Dodd-Frank News Center

Strict Volcker Rule May Cut Bank Earnings by $10 Billion

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

The Volcker Rule could cut combined pretax earnings for the eight largest U.S. banks by as much as $10 billion annually, if final rules are stricter than currently written, according to new analysis from Standard & Poor’s Ratings Services. The impact on earnings from a less strict interpretation of the rule would be around $2-3 billion, S&P said.

Frank Urges Restraint on Punishing Larger Firms for Misdeeds of Acquired Firms

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

House Financial Services Committee ranking member Barney Frank, D-Mass., said it is “inappropriate” to punish larger financial institutions for the prior activities of smaller firms they absorbed during the financial crisis at the urging of federal officials. Frank pointed to the decision by the New York Attorney General and members of the federal-state task force to take action against J.P. Morgan Chase for acts committed by Bear Stearns, prior to its purchase by J.P. Morgan, as an example of “allowing no good deed to go unpunished.”

CFPB Begins Taking Complaints on Credit Reporting

This story appeared in Bank Digest.

The CFPB has begun accepting consumer complaints about credit reporting, giving consumers individual-level complaint assistance for the first time at the federal level. “Credit reporting companies exert great influence over the lives of consumers. They help determine eligibility for loans, housing, and sometimes jobs,” said CFPB Director Richard Cordray. “Consumers need an avenue of recourse when they feel they have been wronged.”

“Every complaint we receive helps us understand the challenges facing consumers, and they inform and shape our priorities,” stated CFPB Office of Consumer Response Assistant Director Scott Pluta.

Retail Lobby Still Opposed to Revised Credit Card Swipe Fee Settlement

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

The National Retail Federation said a revised antitrust settlement filed in federal court Oct. 19, 2012, “still does virtually nothing” to protect customers and address retailers’ concerns about credit card swipe fees charged by Visa and MasterCard.

Merchant plaintiffs in the case, Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, have asked the U.S. District Court in Brooklyn to preliminarily approve the class action settlement. The initial proposed settlement was announced on July 13, 2012, following seven years of litigation.

Servicemembers Face Student Loan Repayment Obstacles

By Serena Lynn, Editor, the CCH Federal Banking Law Reporter and Bank Digest.

The CFPB has examined how servicemembers are handling both their federal and private student loans and has released its findings in a report entitled, “The Next Front? Student Loan Servicing and the Cost to Our Men and Women in Uniform.” The report outlines the unique servicing obstacles reported by servicemembers seeking to pay off student loan debt and describes complaints regarding the difficulty of accessing Servicemembers Civil Relief Act protections.

OCC Issues Small Bank Stress Testing Guidance

By Richard Roth, J.D., Editor, the CCH Federal Banking Law Reporter, CCH Bank Compliance Guide, Bank Digest; co-author, Dodd-Frank Wall Street Reform and Consumer Protection Act—Law, Explanation and Analysis.

The OCC has issued guidance intended to help banks and thrifts with $10 billion or less in total assets use stress tests to identify and measure loan portfolio weaknesses and bolster their planning processes. While these smaller institutions are not covered by the Dodd-Frank Act annual stress test requirement, the guidance makes clear the OCC expects them to carry out at least simple stress tests that are appropriate for their business strategy, size, products, sophistication and risk profile. “The OCC, however, does consider some form of stress testing or sensitivity analysis of loan portfolios on at least an annual basis to be a key part of sound risk management for community banks,” the agency says.

Senator Warner Eyes Dodd-Frank Technical Corrections Next Year

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

Senate Banking Committee member Sen. Mark Warner, D-Va., said he is hoping Congress will be able to revisit the Dodd-Frank Act next year with a technical corrections bill that addresses the parts of the legislation where “we got it wrong."

Speaking Oct. 18, 2012 at the Bipartisan Policy Center in Washington D.C., Warner noted that with any major piece of reform legislation, regardless of which party is in power, “Congress never gets it right…the first time through…you come back, two years, three years hence, and do a corrections legislation.”

CFPB Proposes Easier Credit Card Access for Stay-At-Home Spouses

This story appeared in Bank Digest.

In order to make it easier for spouses or partners who do not work outside of the home to qualify for credit cards, the CFPB has proposed amendments to Reg. Z--Truth in Lending (12 CFR 1026) that would remove the independent ability-to-pay requirement for consumers who are 21 and older and permit issuers to consider income to which such consumers have a reasonable expectation of access. The CFPB calls the proposed amendments “common-sense changes that would facilitate credit access for spouses or partners who do not work outside the home. 

Rep. Shelley Moore Capito, R-W.Va., Rep. Carolyn Maloney, D-N.Y., and Rep. Louise M. Slaughter, D-N.Y., commended the burueau's proposal, calling it a “common sense clarification.” “This is an excellent first step forward in solving the unintended consequence of otherwise credit worthy stay-at-home spouses being denied credit solely because they do not have an independent income,” stated Capito.

Dodd-Frank Provisions for Large Firm Failure Analyzed

This story appeared in Bank Digest.

In response to assertions that the Dodd-Frank Act perpetuates “too big to fail” and taxpayer bailouts of large financial institutions, the minority staff of the House Financial Services Committee has released an analysis of the provisions in the Dodd-Frank Act that address the issue of large firm failure. The paper describes how the law provides for the orderly dissolution of failing institutions in order to protect the broader economy, stating that the act “clearly establishes a framework that allows large financial firms to fail while preventing catastrophic harm to the broader economy. It effectively ends ‘too big to fail’ and specifically outlaws future taxpayer bailouts of a failing financial institution.”

Senators Want Simplified, Enhanced Basel III Requirements

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

Two members of the Senate Banking Committee are asking bank regulators to simplify and enhance Basel III requirements by focusing on higher, more loss-absorbing capital buffers.  

An Oct. 17, 2012 letter from Sen. Sherrod Brown, D-Ohio, and Sen. David Vitter, R-La., to the Federal Reserve, Federal Deposit Insurance Corporation, and Comptroller of the Currency, notes that simple, more robust capital rules will benefit smaller banks by lessening their regulatory burden, and “properly align incentives for megabanks by lessening government support for the financial sector.”