Dodd-Frank News Center

CFPB Adopts Rule to Protect Institutions' Privileged Information

This story appeared in Bank Digest.

The CFPB has adopted a rule intended to protect from disclosure confidential information provided to it by financial institutions for supervisory purposes. Under the rule, neither an institution's delivery of privileged information to the CFPB nor the bureau's subsequent transfer of the information to another regulator waives any privilege the institution could claim.

First Round of Living Wills Due July 2nd

This story appeared in Bank Digest.

The Federal Deposit Insurance Corp. and the Federal Reserve Board announced, on June 29, 2012, the process for receiving and evaluating the initial resolution plans--also known as living wills--from the largest banking organizations operating in the United States. The following banking organizations--Bank of America, Barclays, Citibank, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and UBS—are required to submit their resolution plans  by July 2, 2012.

IG Report Examines Progress in Creating Office of Financial Research

This story appeared in Bank Digest.

Efforts to establish the Office of Financial Research are still ongoing 21 months after it was created by the Dodd-Frank Act, according to a report by the Treasury Department Inspector General. Faster progress was achieved starting in the summer of 2011 when necessary personnel were in place, the report noted, and the OFR now has a comprehensive implementation plan intended to bring the agency to a “mature state” in fiscal year 2016.

CFPB Considering Reverse Mortgage Consumer Protections

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

The Consumer Financial Protection Bureau said it will consider a 2010 Federal Reserve Board consumer protection proposal with respect to reverse mortgages, and will also look at whether other regulations are necessary and appropriate. 

In a report to Congress issued June 28, 2012, which was mandated by the Dodd-Frank Act, the CFPB noted that while the current reverse mortgage market is only about 2 to 3 percent of eligible homeowners, it has the potential to become “a much more prominent part of the financial landscape in the coming decades” as more baby-boomers qualify.

Petraeus Commends Findings on Federal G.I. Bill Benefits

This story appeared in Bank Digest.

CFPB Assistant Director for the Office of Servicemember Affairs, Holly Petraeus, expressed her support of the Attorneys General announcement on GI Bill lead generators. She asserted that using one of the lead-generator sites “is extremely unlikely to assist veterans in making an informed choice between different types of schools where they might spend hard-earned GI Bill benefits. Instead, no matter what the veteran’s educational goals or financial situation, the recommendation always seems to be that they attend a for-profit school that is paying for the site, even though it may cost more and have higher student-loan default rates and lower graduation rates.” She commended the Attorneys General for “their determination to see that servicemembers and veterans get the information they need to use their GI Bill benefits in the best way possible for them.”

Committee Approves Fed Transparency Legislation

This story appeared in Bank Digest.

H.R. 459, the Federal Reserve Transparency Act, has been approved by the House Oversight and Government Reform Committee. The legislation would require a full audit of the Federal Reserve Board and the Federal Reserve Banks by the U.S. Comptroller General before the end of 2012. Committee Chairman Darrell Issa, R-Calif., noted “The public has a right to know how government spends taxpayer dollars and they have a right to know how government agencies—especially the Federal Reserve—leverage that revenue to create trillions in new debt. This measure will bring vital transparency to long-secret Federal Reserve activities affecting public interests.”

Banks and Thrifts Notified of Removal Credit Rating References from OCC Regulations

By Gregg D. Killoren, J.D., CCH State Banking Law Reporter, Bank Digest and Individual Retirement Plans Guide; co-author, Dodd-Frank Wall Street Reform and Consumer Protection Act—Law, Explanation and Analysis.

The OCC has announced the issuance of final guidance clarifying regulatory expectations with respect to investment purchase decisions and ongoing portfolio due diligence processes. Simultaneously with this proposed guidance, the OCC has published in the Federal Register a final rule to remove references to credit ratings in the OCC's regulations. In the rulemaking, the OCC amended the regulatory definition of “investment grade” in 12 CFR 1 and 12 CFR 160 by removing references to credit ratings. Under the revised regulations, to determine whether a security is investment grade, banks must determine that the probability of default by the obligor is low and the full and timely repayment of principal and interest is expected. To comply with the new standard, banks may not rely exclusively on external credit ratings, but they may continue to use such ratings as part of their determinations.

 

Banking Committee Updated on Consumer Protection of Servicemembers and Families

By John M. Pachkowski, J.D., Editor, CCH Federal Banking Law Reporter and Bank Digest; Author, Anti-Money Laundering and Bank Secrecy: Compliance and the USA PATRIOT Act; co-Author CCH Financial Privacy Law Guide and Dodd-Frank Wall Street Reform and Consumer Protection Act—Law, Explanation and Analysis.

The Senate Banking Committee held a hearing on June 26, 2012 (webcast), to examine consumer financial protections for servicemembers, veterans, and their families. The Banking Committee discussed financial challenges facing the military community, the importance of financial education, and the enforcement of existing consumer protection laws with Beau Biden, Delaware Attorney General; Colonel Paul Kantwill, Director of Legal Policy at the Office of the Undersecretary for Personnel and Readiness at the Defense Department; and Holly Petraeus, Assistant Director of the Office of Servicemember Affairs at the Consumer Financial Protection Bureau. 

CFTC, DOJ, Reach LIBOR, Euribor Settlement with Barclays

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

The Commodities Futures Trading Commission has ordered UK bank Barclays to pay a $200 million penalty in connection with attempted manipulation of global benchmark interest rates. Barclays also entered into a non-prosecution agreement with the Department of Justice, which includes a fine totaling $160 million. The resolution is part of an industry-wide investigation into the setting of interbank offered rates across a range of currencies.

Comment Period on Stress Test Information Collection Extended

This story appeared in Bank Digest.

The Fed has extended to Aug. 6, 2012, the public comment period on an information collection titled “Capital Assessments and Stress Testing.” The information collection will ask financial institutions that participated in stress tests in 2009 and 2011 for information on their balance sheets, income, losses and capital across a range of macroeconomic scenarios, and for qualitative information on methodologies used to develop internal projections of capital across scenarios. The Fed stated that, due to the range and complexity of the issues, an extension of the end of the public comment period for an additional 30 days is appropriate.