Dodd-Frank News Center

CFPB Report Shows Consumer Credit Card Confusion

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

Consumers are still struggling to understand the terms of credit cards and associated products like debt protection services, a new report from the Consumer Financial Protection Bureau shows.

In a report on its first three months of collecting credit card complaint data, reflecting input from roughly 5,000 consumers, the CFPB found “a mismatch between consumer expectations and the way the product functions.”

SEC Chair Schapiro Asks Senators for Statutory Changes Enhancing the Commission’s Enforcement Program

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 Senators Jack Reed (D-RI) and Larry Crapo (R-ID), SEC Chair Mary Schapiro requested statutory changes that would substantially enhance the effectiveness of the SEC enforcement program by addressing existing limitations. The SEC seeks five specific statutory enhancements to its enforcement authority that collectively would allow the Commission to impose appropriate monetary penalties for serious violations and authorize greater penalties for recidivists. Senator Reed is Chair of the Securities Subcommittee and Senator Crapo is the Ranking Member.

Court Rejects SEC-Citigroup Settlement

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.

The U.S. District Court for the Southern District of New York has rejected a $285 million settlement between Citigroup and the Securities and Exchange Commission. The court concluded that “the parties' successful resolution of their competing interests cannot be automatically equated with the public interest, especially in the absence of a factual base on which to assess whether the resolution was fair, adequate, and reasonable.”

Final Rule Allows Federal Credit Unions to Provide Remittance Transfers

This story appeared in Bank Digest.

The National Credit Union Administration is amending its rules to add remittance transfers, as now defined under the Electronic Fund Transfer Act, as an example of money transfer instruments federal credit unions may provide to persons within their fields of membership. This amendment conforms to amendments made to the Federal Credit Union Act by the Dodd-Frank Act.

Hearing Requested on Secret Government Loans to Rescue Banks

This story appeared in Bank Digest.

House Oversight and Government Reform Committee Ranking Member Elijah E. Cummings, D-Md., has written a letter to Committee Chairman Darrell Issa, R-Calif., requesting that the committee hold a hearing with Federal Reserve Board Chairman Ben Bernanke and officials from the nation's largest financial institutions that benefitted from trillions of dollars in previously undisclosed government loans provided at below-market rates. “Many Americans are struggling to understand why banks deserve such preferential treatment while millions of homeowners are being denied assistance and are at increasing risk of foreclosure,” said Cummings.

Federal Court Refuses to Approve Settlement of SEC-Citigroup Enforcement Action

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

After agonizing over the substantial deference to be given to the SEC in approving the settlement of an agency enforcement action, a federal judge ruled that the consent judgment in an action against a large financial institution was neither fair, nor reasonable, nor adequate, nor in the public interest. It is not reasonable, said Judge Rakoff, because how can it ever be reasonable to impose substantial relief on the basis of mere allegations. It is not fair, because, despite Citigroup's nominal consent, there is a potential for abuse in imposing penalties on the basis of facts that are neither proven nor acknowledged patent. It is not adequate, because, in the absence of any facts, the court lacked a framework for determining adequacy. And, the proposed consent judgment does not serve the public interest because it asks the court to employ judicial power and assert judicial authority when it does not know the facts. Refusing to approve the proposed consent judgment, the court instead consolidated the case with an SEC enforcement action against an employee of the financial institution and directed the parties to be ready to try the case next July. SEC v. Citigroup Global Markets, Inc., 11 Civ. 7387, Nov. 28, 2011.

Corker: Time to Move Beyond Freddie Mac and Fannie Mae

This story appeared in Bank Digest.

In a Washington Post editorial, Sen. Bob Corker, R-Tenn., called for an end of the  conservatorship of Freddie Mac and Fannie Mae. Corker noted, “we have come to a point where continued inaction impedes the ability of the private market to take over a function the government has completely mismanaged.” He added, “This task will not be politically easy. Many of the institutions that have come to rely on the corporate welfare Fannie and Freddie provide have argued that we cannot have a housing finance system without the support of government-sponsored enterprises (GSEs). This argument not only ignores the risks taxpayers are forced to bear but also fundamentally misrepresents the structure of the housing finance system.”

Comments Sought on Alternatives to Credit Ratings

This story appeared in Bank Digest.

The Office of the Comptroller of the Currency has issued a notice of proposed   rulemaking seeking comment on a proposal to revise its regulations pertaining to investment securities, securities offerings and foreign bank capital equivalency deposits to replace references to credit ratings with alternative standards of creditworthiness. The proposed rulemaking would implement Section 939A of the Dodd-Frank Act, which requires, among other things: the removal of any references to, or requirements of reliance on, credit ratings and substitute such standard of credit-worthiness; and the establishment of uniform standards of creditworthiness.

Rep. Barney Frank Announces Retirement

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

House Financial Services Committee Ranking Member Rep. Barney Frank, D-Mass., co-author of the Dodd-Frank Act and a member of Congress since 1980, said he will not seek re-election for 2012.

At a news conference Frank said his decision to retire reflected redistricting issues in Massachusetts, his age, as well as a desire to advocate for issues outside of the political system.

Senate Legislation Would Provide Small Companies with Exemption from Sarbanes-Oxley Section 404(b)

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

Bi-partisan Senate legislation would provide relief from Section 404(b) of Sarbanes-Oxley as part of an effort to forge agreement between the President’s American Jobs Act, recommendations from the President’s Council on Jobs and Competitiveness, and proposals put forward by members of both parties in Congress. The American Growth, Recovery, Empowerment and Entrepreneurship (AGREE) Act (S 1866), introduced by Senators Chris Coons (D-DEL) and Marco Rubio (R-FLA), is a mixture of tax relief for small businesses and regulatory relief for small companies. A companion bill, HR 3476, has been introduced in the House.