Dodd-Frank News Center

Acting Comptroller’s Remarks Highlight Actions Against Mortgage Servicers

This story appeared in Bank Digest.

In remarks before the Institute of International Finance in Washington, D.C., Acting Comptroller of the Currency John Walsh discussed the prospects for recovery of the housing and mortgage markets in the United States. Walsh’s remarks focused on the activities of the banks as mortgage servicers and how the OCC is addressing problems in light of its enforcement orders against 14 mortgage servicers. He noted, “The challenges before us are substantial, but so are the steps we have taken in our enforcement orders. I believe that we are on track to settle outstanding issues in a way that respects the needs of all who have truly suffered from flaws in the system and restores confidence in the system. The sooner the better.”

Proposed GSA Amendments to Remove Credit Rating Agency References

This story appeared in Bank Digest.

The Treasury Department is seeking public comment on a proposed amendment to the regulations issued under the Government Securities Act of 1986 (GSA) to replace references to credit ratings in its rules with alternative requirements. The proposed amendments would implement Section 939A of the Dodd-Frank Act, which requires federal agencies to remove from their applicable regulations any reference to or requirement of reliance on credit ratings and to substitute a standard of creditworthiness as the agency determines appropriate for such regulations. In its proposal, the Treasury Department is specifically seeking comments on a substitute standard of creditworthiness for use in the liquid capital rule required by the GSA regulations.

Collins Legislation Would Mandate One-Year Moratorium on Significant Federal 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.

Legislation introduced by Senator Susan Collins (R-ME) would provide a one-year moratorium for significant regulations of federal executive and independent agencies. The Regulatory Time-Out Act, S 1538, would impose a one year moratorium on significant new regulations from going into effect if they would have an adverse impact on jobs, the economy, or US international competitiveness. Significant regulations include those costing more than $100 million per year. This definition is similar to definitions used by Presidents Clinton and G.W. Bush in Executive Orders, said Senator Collins. The time-out applies to regulations issued by Executive Branch agencies and independent regulatory agencies.

Federal Legislation Would Curb Excessive Energy Derivatives Position Limits and Define Excessive Speculation

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

Concerned with proposed CFTC regulations on energy derivatives position limits, Senator Bill Nelson (D-FL) has introduced legislation under which no single investor could hold more than 5 percent of the oil futures market thereby greatly reducing speculators ability to manipulate prices. And because more speculators have jumped into the oil flipping business, said the Senator, the bill caps the overall level of speculation in the market at its average over the most recent 25 years. Rep. Peter Welch (D-VT) has introduced a companion bill in the House. The lawmakers say that the legislation could reduce present day levels of speculation by more than half.

Shelby Bill Seeks Insight on Economic Impact of Rulemaking

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

Legislation introduced by Senate Banking Committee ranking member Sen. Richard Shelby, R-Ala., and supported by all GOP committee members would require financial regulators to demonstrate the economic impact of proposed rulemakings and their effect on growth and job creation.

The Financial Regulatory Responsibility Act of 2011 states that if a rulemaking’s cost exceeds its benefits, then it should not be implemented. “American job creators are under siege from the Dodd-Frank Act,” said Shelby, adding that Congressional Democrats failed to consider the economic impact of the act “in their rush to expand the reach of government into our private markets.”

CFPB Assistant Director Warns of Abusive Education Loans to Servicemembers

This story appeared in Bank Digest.

A New York Times op-ed by Holly Petraeus, Assistant Director for Service Member Affairs at the Consumer Financial Protection Bureau, warns of aggressive and misleading marketing by for-profit colleges that targets servicemembers and their families. According to Petraeus, more than $520 million was paid to only 20 such institutions in 2010, while students often received little academic, administrative or counseling support. She specifically criticized a requirement that a for-profit college must receive at least 10 percent of its revenue from a source other than Title IV education funds, which are the primary source of federal student aid. As a result, “For every service member or veteran (or spouse or child, in the case of the post-9/11 G.I. Bill) enrolled at a for-profit college and paying with military education funds, that college can enroll nine others who are using nothing but Title IV money. This gives for-profit colleges an incentive to see service members as nothing more than dollar signs in uniform, and to use aggressive marketing to draw them in and take out private loans, which students often need because the federal grants are insufficient to cover the full cost of tuition and related expenses,” Petraeus wrote.

CFPB Moves Forward on Combined Mortgage Disclosures

This story appeared in Bank Digest.

The CFPB has submitted for review a plan to collect information that will be used to develop model forms that integrate separate disclosures about residential mortgage loans that are required under the Truth in Lending Act and Real Estate Settlement Procedures Act. The review request says that the agency will conduct qualitative testing of several features of the possible disclosures and seek information from the public before a final proposal is made.

FHFA May Be Unable to Examine GSEs Properly

This story appeared in Bank Digest.

A report by the FHFA's Inspector General casts serious doubt on the agency's ability to examine Fannie Mae, Freddie Mac and the Federal Home Loan Banks adequately. According to the report, the FHFA does not have enough examiners for the program to be efficient and effective, and too few of them are accredited federal financial examiners. Moreover, the FHFA does not have an established accreditation program, the report said. The other financial regulatory agencies require all examiners either to be accredited or to be enrolled in an examination program, it was noted. The report added that the FHFA has not properly reported on the inadequacy of its examination capabilities.

Senator Shelby Introduces Legislation Reforming Federal Financial Regulatory Process

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

Senator Richard Shelby (R-AL), Ranking Member on the Banking Committee has introduced the Financial Regulatory Responsibility Act of 2011, which holds federal financial regulators such as the SEC and CFTC accountable for rigorous, consistent economic analysis on every new regulation they propose. The legislation would require the SEC and CFTC to provide clear justification for the regulations and determine the economic impacts of proposed rulemakings, including their effects on growth and net job creation. In addition, the legislation mandates that if a regulation’s costs outweigh its benefits, regulators are barred from promulgating it. The Financial Regulatory Responsibility Act of 2011 is cosponsored by all Republican members of the Banking Committee and is supported by former SEC and CFTC Chief Economists. Senator Shelby has written a letter to Banking Committee Chairman Tim Johnson (D-SD) requesting a hearing on the Financial Regulatory Responsibility Act.

Frank Comments on “Too Big to Fail”

This story appeared in Bank Digest.

House Financial Services Committee Ranking Member Barney Frank, D-Mass., expressed his belief that the Moody’s Investor Service downgrade of Bank of America, Wells Fargo and Citigroup “recognizes that such large institutions are not ‘too big to fail.’” Moody’s downgraded the banks’ credit ratings September 21, underscoring the challenges the banking sector still faces. According to the rating agency, the downgrades “result from a decrease in the probability that the US government would support the bank, if needed.”