Dodd-Frank News Center

CFPB announces changes to CID policies

This story appeared in Bank Digest.                                     

The Consumer Financial Protection Bureau has announced changes to policies regarding Civil Investigative Demands, which are investigational subpoenas the Bureau is authorized to issue when looking into potential violations of law. The changes are intended to ensure the CIDs provide more information about the potentially wrongful conduct under investigation.

The Bureau's release said CIDs will now provide more information about the potentially applicable provisions of law that may have been violated and will also typically specify the business activities subject to the Bureau's authority. If determining the extent of the Bureau's authority over the relevant activity is a significant purpose of the investigation, staff may specifically include that issue in the CID in the interests of further transparency, the CFPB said.

CFPB seeks renewal of 'Interstate Land Sales Full Disclosure Act' information collection

This story appeared in Bank Digest.

The Consumer Financial Protection Bureau is proposing to renew, without change, the Office of Management and Budget approval for an existing information collection entitled "Interstate Land Sales Full Disclosure Act (Regulations J, K & L) 12 CFR 1010, 1011, 1012." According to the CFPB's notice, information relating to this collection is submitted to the Bureau to assure compliance with the Interstate Land Sales Full Disclosure Act and the implementing regulations.

On Dec. 17, 2018, the Bureau issued a 60-day notice at 83 Federal Register 64566 seeking comments on the proposal. Written comments on the current notice must be received by May 22, 2019, and will be reviewed by the OMB as part of its review of this request.

FDIC considers easier living will rule for banks, thrifts

 This story appeared in Bank Digest.                                   

The Federal Insurance Deposit Corporation is publishing an advance notice of proposed rulemaking on ways it could tailor living will requirements for the banks and savings associations it supervises. The ANPR suggests possible changes in three areas: (1) creating tiered planning requirements based on each institution's size and complexity, as well as other factors; (2) reducing the frequency and required content for resolution plans, and eliminating the filing obligation for some smaller and less complex institutions; and (3) improving the communication between the agency and the institutions.

According to an FDIC staff memorandum, the agency is considering two possible approaches, one with three tiers and the other with two. Since the FDIC may adopt living will rule amendments before affected banks and thrifts are required to file their plans--July 1, 2020--the ANPR asks if filing should be delayed until the agency reaches and implements a decision. Comments on the ANPR must be received within 60 days of its publication in the Federal Register.

Brown urges FSOC to address risks in leveraged loan market

This story appeared in Bank Digest.                                   

Senate Banking Committee Ranking Member Sherrod Brown (D-Ohio) has written a letter to Treasury Secretary Steven T. Mnuchin, who is also chair of the Financial Stability Oversight Council, urging the FSOC to take action to address heightened risks in the leveraged loan market. According to Brown, "The marked increase in the volume of leveraged loans originated by financial institutions has been accompanied by a notable decrease in underwriting standards. Like many financial activities, leveraged lending benefits banks and financial intermediaries that profit by packaging and selling risky loans."

He added that the "FSOC must consider whether this additional risk to the banking system serves as a public benefit to the real economy." Brown requested that he be provided with any FSOC analyses and documents relating to leveraged lending, along with other information.

 

Agencies tell Warren, Brown that Wells Fargo has not satisfied consent order obligations

This story appeared in Bank Digest.                                   

Senators Elizabeth Warren (D-Mass) and Sherrod Brown (D-Ohio) have released new letters from the Federal Reserve Board, Office of the Comptroller of the Currency, and Consumer Financial Protection Bureau in response to inquiries they sent the regulators in March 2019 regarding Wells Fargo.

In separate letters sent to the OCC and CFPB and to the Fed, the senators had expressed concern about Wells Fargo's apparent unwillingness to compensate customers harmed by the bank's illegal auto-lending practices, despite an obligation to do so under its settlement with the OCC and CFPB, and urged the agencies to use their enforcement tools to remove then-CEO Tim Sloan. The senators' letter to the Fed also cited a recent Securities and Exchange Commission fine for overcharging retail mutual fund investors and urged the Fed to refrain from lifting Wells Fargo's growth restriction until Sloan was replaced.

According to Warren's press release, the agencies said in their response letters that Wells Fargo has not satisfied its obligations under existing consent orders, which require the bank to remediate customers harmed by its wrongdoing and impose reforms to end the bank's unlawful activity.

Fed, FDIC propose modifying resolution plan requirements for U.S., foreign banks

This story appeared in Bank Digest.

The Fed and FDIC are inviting public comment on a joint proposal to modify regulations implementing the resolution planning requirements of Section 165(d) of the Dodd-Frank Act for U.S. and foreign banking organizations.”

The rule changes are intended to conform with 2018 amendments made by the Economic Growth, Regulatory Relief, and Consumer Protection Act to the Dodd-Frank Act and to reflect desired improvements to resolution planning that the federal agencies have identified over the past several years.

Principally, the agencies’ proposal seeks to establish “risk-based categories for determining the application of the resolution planning requirement to certain U.S. and foreign banking organizations,” extend the “default resolution plan filing cycle,” and allow for “more focused resolution plan submissions.” According to the draft notice of the proposal, public comments are to be received by June 21, 2019.

CFPB requests renewal of RESPA information collection

This story appeared in Bank Digest.                                   

The Consumer Financial Protection Bureau is requesting to renew, without change, the Office of Management and Budget approval for an existing information collection entitled "Real Estate Settlement Procedures Act (Regulation X) 12 CFR 1024." Written comments must be received by June 7, 2019.

According to the Bureau's notice, the Real Estate Settlement Procedures Act of 1974, as amended, requires lenders, mortgage brokers, or servicers of certain home loans to provide borrowers with pertinent and timely disclosures regarding the nature and costs of the real estate settlement process, as well as servicing, including escrowing.

Regulation X, which implements RESPA, contains information collections in the form of third party disclosures and recordkeeping requirements.  

CFPB blog post urges consumers to work with credit card companies on debt

This story appeared in Bank Digest.                                   

Noting that overall credit card debt increased by 13 percent from 2015 to 2017, and by 22 percent for those with very low credit scores, the authors of a Consumer Financial Protection Bureau blog post advise consumers to work with their credit card companies to help address their debt, saying that many companies "will work with you to find a repayment plan that suits your current situation."

The post also discusses the use of debt settlement companies, which "are typically for-profit companies that often state that they can negotiate with your credit card company to reduce the amount you owe." The authors describe certain drawbacks to using such companies, noting that they typically advise consumers to stop making payments, which could negatively affect their creditworthiness. Such companies also often charge large fees, according to the authors, for work that consumers can do themselves.

 In addition, the post says consumers may want to work with a credit counselor to help them manage their money and pay off their debt.

 

Agencies propose rule to limit impact of large bank failures

This story appeared in Bank Digest.                                     

The Federal Deposit Insurance Corporation, Federal Reserve Board, and Office of the Comptroller of the Currency have issued a proposed rule that would limit the interconnectedness of large banking organizations and reduce the impact from large bank failures. According to the joint press release, it would discourage certain firms (generally, those with $250 billion or more in assets or $10 billion in foreign exposure) from purchasing large amounts of total loss-absorbing capacity (TLAC) debt by requiring the organizations to hold additional capital against substantial holdings of TLAC debt. Comments on the proposed rule will be due 60 days after its publication in the Federal Register.

CFPB updates ECOA baseline review procedures, HMDA examination procedures

This story appeared in Bank Digest.                                   

The Consumer Financial Protection Bureau has updated its Equal Credit Opportunity Act baseline review procedures and its Home Mortgage Disclosure Act examination procedures. The ECOA Baseline Review Modules will be used by examiners during ECOA baseline reviews to evaluate how institutions' compliance management systems identify and manage fair lending risks under ECOA.

HMDA requires certain financial institutions to collect, report, and disclose information about their mortgage lending activity. An HMDA review includes transactional testing for HMDA data accuracy and is conducted using the HMDA Examination Procedures within the CFPB Supervision and Examination Manual. The updated HMDA procedures include updates to reflect the Bureau's interpretive and procedural rule, issued in August 2018, which was issued to implement and clarify Section 104 of the Economic Growth, Regulatory Relief, and Consumer Protection Act.