Dodd-Frank News Center

FOMC Holds Steady Course

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

The Federal Open Market Committee decided at its two-day meeting ending Jan. 30, 2013, to make no changes in its current economic policy, leaving all of its stimulus measures in place. Specifically, the committee left the federal funds rate target at a range of 0 to .25 percent and said that it intended to continue purchasing agency mortgage-backed securities and Treasury securities.

GOP Senators Aim To Block Work at CFPB, NLRB

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

Three Republican senators have introduced legislation to prohibit the Consumer Financial Protection Bureau and the National Labor Relations Board from enforcing or implementing decisions and regulations without a constitutionally confirmed board or director.

The move follows a Jan. 25, 2013 decision by the D.C. Circuit Court of Appeals, which ruled that President Barack Obama’s three recess appointments to the NLRB were unconstitutional. The ruling has prompted speculation that a separate court will make a similar finding concerning the recess appointment of Richard Cordray to head the CFPB.

SIGTARP Calls Permanent Ally Exit Essential

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

The Special Inspector General for the Troubled Asset Relief Program has issued a report to Congress on General Motors Acceptance Corp., rebranded as Ally Financial Inc. According to the report, Ally is the second largest remaining TARP investment, with $14.6 billion in TARP funds owed, for which taxpayers own 74 percent of the company. SIGTARP notes that the rescue of GMAC was “markedly different” from the other auto bailouts because GMAC was the only company in the auto bailout whose business extended beyond the auto industry; GMAC was one of the nation's largest subprime mortgage lenders.

Senators Ask if Some Banks Are “Too Big to Jail”

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

Sen. Sherrod Brown, D-Ohio, and Sen. Chuck Grassley, R-Iowa, have asked the Justice Department whether it has designated certain institutions, whose failure could jeopardize financial market stability, as “too big to jail.” In a Jan. 29, 2013, letter to Attorney General Eric Holder, the senators also ask whether the Justice Department “ever failed to bring a prosecution against an institution due to concern that their failure could jeopardize financial markets.”

Treasury Criticized for “Excessive” Compensation at Bailed-Out Companies

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

According to the Special Inspector General for the Troubled Asset Relief Program, the Treasury Department continues to allow “excessive” compensation for executives at firms like American International Group, Inc., and General Motors Corp. that often exceeds guidelines set by the Office of the Special Master for TARP Executive Compensation.

Curry Sees Longer Term Benefits of Foreclosure Settlement

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

While the recent national foreclosure settlement will impact the bottom line of banks in the short term, it will also bring closure to a prolonged and expensive review process, put cash into the pockets of eligible borrowers and allow banks to concentrate fully on lending to businesses and consumers, according to Comptroller of the Currency Thomas Curry. Speaking Jan. 28, 2013, to the American Securitization Forum in Las Vegas, Nev., Curry said there are signs of stabilization in the housing market, with modest price increases in some markets and a slowdown in foreclosures and defaults. “The overall trend is positive. Housing today is lending strength to the economic recovery, rather than sapping it,” he stated.

Stress Test, CCAR Results to Be Released

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

The Fed has announced that supervisory stress test results will be released March 7, 2013. According to the Fed, the Dodd-Frank Act stress tests are forward-looking exercises conducted to help assess whether institutions have sufficient capital to absorb losses and support operations during adverse economic conditions. The results will include data such as capital ratios, revenue and loss estimates under a severely adverse scenario and assuming a common set of capital actions that is used in the analysis of all of the firms. The standardized capital actions used in the Dodd-Frank Act stress test results provide for comparability across the firms as they assume no changes in recent levels of dividend payments and no common stock repurchases.

Obama Praises CFPB, SEC Nominees

This story appeared in Bank Digest.

President Barack Obama said his nomination of Mary Jo White to head the Securities and Exchange Commission, and Richard Cordray to continue leading the Consumer Financial Protection Bureau, will ensure that there are “cops on the beat” to enforce financial regulatory reform and protect the position of middle class Americans. “My top priority is simple: to do everything in my power to fight for middle-class families and give every American the tools they need to reach the middle class,” Obama said in his Jan. 26, 2013, weekly address. Obama stated that at the SEC, White will “help complete the task of reforming Wall Street and keep going after irresponsible behavior in the financial industry so that taxpayers don’t pay the price.” He called Cordray a “champion for American consumers.”

Validity of CFPB Director Questioned

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

A Jan. 25, 2013, decision by the U.S. Court of Appeals for the District of Columbia has lent support to the position that Consumer Financial Protection Bureau Director Richard Cordray’s appointment was invalid. Under the Constitution, the president has the power to make appointments that otherwise would require Senate approval “during the Recess of the Senate,” and President Barack Obama relied on this authority to name Cordray CFPB Director. The problem was that the Senate had not formally recessed at the time of the appointment; rather, it was holding pro forma sessions apparently for the specific purpose of blocking recess appointments.

FHFA Proposes Disclosure Rule

This story appeared in Bank Digest.

The Federal Housing Finance Agency has proposed a rule that would prohibit the unauthorized disclosure of FHFA nonpublic information. The rule would replace rules issued by the FHFA’s predecessor agencies, the Federal Housing Finance Board and Office of Federal Housing Enterprise Oversight. According to the agency, the proposed rule would update, clarify and simplify existing regulations and eliminates redundant provisions. It is intended to reduce confusion about the applicability of the predecessor agencies’ rules and is internal and procedural rather than substantive.