Dodd-Frank News Center

Treasury Sends Consumer Financial Protection Agency Plan to Congress

By Sarah Borchersen-Keto, CCH Washington News Bureau, and Richard Roth, J.D., Editor, the CCH Federal Banking Law Reporter, CCH Bank Compliance Guide and Bank Digest.

The Treasury Department has sent Congress its draft proposal to create a Consumer Financial Protection Agency, and expects lawmakers to move quickly to enact legislation. Michael Barr, Treasury Assistant Secretary for Financial Institutions, told reporters on June 30, 2009, that President Obama is “highly focused” on getting legislation passed and that it will be an “extremely high priority” in coming weeks.

Treasury Secretary Timothy Geithner said the agency “will have only one mission – to protect consumers – and have the authority and accountability to make sure that consumer-protection regulations are written fairly and enforced vigorously.” Consumer protection will have an independent seat at the table in the financial regulatory system, he said, adding that consolidating accountability in one place will reduce gaps in federal supervision and enforcement.

Latest FSOB Minutes Released

This story appeared in Bank Digest.

The Financial Stability Oversight Board (FSOB) has released the minutes from its meeting held on May 28, 2009. Discussion during the meeting focused on the Supervisory Capital Assessment Program (SCAP), the Capital Assistance Program (CAP), the Term Asset-Backed Securities Loan Facility (TALF), the Home Affordable Modification Program (HAMP), and the Automotive Industry Financing Program (AIFP).

In regards to the SCAP, the Board discussed the reviewed the status of the efforts of all institutions subject to the SCAP in raising capital from private sources, issuing nongovernmental guaranteed debt, and taking other steps to improve their capital position.

Sen. Levin Issues Report on Speculation in Wheat Market

This story appeared in the Commodity Futures Law Reporter.

Senator Carl Levin (D-Mich.), Chairman of the U.S. Senate Permanent Subcommittee on Investigations, and Sen. Tom Coburn (R-Okla.), Acting Ranking Minority Member, released a 247-page report, “Excessive Speculation in the Wheat Market”. The report found that commodity index traders, in the aggregate, have made such large purchases on the Chicago wheat futures market that they have pushed up futures prices, disrupting the normal relationship between futures prices and cash prices for wheat.  According to the results of the investigation, this price disruption has caused farmers, grain elevators, grain processors, consumers, and others to experience significant unwarranted costs and price risks.

Supreme Court Says States Can Bring Enforcement Actions Against Banks

By Sarah Borchersen-Keto, CCH Washington News Bureau, Contributing Author, the CCH Federal Banking Law Reporter, June 29, 2009.

The Supreme Court, in a 5-4 decision, ruled June 29 that New York’s Attorney General could bring judicial enforcement actions against national banks, but was not authorized to issue executive subpoenas if the banks failed to provide information about their lending practices.

The case, Cuomo v. the Clearing House Association LLC, dates back to 2005 when then-New York State Attorney General Eliot Spitzer, concerned that minorities were being charged higher rates, asked four leading banks for information regarding interest rates on home mortgage loans.

Capital Rules Clarified for Modified Mortgages

This story appeared in Bank Digest.

The Federal Deposit Insurance Corp., Office of the Comptroller of the Currency, Federal Reserve Board and Office of Thrift Supervisions have issued an interim final rule which clarifies that a banking organization may retain the risk weight assigned to a mortgage loan before the loan was modified under the Treasury Department's Making Home Affordable Program (MHAP) following modification of the mortgage loan. The Treasury launched the MHAP in March to promote sustainable loan modifications for homeowners at risk of losing their homes due to foreclosure. The interim final rule will take effect when published in the Federal Register. Public comments must be submitted within 30 days after publication of the interim final rule in the Federal Register.
Press Release at http://www.fdic.gov/news/news/financial/2009/fil09036.html
Interim Final Rule at http://www.fdic.gov/news/news/press/2009/pr09100a.pdf

Fed Reports on Credit and Lending Facilities

This story appeared in Bank Digest.

The Federal Reserve Board has issued a report, pursuant to Section 129(b) of the Emergency Economic Stabilization Act of 2008, which provides an update concerning the lending facilities established by the Fed under Section 13(3) of the Federal Reserve Act. The report is the fourth periodic report filed by the Fed and covers all of the loans and lending facilities authorized by the agency since March 1, 2008, that are outstanding. http://www.federalreserve.gov/monetarypolicy/files/129periodicupdate06262009.pdf

NCUA Chairman Comments on CLF Funding Vote

This story appeared in Bank Digest.

Following a House of Representatives Appropriation Subcommittee vote not to place a cap and to maintain the Central Liquidity Facility (CLF) maximum borrowing authority through fiscal year 2010, NCUA Chairman Michael E. Fryzel issued a statement noting that “Today’s Subcommittee action suggests that Congress will continue to support NCUA’s authority regarding Central Liquidity Facility borrowing.” Fryzel added, “I am optimistic that the cap will be removed for the second consecutive fiscal year and that Congress will provide NCUA with the necessary tools to maintain liquidity in the credit union system.”  http://www.ncua.gov/news/press_releases/2009/MA09-0626.htm

OCC Reports First Quarter Bank Trading Revenue of $9.8 Billion

This story appeared in Bank Digest.

U.S. commercial banks reported record trading revenues of $9.8 billion in the first quarter of 2009, compared to losses of $9.2 billion in the fourth quarter of 2008, according to the OCC's Quarterly Report on Bank Trading and Derivatives Activities. The report shows that the notional amount of derivatives held by insured U.S. commercial banks increased by $2 trillion (nearly 1 percent) in the first quarter to $202 trillion. The increase resulted from the continued migration of investment bank derivatives activity into the commercial banking system. Interest rate contracts increased $5 trillion to $169 trillion, while credit derivatives fell 8 percent to $15 trillion. Commenting on the report, Deputy Comptroller for Credit and Market Risk Kathryn E. Dick said, “Banks continued to benefit from solid client demand and wide intermediation spreads in the first quarter, and from lower write-downs on legacy assets.”  http://www.occ.treas.gov/ftp/release/2009-72a.pdf

Guidance Provided for Risk Weighting Downgraded Securities

This story appeared in Bank Digest.

Due to the recent stresses on the financial markets and the large number of rating downgrades regarding certain mortgage-and asset-backed securities,the Office of Thrift Supervision has provided guidance and examples of how to risk weight downgraded securities.
http://files.ots.gslsolutions.com/25307.pdf

Thrifts Reminded of Credit CARD Act Effective Dates

This story appeared in Bank Digest.

The Office of Thrift Supervision has alerted its stakeholders of the effective dates of the Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit CARD Act), which was signed by President Barack Obama on May 22, 2009. Although most aspects of the Credit CARD Act will become effective on Feb. 22, 2010, nine months after it was signed into law, there are two provisions which will become effective on Aug. 20, 2009, 90 days after the legislation was enacted. These provisions contain the requirement that issuers provide 21 days for consumers to pay their credit card bills, and the requirement that issuers provide 45 days notice of changes in terms.  http://files.ots.treas.gov/25308.pdf