Dodd-Frank News Center

Corporate Secretaries Society Has Concerns with ISS Policy on Board Response to Majority-Approved Shareholder Proposals

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 Society of Corporate Secretaries and Governance Professionals has major concerns with a proposed revision to the Institutional Shareholder Services (ISS) voting policies on a board’s response to a majority-supported shareholder proposal. In a letter to the ISS Global Policy Board, the Society said that the proposed change would undermine the exercise of directors’ fiduciary duties on matters that under state law are firmly within the board’s purview. The Society urged the Global Policy Board to reject this proposed change. 

CFPB Enforcement Authority Yielding Results, Cordray Says

This story appeared in Bank Digest.

Consumer Financial Protection Bureau Director Richard Cordray said the agency is now showing, through the use of its enforcement authority, that it will focus on practices that violate the law and cause meaningful harm to consumers. Speaking Oct. 25, 2012, to the National Consumer Law Center Conference in Seattle, Wash., Cordray stressed that the CFPB fully intends to be the “cop on the beat” that was envisioned when the Dodd-Frank Act was enacted. He noted that since July 2012 the CFPB has launched three major public enforcement actions against companies who were deceiving and misleading consumers. By developing strong partnerships with fellow regulators, he added, the CFPB has been able to return about $425 million in refunds to consumers. Cordray also noted that by issuing public orders that are very specific to a particular conduct, “we have effectively signaled to other market participants that they need to clean up their own practices sooner rather than later.”

Cordray Comments on Proposal to Improve Access to Credit

This story appeared in Bank Digest.

Consumer Financial Protection Bureau Director Richard Cordray discussed the bureau’s proposal that would make it easier for spouses or partners who do not work outside of the home to qualify for credit cards in a “Huffington Post” blog entry. According to Cordray, the CFPB’s mission is “to empower consumers and strengthen their financial independence.” He added that the proposal would allow a consumer to rely on accessible income from a third party when applying for a credit card, stating that the proposal “shows our commitment to independent evaluation and rigorous analysis of the existing regulatory framework. We reviewed feedback from consumers and industry, and based on this information, we established a view on the effects of existing rules on access to credit.”

Obama Vows to Protect Financial Reforms

This story appeared in Bank Digest.

President Barack Obama said he would refuse to let Republicans in Congress “delay, defund and dismantle” new financial reform measures, including the recent step by the Consumer Financial Protection Bureau to monitor credit reporting agencies. In his Oct. 27, 2012, weekly radio address, Obama noted that “companies that put your credit score together can make mistake. They may think you had a loan or a credit card that was never yours… And when they mess up, you’re the one who suffers.”

Now, however, the CFPB can bring customer complaints directly to the company, “they’ll give you a tracking number, so you can check back and see exactly what’s being done on your behalf,”

“We’ve come too far—and sacrificed too much—to go back to an era of top-down, on-your-own economics,” Obama asserted.

LIBOR Concerns Raised by SIGTARP

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

The Special Inspector General for the Troubled Asset Relief Program is concerned that U.S. taxpayers may still be be at risk from manipulation of the London Interbank Offered Rate, a global benchmark interest rate used in several TARP programs.

In its latest quarterly report to Congress SIGTARP recommends that the Federal Reserve and Treasury Department end their reliance on LIBOR. The report notes that LIBOR continues to be used in two TARP programs that will continue for several years: the Public-Private Investment Program and the Term Asset-Backed Securities Loan Facilities.

Senate Authors of Volcker Rule Say SEC, CFTC and Banking Agencies Must Adopt Final Regulations Implementing the Rule by Year End

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

Senators Jeff Merkley (D-OR) and Carl Levin (D-MI) called on federal financial regulators to end the delay in issuing a final version of the Volcker Rule. In a letter to the SEC, CFTC and the federal banking regulators, the Senators expressed frustration that months after the deadline for finalizing the Volcker Rule has past staff-level differences at the various agencies may be obstructing progress on removing the loopholes from earlier proposals and finalizing the rule. Senators Levin and Merkley are the co-authors of Section 619 of the Dodd-Frank Act, which directs federal regulators to implement the Volcker Rule. The regulations implementing the Volcker Rule were due two years after the law was passed, on July 21, 2012. Until a strong Volcker Rule is firmly in place and meaningfully enforced, cautioned the Senators, businesses and investors will continue to doubt the U.S. commitment to Wall Street reform, and taxpayers will remain exposed to the dangers of high-risk trading and conflicts of interest by Wall Street’s largest firms.

Cordray Calls Debt Collection a "Central Issue"

This story appeared in Bank Digest.

As the United States continues to emerge from the devastating impact of the financial crisis, debt collection has become a "central issue of our times," said CFPB Director Richard Cordray. Speaking Oct. 24, 2012, at a public hearing on debt collection practices held in Seattle, Wash., Cordray noted that about 30 million consumers, or one out of every 10 Americans, are being pursued by debt collectors for amounts averaging about $1,500 each.

U.S. Sues Bank of America for Over $1 Billion in Civil Mortgage Fraud Lawsuit

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

The U.S. has filed a civil mortgage fraud lawsuit against Bank of America Corp., claiming that from at least 2007 through 2009 the bank sold thousands of fraudulent residential mortgage loans to Fannie Mae and Freddie Mac that later defaulted.

The complaint seeks penalties under the Financial Institutions Reform, Recovery, and Enforcement Act, as well as damages and penalties under the False Claims Act, of over $1 billion, reflecting losses incurred by Fannie and Freddie for defaulted loans.

CFPB to Oversee Debt Collectors

This story appeared in Bank Digest.

The CFPB has finalized a rule authorizing its supervision of large consumer debt collectors. The CFPB also released a field guide for examiners to use to ensure that companies engaging in debt collection are following the law.

“Millions of consumers are affected by debt collection, and we want to make sure they are treated fairly,” said CFPB Director Richard Cordray. “Today we are announcing that we will be supervising the larger debt collectors in the market for the first time at the federal level. We want all companies to realize that the better business choice is to follow the law--not break it.”

Curry Addresses Community Bank Compliance Concerns

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

Comptroller of the Currency Thomas Curry said regulators will be “particularly sensitive” to the compliance burden placed on community banks and thrifts as new regulations implementing the Dodd Frank Act and Basel III capital standards are considered. Speaking Oct. 23, 2012, to the Florida Bankers Association, Curry noted that the Dodd-Frank Act contains a number of provisions that many in the industry thought would not apply to community banks, yet in fact did. One example is credit ratings, Curry said, which had a “particularly severe impact on community institutions that legislators may not have foreseen.