforcement and to review existing guidance, pending matters, and consent orders that leverage that theory.

The federal banking agencies are removing disparate impact references in their examination manuals and shifting toward intentional discrimination theories, while  use of the disparate impact theory by state authorities and private litigants remain risks. Banks and financial services companies should continue to review policies and procedures for potential disparate impact, conduct rigorous fair lending monitoring and testing, and prepare for potential future shifts in enforcement.


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Executive Order 14281:  The End of Fair Lending Law Enforcement Through Use of the Disparate Impact Legal Theory?

Join top CRA experts Doctor Ken Thomas, Len Suzio and Dean Stockford for a wide ranging discussion on the Community Reinvestment Act.  
 * The NPR for repeal of the 2023 Rule
 * What to be learned from the 2023 Rule
 * Do the examiners in the field reflect "deregulation"?
 * Simple ideas to improve the CRA regulations and make them more effective for banks
 * What banks should do ASAP

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Wild Times for the Community Reinvestment Act

Welcome to Compliance 911, a no-nonsense, cut to the point, style show for today’s busy bank and credit union compliance professionals. With this series of bi-weekly shows our goal is to boil down some of today’s hottest regulatory compliance topics in quick and easy to digest 5-10 minute episodes so you can get the information you want and get on with your day. We’ll be discussing topics like CRA, HMDA, Fair Lending, Anti Money Laundering, and so much more. Don’t forget to subscribe and tell a friend about us! Follow M&M Consulting and GeoDataVision us on LinkedIn to get the latest updates.

Tom Sullivan

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