Dodd-Frank News Center

CFPB releases report on credit card market

This story appeared in Bank Digest.                                     

The Consumer Financial Protection Bureau has released its biennial report on the state of the credit card market. According to the CFPB's release, the report found that the total amount of credit line, the number of accounts, the average amount of card debt, and enrollment in online services have all increased over the past several years.                                   

The report also found that cardholders average fewer credit cards than before the recession and that more are signing up for secured cards requiring a cash deposit. In addition, the average debt of cardholding consumers overall has increased 9 percent over the last two years, according to the report.

Foreclosure Prevention Report issued

This story appeared in Bank Digest. 

The Federal Housing Finance Agency has issued its Foreclosure Prevention Report for the third quarter of 2017. According to the report, Fannie Mae and Freddie Mac (the Enterprises) completed 41,465 foreclosure prevention actions in the third quarter, bringing the total to 3,972,689 since the Enterprises were placed into conservatorship in September 2008.                                 

Regarding the Enterprises' mortgage performance, the report said the serious delinquency rate remained flat at 0.95 percent at the end of the third quarter.

 

Fed extends 'Volcker Rule' information collection

This story appeared in Bank Digest.                                   

The Federal Reserve Board is adopting a proposal to extend for three years, without revision, an existing information collection entitled "Reporting, Recordkeeping, and Disclosure Requirements Associated with Proprietary Trading and Certain Interests in and Relationships with Covered Funds (Regulation VV)."                                   

This collection concerns Section 13 of the Bank Holding Company Act of 1956, commonly known as the Volcker Rule, which contains certain prohibitions and restrictions on the ability of a banking entity supervised by certain federal agencies to engage in proprietary trading and have certain interests in, or relationships with, a hedge fund or private equity fund.                                 

On Aug. 2, 2017, the Fed published a notice (see 2017 No. 2655) in 82 Federal Register 35947 requesting public comment for 60 days on the proposal. The Fed did not receive any comments, and the information collection will be extended as proposed.

Fed revises 'Capital Assessments and Stress Testing' information collection

This story appeared in Bank Digest.                                   

The Federal Reserve Board is adopting a proposal to extend for three years, with revision, its mandatory "Capital Assessments and Stress Testing" information collection applicable to bank holding companies with total consolidated assets of $50 billion or more and U.S. intermediate holding companies established by foreign banking organizations. According to the Fed, the data collected through this collection provide it with the information and perspective needed to help ensure that large firms have strong, firm wide risk measurement and management processes supporting their internal assessments of capital adequacy and that their capital resources are sufficient given their business focus, activities, and resulting risk exposures.

On June 9, 2017, the Fed published a notice in 82 Federal Register 26793 requesting public comment for 60 days on the proposal. The revisions to the collection are applicable as of either Dec. 31, 2017, or March 31, 2018.

House passes bills opposing Operation Choke Point, amending Volcker rule

This story appeared in Bank Digest. 

The House of Representatives has passed the Financial Institution Customer Protection Act of 2017 (H.R. 2706), sponsored by Rep. Blaine Luetkemeyer (R-Mo), and the Investor Clarity and Bank Parity Act (H.R. 3093), which was sponsored by Rep. Mike Capuano (D-Mass). H.R. 2706, which passed by a vote of 395 to 2, requires federal banking agencies to provide banks or credit unions written justification of any request to terminate or restrict a customer’s account, except in instances of national security, according to a House Financial Services Committee press release. The bill was introduced in response to a former Justice Department and Federal Deposit Insurance Corporation initiative called “Operation Choke Point.” 

H.R. 3093, which passed the House by voice vote, amends the Dodd-Frank Act’s Volcker rule so that a hedge fund or private equity fund could share a name with a bank-affiliated investment adviser that manages the fund.

Hill introduces GSE Jumpstart Reauthorization Act

This story appeared in Bank Digest. 

Representative French Hill (R-Ark) has introduced the GSE Jumpstart Reauthorization Act of 2017 (H.R. 4560), which would extend an existing prohibition while preventing the Treasury Department from selling its government-sponsored enterprise preferred shares, according to Hill’s press release. The bill would also require government sponsored enterprises Fannie Mae and Freddie Mac to pay dividends to the Treasury Department prior to making payments to the Housing Trust Fund for that year. 

According to Hill, “The U.S. Treasury still backs the GSEs with a line of credit standing at over $250 billion and, while Fannie and Freddie remain in conservatorship, the taxpayers continue to be on the hook. Rather than increasing taxpayer exposure by withholding money, it is time to mandate that the GSEs pay their bills to taxpayers before growing this Trust Fund.”

Latest Making Home Affordable Program Performance Report released

This story appeared in Bank Digest.                                   

The Treasury Department has released the latest Making Home Affordable Program Performance Report, which provides information through the third quarter of 2017. The MHA Program closed to new applicants on Dec. 31, 2016, and servicers were required to design policies and procedures to reasonably ensure that all MHA transactions were completed by Dec. 1, 2017. Although the program is now closed, servicers will continue to perform certain functions. According to the report, more than 2.9 million homeowner assistance actions have taken place under MHA programs.

Banking agencies announce support for reforms to Basel III agreement

This story appeared in Bank Digest.                                   

The Office of the Comptroller of the Currency, Federal Reserve Board, and Federal Deposit Insurance Corporation have announced their support for the conclusion of efforts to reform the international bank capital standards initiated in response to the global financial crisis. According to the agencies' joint release, the Governors and Heads of Supervision and the Basel Committee on Banking Supervision have announced the finalization of the reforms to the Basel III agreement on bank capital standards, and with this agreement the committee will conclude the international reforms.                                  

Treasury Secretary Steven Mnuchin issued a statement saying, "The reforms standardize the approach, improve the quality and consistency of bank capital requirements, and will help level the playing field for U.S. firms and businesses operating internationally."

OIG issues report on FDIC's implementation of Dodd-Frank rules

This story appeared in Bank Digest.                                   

The Federal Deposit Insurance Corporation's Office of Inspector General has issued a report assessing the FDIC's implementation of selected consumer protection rules enacted to implement requirements of the Dodd-Frank Act. The OIG focused on two rules that placed new requirements on the banking industry to: (1) determine if a consumer has a reasonable ability to repay a mortgage loan; and (2) limit loan originator compensation and subject loan originators to new requirements.                                   

According to the report, the FDIC's Division of Depositor and Consumer Protection (DCP) incorporated these rules into its examination program, trained its examiners, and communicated regulatory changes to FDIC-supervised institutions. The report also found that DCP management should do a better job of tracking certain information and that examination workpapers needed improvement. The OIG made four recommendations to DCP to strengthen its compliance examination process.

GAO issues report on threats to independence in large bank supervision

This story appeared in Bank Digest.                                   

The Government Accountability Office has issued a report on risks of regulatory capture and threats to supervisory independence in the Large Institution Supervisory Coordinating Committee program, which was created by the Federal Reserve Board in 2010 to strengthen supervision of the largest U.S. financial institutions that pose the greatest risk to the economy. Regulatory capture occurs when a regulator acts in service of private interests, such as the interests of the regulated industry, at the expense of the public interest.

According to the report, the Fed has not finalized and implemented its enterprise risk management framework and therefore may have limited ability to manage risks across the LISCC program, including regulatory capture. The GAO also found weaknesses in the implementation of policies designed to mitigate threats to independence for supervisory staff and conflict-of-interest and other ethics policies for supervisory employees.                                  

The GAO made six recommendations to help improve the Fed's implementation of enterprise risk management and to strengthen internal controls to more effectively mitigate risks of regulatory capture and threats to supervisory independence across the LISCC program.                                   

In response to the report, House Financial Services Committee Ranking Member Maxine Waters (D-Calif) issued a statement, saying, "This report is yet more evidence that the Federal Reserve and other prudential regulators need to take the supervision of large banks much more seriously. Regulators must strengthen the independence of their large bank supervisory programs and fully enforce the law when it comes to wrongdoing by megabanks."