Dodd-Frank News Center

Fed adjusts capital plan and stress testing rules

This story appeared in Bank Digest.

The Federal Reserve Board has issued a final rule, effective 30 days after publication in the Federal Register, adjusting its capital plan and stress testing rules for the 2017 cycle. According to the Fed's press release, the final rule removes large and noncomplex firms from the qualitative assessment of the Fed's Comprehensive Capital Analysis and Review, reducing significant burden on these firms and focusing the qualitative review in CCAR on the largest, most complex financial institutions.

CCAR evaluates the capital planning processes and capital adequacy of large financial institutions through quantitative and qualitative assessments. According to the Fed, large and noncomplex firms will still be required to meet their capital requirements under stress as part of CCAR's quantitative assessment and will be subject to regular supervisory assessments that examine their capital planning processes. The Fed said the scenarios and instructions for the 2017 CCAR cycle would be released shortly.

OIG report evaluates FDIC's monitoring of SIFIs' risk of default

This story appeared in Bank Digest.

The Office of Inspector General for the FDIC has issued a report on the FDIC's progress in implementing systemic risk monitoring that would identify systemically important financial institutions' risk of default so that the FDIC can undertake necessary preparatory actions for their resolution. The OIG determined that the FDIC's Division of Risk Management Supervision-Complex Financial Institutions (RMS-CFI) has made steady progress in developing criteria and a process, namely the Systemic Monitoring System, for assessing the proximity and speed to default for the 16 large and complex SIFIs in RMS-CFI's portfolio.

The OIG made three recommendations to improve SMS documentation and to independently evaluate the SMS tool's output.

Hensarling says dismantling Dodd-Frank 'essential'

This story appeared in Bank Digest.

Following comments from President Trump that Congress should make financial regulatory reform a priority and from Vice President Pence that "dismantling Dodd-Frank" is a top legislative priority for the new administration, House Financial Services Committee Chairman Jeb Hensarling (R-Texas) issued a statement in which he said, "Fulfilling the Trump Administration's pledge to dismantle Dodd-Frank this year is essential to leveling the playing field, building a healthy economy and offering every American greater opportunities to achieve financial independence."

In the statement, Hensarling criticized the Dodd-Frank Act, saying the act "makes it harder for people to get loans to buy a home or start a small business. Consumers are paying more in fees and are losing benefits and access to services they want and need. Instead of ending 'too big to fail,' Dodd-Frank institutionalizes bailouts for big banks." In addition, Hensarling said the Financial CHOICE Act, the Republican proposal to replace Dodd-Frank, contains "new policies to protect consumers by holding Wall Street and Washington accountable, end bailouts and unleash America's economic potential."

Congressional Black Caucus members write letter supporting Cordray

This story appeared in Bank Digest.

In a Jan. 24, 2017, letter, led by House Financial Services Committee Ranking Member Maxine Waters (D-Calif) and Congressional Black Caucus Chairman Cedric Richmond (D-La), members of the CBC warned President Donald Trump against removing Consumer Financial Protection Bureau Director Richard Cordray prior to the expiration of his term in July 2018.

 The letter stated, "No President of the United States has ever removed the head of an independent agency for cause. The absence of any precedent suggests that 'for-cause removal' is an extraordinary remedy whose use must be subjected to enhanced congressional, judicial, and public scrutiny. We are especially troubled by suggestions that your administration is seeking to twist Director Cordray's attempts to address discrimination allegations within the CFPB as cause for removal." The CBC members added that removal of Cordray before his term expired would be viewed "as an illegitimate abuse of power."

CFPB releases independent audit of its operations and budget

This story appeared in Bank Digest.

The Consumer Financial Protection Bureau has released an independent audit of its operations and budget for fiscal year 2016, an audit it orders annually in accordance with the Dodd-Frank Act. This year's audit, conducted by KPMG LLP, evaluated: (1) the CFPB's budget process relative to bureau policies and procedures established over budget formulation, execution, and monitoring; (2) a review of CFPB inventory and asset management practices, policies, and procedures; (3) the CFPB's Frequent Traveler Stipend Program; and (4) the corrective actions taken to resolve the findings included in the bureau's fiscal year 2015 Independent Audit of Selected Operations and Budget, also completed by KPMG.

The report found that adherence to asset management policies and procedures needs to be improved and certain additional controls need to be adopted. It also found that the prior year audit's control deficiency has been partially remediated.

'Runaround' to homeowners seeking relief costs Citi subsidiaries $28.8 million

This story appeared in Bank Digest.

Mortgage servicers CitiFinancial Servicing and CitiMortgage, Inc., kept struggling homeowners in the dark about options to avoid foreclosure or burdened them with excessive paperwork demands in applying for foreclosure relief, according to findings in consent orders settling Consumer Financial Protection Bureau enforcement actions. "Citi's subsidiaries gave the runaround to borrowers who were already struggling with their mortgage payments and trying to save their homes," said CFPB Director Richard Cordray.

The CFPB is requiring CitiMortgage to pay an estimated $17 million to compensate wronged consumers and to pay a civil penalty of $3 million, and the bureau is requiring CitiFinancial Servicing to refund approximately $4.4 million to consumers and to pay a civil penalty of $4.4 million.

• Press release
• CitiFinancial Servicing Consent Order
• CitiFinancial Servicing Stipulation
• CitiMortgage Consent Order
• CitiMortgage Stipulation

NCUA issues guidance on CFPB mortgage servicing rule, FDCPA interpretive rule

This story appeared in Bank Digest.

The National Credit Union Administration has issued a regulatory alert to federally insured credit unions regarding the Consumer Financial Protection Bureau's final rule amending certain mortgage servicing rules it issued in 2013 and the CFPB's interpretive rule that functions as an advisory opinion for purposes of the Fair Debt Collection Practices Act, providing safe harbors from FDCPA liability.

The final rule, issued on Aug. 4, 2016, amends provisions of Reg. X, which implements the Real Estate Settlement Procedures Act, and Reg. Z, which implements the Truth in Lending Act. It amends Reg. X provisions regarding force-placed insurance notices, mortgage servicing policies and procedures, early intervention, and loss mitigation requirements, and it amends Reg. Z regarding prompt crediting and periodic statement requirements.

The FDCPA interpretive rule clarifies the interaction of the FDCPA and certain mortgage servicing rules under RESPA and TILA, as well as Regs. X and Z.

NCUA guidance discusses HMDA data collection requirements for 2017

This story appeared in Bank Digest.

In a regulatory alert to federally insured credit unions, the National Credit Union Administration describes the criteria under which credit unions must comply with the Consumer Financial Protection Bureau's Reg. C, which implements the Home Mortgage Disclosure Act. The NCUA's guidance lists the four criteria under which credit unions that make residential mortgage loans must collect HMDA data associated with mortgage loan applications processed during 2017 and says these credit unions must submit the data to the CFPB no later than March 1, 2018.

Bank sued for 'deceptive' overdraft opt-in practices

This story appeared in Bank Digest.

The Consumer Financial Protection Bureau has filed a lawsuit in Minnesota federal court against TCF National Bank for TCF's overdraft opt-in practices from 2010 to April 2014 that allegedly violated the Electronic Fund Transfer Act and the Dodd-Frank Act prohibition against unfair, deceptive, or abusive acts or practices.

In its complaint, the bureau alleges that the Wayzata, Minnesota-based bank designed its account opening process to obscure the fees and make overdraft seem mandatory for new customers. In addition, in a press release, the CFPB claims that the bank employed a "loose definition" of consent to get existing customers to opt into the overdraft program.

As part of the lawsuit, the bureau is seeking redress for consumers, injunctive relief, and unspecified civil money penalties. A CFPB blog post discusses understanding the overdraft "opt-in" choice.

CFPB sues student loan company for allegedly failing borrowers at every stage of repayment

This story appeared in Bank Digest.

The Consumer Financial Protection Bureau has taken action against the nation's largest servicer of both federal and private student loans, alleging that Navient systematically and illegally failed borrowers at every stage of repayment by creating obstacles to repayment, providing bad information, processing payments incorrectly, and failing to act when borrowers complained.

According to the complaint, the company is also said to have "cheated" many borrowers out of their rights to lower repayments, causing them to pay much more than they had to for their loans. The CFPB is seeking to recover significant relief for the borrowers harmed by these alleged servicing failures. The CFPB has named in its suit Navient Corporation and two of its subsidiaries: Navient Solutions, Inc., a division responsible for loan servicing operations, and Pioneer Credit Recovery, Inc., which specializes in the collection of defaulted student loans.