CCH Financial Reform News Center

Proposed Reg. Z to Implement Credit CARD Act

This story appeared in Bank Digest.

The Federal Reserve Board has proposed rules amending Regulation Z (Truth in Lending) to protect consumers who use credit cards from a number of potentially costly practices. “This proposal is another step forward in the Federal Reserve's efforts to ensure that consumers who rely on credit cards are treated fairly,” said Fed Governor Elizabeth A. Duke. “The rule bans several harmful practices and requires greater transparency in the disclosure of the terms and conditions of credit card accounts.”

Among other provisions, the proposed rule would:

Refinance Volumes Drop in Response to Higher Interest Rates

This story appeared in Bank Digest.

The Federal Housing Finance Agency's monthly report on government sponsored enterprise refinance volumes showed a recent drop in refinances likely due to a sharp rise in mortgage rates in June. The report, which also covers the Making Home Affordable Refinance Program (HARP), noted that Fannie Mae and Freddie Mac refinanced more than 3.2 million mortgages year-to-date through August 2009. “Successful refinancing is a key element of the ongoing efforts to stabilize the housing market,” said FHFA Acting Director Edward J. DeMarco. “So far, more than 260,000 homeowners who are current on their mortgage payments have been assisted through the HARP and other streamlined refinance programs administered by Fannie Mae and Freddie Mac,” said DeMarco. Refinance volumes increased through the first half of the year as mortgage rates dropped. The report commented that refinance volumes are strongly influenced by changes in mortgage rates and that there is a one or two month lag in the effect.

Joint Forum Issues Report on Special Purpose Entities

This story appeared in Bank Digest.

Comptroller of the Currency John C. Dugan has announced the release of the final version of the Joint Forum's Report on Special Purpose Entities. The Joint Forum was established in 1996 under the aegis of the Basel Committee on Banking Supervision, the International Organization of Securities Commissions, and the International Association of Insurance Supervisors to deal with issues common to the banking, securities, and insurance sectors, including the supervision of financial conglomerates. Dugan has served as chairman of the Joint Forum since September 2007. The report serves two broad objectives. First, it provides background on the variety of special purpose entities found across the financial sectors, the motivations of market participants to make use of these structures, and risk management issues that arise from their use. Second, it suggests policy implications and issues for consideration by market participants and the supervisory community.

Treasury Releases Latest CPP Transactions Report

This story appeared in Bank Digest.

The Treasury Department has released the latest transactions completed under its Capital Purchase Program. As of MM DD, 2009, the Treasury has invested $204,617,573,320 in 742 financial institutions. In addition, the Treasury has received $70,689,152,000 in capital repayments.

Securities Industry Concerned About Consumer Financial Protection Draft, Supports Draft Creating Federal Fiduciary Standard for Brokers and Advisers

By James Hamilton, J.D., LL.M., Principal Analyst, CCH Federal Securities Law Reporter; and CCH Derivatives Regulation Law Reporter.

The securities industry fears that draft legislation creating a Consumer Financial Protection Agency with broad new powers could inadvertently encroach on the jurisdiction of the SEC and CFTC. In testimony before the House Small Business Committee, The Securities Industry and Financial Markets Association (SIFMA) also said it favors draft legislation creating a new uniform federal fiduciary standard for brokers and advisers. However, SIFMA opposes the piece of the draft authorizing the SEC to prohibit pre-dispute arbitration clauses in broker-dealer and investment advisory agreements with retail customers.

Fed Grants Regulatory Reporting Relief

This story appeared in Bank Digest.

The Federal Reserve Board has granted temporary relief from the agency’s regulatory reporting requirements for bank holding companies to CIT Group Inc., New York, N.Y. The bank holding company sough the relief so as to include information regarding its debt restructuring process in its regulatory reports and filings with the Securities and Exchange Commission.

Credit Union Letter Addresses Loan Modification Programs

This story appeared in Bank Digest.

The NCUA has issued a Supervisory Letter on evaluating residential real estate loan modification programs. The Letter notes that, during this economic downturn, many credit unions are offering some type of loan modification, or other workout solution, to their distressed residential mortgage borrowers. The loan modifications will vary by credit union and by loan. The Letter lists “fundamental components” that examiners should look for in any loan modification program.

FDIC Alerts Banks to Tenant Protection Act

This story appeared in Bank Digest.

The FDIC has published highlights of the “Protecting Tenants at Foreclosure Act of 2009,” which became effective on May 20, 2009. The law is intended to protect tenants from immediate eviction by persons or entities that become owners of residential property through foreclosure and extends additional protections for tenants with U.S. Department of Housing and Urban Development Section 8 vouchers. It establishes a minimum time period that a tenant can remain in a foreclosed property before being evicted. Tenants must be given at least 90 days notice; tenants with leases must be permitted to remain until the end of the lease, except that a lease can be terminated with 90 days notice by a purchaser who intends to occupy the property.

National Banks Notified of Proposed Concentration Risk Guidance

This story appeared in Bank Digest.

The OCC has alerted banks of a proposed Correspondent Concentration Risks guidance. The proposed guidance addresses supervisory matters relating to identifying, monitoring, managing and performing appropriate due diligence of correspondent concentration risks.

Senior Senate Democrat Sponsors Legislation Regulating OTC Derivatives

By James Hamilton, J.D., LL.M., Principal Analyst, CCH Federal Securities Law Reporter; and CCH Derivatives Regulation Law Reporter.

Draft legislation establishing a comprehensive regulatory framework for derivatives has been introduced by Jack Reed, Chair of the Senate Securities Subcommittee. The Comprehensive Derivatives Regulation Act, S. 1691, would require standardized credit default swaps and other unregulated derivatives to be cleared through a clearinghouse in order to protect the companies and the financial system from the risks posed by these instruments. Importantly, the draft would also authorize regulators to oversee any new derivative product in the future, so dealers can no longer create products that fall into holes in the law. Moreover, S. 1691 would set up strong capital and margin requirements for derivatives dealers and other major market participants and subject them to higher standards for products that are not traded on clearinghouses.