U.S. Financial Reform Requires ‘Double-Fisted Diligence’ Of Lawyers And Lenders, New York City Attorney Explains

Attorneys Michael Amtzis; Mark Villa, partner, and Michael Menicucci, managing partner, work late into the evening at Menicucci, Villa & Associates headquarters in Staten Island, N.Y., reviewing the latest updates from the Consumer Financial Protection Bureau.

NEW YORK – Federal legislation is reinventing the way attorneys and lenders must conduct business, leaving many law firms and banks in need of procedural overhauls.

“It’s not only financial-services industries that must conform to new business guidelines; in some instances, it’s the lawyers who advise them, as well,” said New York attorney Michael Menicucci, founder and managing partner of Menicucci, Villa & Associates.

The law firm, with offices in Manhattan and Staten Island, N.Y., focuses on the legal details of banking and finance, including federal regulatory-compliance issues; residential and commercial real estate transactions; commercial litigation, and trusts and estates.

The latest compliance requirements are highlighted in a Consumer Financial Protection Bureau (CFPB) Bulletin targeting the legal responsibilities of financial institutions as they relate to lenders’ “business relationships with service providers. …” The bulletin, released on April 13, clarifies that lenders under the agency’s supervision may be held responsible for the actions of companies they contract.

“If a vendor, whether it be a lawyer or other service provider, is negligent, it doesn’t let the lender off the hook in respect to its regulatory requirements,” Menicucci said.

The CFPB, a creation of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, states it will hold all appropriate companies accountable when legal violations occur.

“The latest regulations require double-fisted diligence from banking and finance attorneys,” Menicucci said. “I’m guiding banks toward compliancy, while, as a finance attorney, I’m also ensuring my firm continues to meet the newly enacted standards required of all professionals with access to personal financial data.”

NEW SAFETY MEASURES

The Dodd-Frank Act is sweeping, Menicucci said, “The new regulations are changing the way lenders and banks of all sizes are to conduct business.”

Dodd-Frank, Menicucci explained, granted rule-making authority of the earlier Gramm-Leach-Bliley Act to the CFPB for establishing rules to protect the privacy of consumer and customer financial information.

“Anyone – including a lawyer – exchanging a person’s private data with a bank is subject to the same newly enacted security standards required of the financial institution,” Menicucci said.

This means banking attorneys who, in order to safeguard personal data passing between themselves and client banks, must incorporate measures such as high-tech anti-hacking and penetration safeguards, information-backup procedures, encrypted email systems and regularly changed online passwords.

“In a nutshell,” Menicucci said, “professionals having anything to do with consumer financial transactions have to overhaul the way they have been conducting business, if they haven’t done so already. It’s this simple: If you’re a finance attorney, you deal with banks and mortgage loans; if you deal with banks and mortgage loans, you need to conform.”

ENSURING COMPLIANCY

As the CFPB’s intention is to hold financial institutions responsible for their service providers’ actions, Menicucci added, “the responsibility for harm done to a consumer by a service provider’s misconduct will ultimately land at the lender’s doorstep.”

Once the changeover to CFPB compliancy is accomplished, legal advisers will have to stay on top of things as the legislation’s broader requirements continue to be initiated.

“This likely will cause havoc for some lawyers, who may find the amount of time and money needed to comply with the new banking regulations confusing, exhaustive or unaffordable; and it threatens the compliancy of banks whose service providers are ill-prepared to meet the regulatory requirements,” Menicucci said.

“In the mean time, my firm is working with financial institutions to ensure their compliancy obligations are up to date and fulfilled prior to any and all pending deadlines,” he said.

About Menicucci ^. Villa & Associates

Menicucci, Villa & Associates PLLC is a New York-based law firm with a focus on the legal details of banking and finance, including federal regulatory-compliance issues; residential and commercial real estate transactions; commercial litigation, and trusts and estates.

With offices in Manhattan and Staten Island, N.Y., the team of Menicucci, Villa & Associates is widely recognized as one of the top law practices of its kind in metropolitan New York. The firm may be reach at 212-563-9090 or via e-mail at This e-mail address is being protected from spambots. You need JavaScript enabled to view it "