Dodd-Frank News Center

Financial Services Democrats Issue Dissenting Views on Dodd-Frank Act Repeal Efforts

This story appeared in Bank Digest.

House Financial Services Committee Democrats have issued dissenting views to the budget reconciliation legislative recommendations that passed the committee last week on a straight party line vote.

One section of the budget reconciliation language would repeal the Orderly Liquidation Authority provided for in the Dodd-Frank Act, which allows the federal banking regulators to wind down large failing firms. Committee Democrats wrote in their dissenting views that “the Republicans have used the reconciliation vehicle as a means of achieving what they have been unable to do through the regular legislative process, namely repeal the section of the Financial Reform bill... that provides for a way to deal with large financial institutions that have become too indebted to exist.” During last week's markup, Committee Ranking Member Barney Frank, D-Mass., and Rep. Luis Gutierrez, D-Ill., offered an amendment intended to provide another way of paying for any costs associated with orderly liquidation--a $30 billion levy on the largest financial institutions to be collected up front over a ten-year period. The amendment was defeated.

FDIC Says Deposit Insurance Fund Restoration on Track

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

The FDIC is forecasting that the Deposit Insurance Fund balance will remain on track to meet the requirements of the DIF Restoration Plan and the Dodd-Frank Act, noting that the insurance fund has continued to recover as the banking industry's performance has improved.

Under Dodd-Frank, the DIF has until Sept. 30, 2020, to reach the minimum designated reserve ratio of 1.35 percent. The FDIC is projecting that the reserve ratio should reach 1.15 percent in the second half of 2018.

Comment Period Extended on Impact of Overdraft Programs on Consumers

This story appeared in Bank Digest.

The CFPB has extended the comment period until June 29, 2012, on a notice and request for information regarding the impacts of overdraft programs on consumers. The overdraft notice was published on Feb. 28, 201. The extension is to allow parties more time to consider and craft their responses.

Final Rule Specifies Calculation of Maximum Limitation Obligation

This story appeared in Bank Digest.

The FDIC and the Treasury Department are issuing a final rule to implement applicable provisions of Section 210(n)(6) of the Dodd-Frank Act governing the calculation of the maximum obligation limitation (MOL). Section 210(n) establishes an Orderly Liquidation Fund in the Treasury to be made available to the FDIC as receiver of a financial company upon a determination that its failure and resolution under otherwise applicable law would have serious adverse effects on financial stability in the United States. The MOL limits the aggregate amount of outstanding obligations that the FDIC may issue or incur in connection with the orderly liquidation of a covered financial company.

Resolution Treatment of Mutual Insurance Holding Company Subject Clarified

This story appeared in Bank Digest.

The FDIC is issuing a final rule that treats a mutual insurance holding company as an insurance company for purposes of Section 203(e) of the Dodd-Frank Act. The final rule clarifies that the liquidation and rehabilitation of a covered financial company that is a mutual insurance holding company will be conducted in the same manner as an insurance company. The rule also harmonizes the treatment of mutual insurance holding companies under Section 203(e) of the Dodd-Frank Act with the treatment of such companies under state insurance company insolvency laws.

OCC Alerts Banks to CFPB Rule for HMDA Reporting Thresholds

This story appeared in Bank Digest.

The OCC has alerted national banks and federal savings associations that the Consumer Financial Protection Bureau published a final rule amending the official commentary that interprets the requirements of the Home Mortgage Disclosure (Regulation C) to reflect a change in the asset-size exemption threshold for depository institutions based on the annual percentage change in the Consumer Price Index for Urban Wage Earners and Clerical Workers. The CFPB raised the asset size exemption threshold to $41 million for depository institutions. Thus, the OCC stated, institutions with assets of $41 million or less as of Dec. 31, 2011, will not be required to collect Home Mortgage Disclosure Act data in 2012. The previous exemption threshold was $40 million.

SEC Warns Issuers on Premature Use of Crowdfunding Exemption

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

The SEC has issued a notice reminding issuers that the crowdfunding exemption created under the recently enacted Jumpstart Our Business Startups (JOBS) Act is unavailable to them until the Commission adopts implementing rules. Said the SEC: “The Act requires the Commission to adopt rules to implement a new exemption that will allow crowdfunding. Until then, we are reminding issuers that any offers or sales of securities purporting to rely on the crowdfunding exemption would be unlawful under the federal securities laws.” The JOBS Act was enacted on April 5, 2012.

CFPB Initiatives Highlighted in Recent Speech

 This story appeared in Bank Digest.

The theme of a speech given by Consumer Financial Protection Bureau Deputy Director Raj Date to The Greenlining Institute Conference, in Los Angeles, Calif., was fairness, transparency and financial incentives. He connected each of these qualities to the various initiatives that the CFPB has or will undertake. In regard to fairness, Date noted that “one of the common sense steps we can take to promote fairness in finance is to fight illegal discrimination” and “the Bureau wants to ensure that lenders are not creating conditions that make loans more expensive, or access more difficult, for certain populations.”

Bank Fraud Guilty Plea Announced

This story appeared in Bank Digest.

The Office of the Special Inspector General for the Troubled Asset Relief Program has announced that Eric H. Menden, of Chesapeake, Va., pled guilty on April 20, 2012, to engaging in a $41 million bank fraud scheme that contributed to the failure of the Bank of the Commonwealth. He also pled guilty to a separate fraud involving a six-year historic tax credit scheme that cost state and federal governments over $12 million and investors more than $8 million.

Frank Praises Principle of Citigroup Executive Compensation Vote

This story appeared in Bank Digest.

House Financial Services Committee Ranking Member Barney Frank, D-Mass., has called the advisory vote by Citigroup shareholders to disapprove the company's proposed executive compensation packages “one more piece of evidence of the beneficial effect of the Wall Street Reform and Consumer Protection Act.” The vote will result in “a reduction in the excessive levels of compensation to financial company executives that will leave them still extremely well compensated, but not as poster children for unfairness in our country.”