Dodd-Frank News Center

Banking Committee holds hearing on CFPB’s semiannual report

This story appeared in Bank Digest.                                   

The Senate Banking Committee held a hearing entitled “The Consumer Financial Protection Bureau’s Semi-Annual Report to Congress” on Oct. 17, 2019. The committee received the testimony of CFPB Director Kathy Kraninger on the Bureau’s recent semiannual report to Congress, as required by the Dodd-Frank Act. The report covers the period beginning Oct. 1, 2018, and ending March 31, 2019.

According to a prepared opening statement by Committee Chairman Mike Crapo (R-Idaho), the report “outlines the Bureau’s significant work” during that period, including rulemakings and supervisory and regulatory activities, and “provides insight into what the CFPB plans to undertake in the coming work period.”

Agencies finalize rules on capital and liquidity requirements, resolution plans

This story appeared in Bank Digest.                                   

The Federal Deposit Insurance Corporation, Federal Reserve Board, and Office of the Comptroller of the Currency have jointly adopted a final rule to revise the criteria for determining the applicability of regulatory capital and liquidity requirements for large U.S. banking organizations and the U.S. intermediate holding companies of certain foreign banking organizations. The final rule establishes four risk-based categories for determining the applicability of requirements under the agencies’ regulatory capital rule and liquidity coverage ratio rule.

Separately, the Fed and FDIC have adopted a final rule implementing the resolution planning requirements of Section 165(d) of the Dodd-Frank Act. The final rule is intended to reflect improvements identified since the agencies finalized their joint resolution plan rule in November 2011 and to address amendments to the Dodd-Frank Act made by the Economic Growth, Regulatory Relief, and Consumer Protection Act. The final rules take effect 60 days after publication in the Federal Register.

FDIC reduces company-run stress test requirements

This story appeared in Bank Digest.                                   

The Federal Deposit Insurance Corporation has amended its rules on company-run stress tests to ease test requirements in three significant ways. The amendments will: (1) increase the asset threshold to $250 billion, from the current $10 billion; (2) change the requirement of annual tests to a requirement of periodic tests; and (3) eliminate one of the three test scenarios. The amendments are consistent with changes made by the Economic Growth, Regulatory Relief, and Consumer Protection Act.

According to the FDIC’s notice, the changes will take effect 30 days after they are published in the Federal Register. The Federal Reserve Board and Office of the Comptroller of the Currency are expected to adopt identical amendments to their stress test rules.

Fed finalizes rules to align regulations with domestic, foreign bank risk profiles

This story appeared in Bank Digest.                                   

At its Oct. 10, 2019, open meeting, the Federal Reserve Board finalized rules that tailor its regulations for domestic and foreign banks to more closely match their risk profiles. According to the Fed, the rules "reduce compliance requirements for firms with less risk while maintaining the most stringent requirements for the largest and most complex banks."

In particular, the rules establish a framework that pigeonholes banks with $100 billion or more in total assets into four different categories based on several factors—including "asset size, cross-jurisdictional activity, reliance on short-term wholesale funding, nonbank assets, and off-balance sheet exposure." As communicated by the Fed, the rules "build on the Board's existing practice of tailoring its requirements and are consistent with changes made by the Economic Growth, Regulatory Relief, and Consumer Protection Act." The rules take effect 60 days after their publication in the Federal Register.

The Fed has also issued a notice of proposed rulemaking that would amend its assessment rule (Regulation TT) to raise the minimum threshold for being considered an assessed company from $50 billion to $100 billion in total consolidated assets for bank holding companies and savings and loan holding companies and adjust the amount charged to assessed companies with total consolidated assets between $100 billion and $250 billion to reflect changes in supervisory and regulatory responsibilities resulting from the Economic Growth, Regulatory Relief, and Consumer Protection Act. Comments must be received by Dec. 9, 2019.

Agencies Finalize Volcker Rule Revisions

This story appeared in Bank Digest.                                   

The Federal Reserve Board and four other federal financial regulatory agencies have finalized revisions to the "Volcker Rule," which generally prohibits banking entities from engaging in proprietary trading or investing in or sponsoring hedge funds or private equity funds. The changes were jointly developed by the Fed, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, Commodity Futures Trading Commission, and Securities and Exchange Commission.

The agencies' joint release said that under the revised rule, firms that do not have significant trading activities will have simplified and streamlined compliance requirements, while firms with significant trading activity will have more stringent compliance requirements. The revisions continue to prohibit proprietary trading, while providing greater clarity and certainty for activities allowed under the law.

House files Supreme Court motion to defend for-cause removal provision for CFPB director

This story appeared in Bank Digest.                                   

Speaker of the House Nancy Pelosi (D-Calif) and House Financial Services Committee Chairwoman Maxine Waters (D-Calif) have announced a filing by the House of Representatives with the Supreme Court in support of the independence of the Consumer Financial Protection Bureau. As described in Pelosi's press release, the House's motion in Seila Law LLC v. CFPB to file an amicus brief follows a recent announcement by Consumer Financial Protection Bureau Director Kathy Kraninger that the Bureau would no longer defend the constitutionality of the for-cause removal provision regarding the CFPB director, which is designed to provide a degree of independence to the agency and to prevent the President from removing the director at will.

The release said the Justice Department has also urged the Supreme Court to consider the case in order to strike down the for-cause removal protection for the CFPB director.

Quarles speaks at European Banking Summit on work of Financial Stability Board

This story appeared in Bank Digest.                                   

Federal Reserve Board Vice Chair for Supervision and Financial Stability Board Chair Randal K. Quarles spoke at the European Banking Federation’s European Banking Summit in Brussels, Belgium, on Oct. 3, 2019. The subject of his prepared remarks was “The Financial Stability Board at 10 Years—Looking Back and Looking Ahead.”

Noting that 2019 marks the 10th anniversary of the founding of the Financial Stability Board, Quarles said he wanted to “look back on the experiences of the past 10 years, what the FSB has accomplished, and also offer some perspective on just how it contributed to the construction of the post-crisis global financial architecture.” He also discussed “the new challenges facing the global regulatory community, such as innovations in financial technology, shifts in financial globalization and integration, and increasing nonbank financial intermediation.”

CFPB and South Carolina sue brokers of high-interest credit offers

This story appeared in Bank Digest.                                     

The Consumer Financial Protection Bureau and the South Carolina Department of Consumer Affairs have filed a lawsuit against Katharine Snyder, Performance Arbitrage Company, Inc., and Life Funding Options, Inc. The Bureau said the companies, which are owned and operated by Snyder, brokered contracts offering high-interest credit to veterans, many of whom are disabled, and to other consumers. The Bureau alleges that the companies and Snyder violated the Consumer Financial Protection Act’s prohibition against deceptive acts or practices.     

The complaint seeks an injunction against Snyder and her companies, redress to consumers, and the imposition of a civil money penalty.

CFPB sues Maryland debt collection entities and CEO over alleged FCRA, FDCPA violations

This story appeared in Bank Digest.                                   

The Consumer Financial Protection Bureau has filed a lawsuit against FCO Holding, Inc., and its subsidiaries, Fair Collections & Outsourcing, Inc.; Fair Collections & Outsourcing of New England, Inc.; and FCO Worldwide, Inc., as well as Michael E. Sobota, the chief executive officer, president, director, and owner of FCO Holding, Inc. All of the entities are Maryland-based debt collectors that operate collectively under the names Fair Collections & Outsourcing and FCO, the Bureau said.

The Bureau alleges that FCO violated the Fair Credit Reporting Act, Regulation V, and the Consumer Financial Protection Act by, among other things, failing to establish or implement reasonable written policies and procedures regarding the accuracy and integrity of the information it furnished to consumer reporting companies, specifically with respect to its handling of indirect disputes. The Bureau also alleges that FCO and Sobota violated the Fair Debt Collection Practices Act when FCO represented that consumers owed certain debts when FCO did not have a reasonable basis for such assertions.

The Bureau's complaint seeks an injunction, as well as damages, redress, disgorgement of alleged ill-gotten gains, and the imposition of a civil money penalty.                            

 

CFPB Files Amicus Brief in CFPA Case

This story appeared in Bank Digest.                         

The Consumer Financial Protection Bureau has filed an amicus brief in the case of Commonwealth of Pennsylvania v. Navient Corp., et al. This case concerns the authority of states to enforce the Consumer Financial Protection Act's prohibition against unfair, deceptive, or abusive acts or practices. The CFPA requires states bringing such actions to notify the CFPB, but the Bureau argued in its amicus brief that nothing in the relevant CFPA section, either explicitly or implicitly, prohibits a state from bringing an action that is parallel to one that the Bureau has already brought.