Dodd-Frank News Center

Durbin Slams BoA Debit Card Monthly Fee

By Sarah Borchersen-Keto, CCH Washington News Bureau, Contributing Author, the CCH Federal Banking Law Reporter

Bank of America’s decision to charge debit card users a monthly fee of $5 came under harsh criticism from Sen. Dick Durbin, D-Ill., who accused the bank of “trying to find new ways to pad their profits by sticking it to its customers.”

In an internal communication BoA said it would begin a phased roll-out of the new fee, starting in early 2012. The bank noted that the economics of offering a debit card had altered as a result of recent regulation.

Inspectors General Review Transfer of OTS Functions

This story appeared in Bank Digest.

A joint review of the transfer of Office of Thrift Supervision authority to the remaining regulatory agencies has found that the agencies have substantially executed their established plan to transfer OTS functions, employees, funds and property to the Fed, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency. The report, prepared by the Inspectors General of the Fed, FDIC and Treasury Department, noted that some plan details needed to protect former OTS employees and properly transfer OTS authority that were not fully covered by the plan were successfully worked out, although it also observed that the Acting Director of OTS has not yet received a notice of position assignment from OCC.

Shelby Legislation Would Create Council of Agency Chief Economists and Change Standard of Judicial Review of Federal Financial Regulations

By James Hamilton, J.D., LL.M., Principal Analyst, CCH Federal Securities Law Reporter and Author of Jim Hamilton's World of Securities Regulation.

Two of the more interesting provisions of Senator Richard Shelby's proposed legislation reforming the federal financial regulatory process are the creation of a council of economists composed of the Chief Economists of the SEC and CFTC and other federal financial regulators and a new standard under which federal courts will review agency regulations.

FIO Director Discusses New Insurance Supervisor

This story appeared in Bank Digest.

In a post on the Treasury Notes blog, Federal Insurance Office Director Michael McRaith discusses the new agency, which was established within the Treasury Department by the Dodd-Frank Act. "Among other things, the FIO advises the Secretary of the Treasury on major domestic and prudential international insurance policy issues," McRaith said in the interview. "As part of this work, we monitor all aspects of the insurance industry, including the availability of affordable insurance to traditionally underserved communities and consumers. The FIO also assists the Secretary in administering the Terrorism Risk Insurance Act, which helps support the market for terrorism risk insurance products." McRaith also discussed the FIO's plans for the near future, working with state regulators, the coordination of international insurance matters and his prior experience as head of the Illinois Department of Insurance.

FHFA Releases Alternative Mortgage Servicing Compensation Discussion Paper

This story appeared in Bank Digest.

The FHFA has released a discussion paper that proposes and seeks comments on two new mortgage servicing compensation structures. On Jan. 18, 2011, the FHFA announced a joint initiative to consider alternatives for a new mortgage servicing compensation structure. The FHFA directed Fannie Mae and Freddie Mac, in coordination with the agency and the Department of Housing and Urban Development, to consider alternatives for future mortgage servicing structures and servicing compensation for single-family loans. The joint initiative's primary goals were:

• improve service for borrowers;
• reduce financial risk to servicers; and
• provide flexibility for guarantors to better manage non-performing loans, while promoting continued liquidity in the to-be-announced mortgage securities market.

While this effort is not a notice and comment rulemaking subject to the requirements of the Administrative Procedures Act, the FHFA is requesting public input on the proposals for a 90-day review period. The FHFA said it will post the written materials received on its web site for public review. Information identifying the submitter will be redacted prior to posting, if requested. After the expiration of the review period, and after the joint initiative has completed an evaluation of the submitted materials, the FHFA said it expects to provide further details to the public on potential courses of action.

FHFA IG Urges Scrutiny of Freddie Mac Loan Review Process

By Sarah Borchersen-Keto, CCH Washington News Bureau, Contributing Author, the CCH Federal Banking Law Reporter.

The Federal Housing Finance Agency should continue to withhold approval of Freddie Mac mortgage repurchase settlements until it is confident that concerns regarding Freddie’s loan review process have been resolved, according to the agency’s Inspector General.

The IG report, issued Sept. 27, 2011, is in response to concerns from members of Congress and others about the adequacy of Freddie Mac’s $1.35 billion repurchase settlement with Bank of America (BoA).

Treasury Assistant Secretary Lago Addresses Global Financial Regulatory Reform

By J. Preston Carter, J.D., LL.M., Editor, Financial Privacy Law Guide, CCH Federal Banking Law Reporter, State Banking Law Reporter and Bank Digest; co-author, Dodd-Frank Wall Street Reform and Consumer Protection Act—Law, Explanation and Analysis.

In remarks before the Institute of International Bankers at a Sept. 26, 2011, Breakfast Regulatory Dialogue in Washington, D.C., Assistant Secretary Marisa Lago remarked on a number of regulatory reform issues that the Treasury Department is addressing on the global financial regulatory front.

Credit Card Fees Rule Amendment Blocked

By Richard Roth, J.D., Editor, the CCH Federal Banking Law Reporter, CCH Bank Compliance Guide, Bank Digest; co-author, Dodd-Frank Wall Street Reform and Consumer Protection Act—Law, Explanation and Analysis.

A federal district court has granted a preliminary injunction against the enforcement of an amendment to Reg. Z—Truth in Lending (12 CFR 226) that would have reduced the ability of credit card companies to impose fees on the types of cards usually offered to subprime borrowers. The injunction, which prevents the Consumer Financial Protection Bureau from enforcing the rule until a final decision is given in the case, was based in part on a determination that the Federal Reserve Board exceeded its authority when it adopted the amendment.

House Democrats Urge SEC to Quickly Finish Dodd-Frank Conflict Minerals Regulations and Use OECD Due Diligence Guidelindes

By James Hamilton, J.D., LL.M., Principal Analyst, CCH Federal Securities Law Reporter and Author of Jim Hamilton's World of Securities Regulation.

In a letter to SEC Chair Mary Schapiro, four prominent House Democrats, including Rep. Barney Frank (D-MASS) urged the SEC to quickly complete the conflict minerals regulations implementing Section 1502 of the Dodd-Frank Act. The letter also said that the SEC should incorporate the OECD due diligence guidance in the regulations. Section 1502 of the Act requires companies that report to the SEC to disclose the measures they use to certify that their products do not contain conflict minerals from the Congo. Companies also have to track their supply chains back to a mineral's origin.

Financial Institutions in the New Regulatory Environment Discussed

This story appeared in Bank Digest.

In a speech before Georgetown University and PwC Conference entitled “Financial Reform, What's Next? A US and Global Perspective Examining the Opportunities and Challenges Ahead,” Assistant Treasury Secretary Marisa Lago discussed the critical issues facing the global financial regulatory landscape. Lago noted, “We know that the steps we have taken in the U.S. and globally have helped. Banks have more capital. Leverage has been reduced. We also know that we need to do more. We must continue to pursue the highest standards if we want to secure our financial system against future crises, cultivate financial markets that efficiently allocate capital and support growth, and maintain the competitiveness of our markets and financial firms. Recent history has underscored that the risk is not in being too bold, too strong or too secure, but rather in being too lax and too vulnerable. Together with our partners in the G-20, the U.S. seeks to establish high standards that allow competition and innovation to thrive, while protecting consumers and taxpayers from future crises.”