Dodd-Frank News Center

Hoenig issues statement on update of Global Capital Index

This story appeared in Bank Digest.                                     

Federal Deposit Insurance Corporation Vice Chairman Thomas M. Hoenig has issued a statement on the semiannual update of the Global Capital Index. The statement said the updated GCI shows that the largest U.S. banks reported higher capital ratios at year-end 2017 and that the U.S. global systemically important banks' average International Financial Reporting Standards tangible leverage ratio estimate (a measure of tangible equity funding a bank's assets) increased to 6.92 percent, up from 6.62 percent in June 2017. 

According to Hoenig, these results reflect two important events occurring in 2017: (1) the adoption by the largest banks of the clearinghouses' settle-to-market rule change for certain centrally cleared derivatives transactions that treats the exchange of variation margin as a settlement rather than collateral; and (2) the distribution by the largest U.S. GSIBs of 125 percent of earnings to shareholders through dividends and share buybacks for the full year 2017.

Treasury highlights regulatory reform successes under Trump executive orders

This story appeared in Bank Digest.                                     

The Treasury Department has released a report highlighting the steps it has taken to bolster President Donald Trump's regulatory reform agenda. The President has used a number of executive orders, government-wide and agency-specific, to bolster the plan to reduce existing regulatory burdens and limit new regulatory costs. The report details the actions Treasury has taken since President Trump issued Executive Order 13777, "Enforcing the Regulatory Reform Agenda," on Feb. 24, 2017

Treasury highlights regulatory reform successes under Trump executive orders

This story appeared in Bank Digest.                                     

The Treasury Department has released a report highlighting the steps it has taken to bolster President Donald Trump's regulatory reform agenda. The President has used a number of executive orders, government-wide and agency-specific, to bolster the plan to reduce existing regulatory burdens and limit new regulatory costs. The report details the actions Treasury has taken since President Trump issued Executive Order 13777, "Enforcing the Regulatory Reform Agenda," on Feb. 24, 2017

CFPB issues FY 2017 'Independent Audit of Selected Operations and Budget'

This story appeared in Bank Digest

The Consumer Financial Protection Bureau has issued its "Consumer Financial Protection Bureau Independent Audit of Selected Operations and Budget" for fiscal year 2017, in accordance with the Dodd-Frank Act. The purpose of this annual audit is to provide objective analyses to improve program performance and operations, reduce costs, facilitate decision-making, and contribute to public accountability.

This year's independent audit was conducted by KPMG LLP and evaluated: (1) the CFPB's budget process relative to CFPB policies and procedures established over budget formulation, execution, and monitoring; (2) the CFPB's monitoring and oversight of the interagency agreement with third-party service provider Bureau of Fiscal Service--Administrative Resource Center; and (3) the corrective actions taken to resolve the findings included in the CFPB's FY 2016 "Independent Audit of Selected Operations and Budget," also completed by KPMG.

Duffy and Perlmutter introduce bill to improve CFPB's rulemaking process

This story appeared in Bank Digest.  

Representatives Sean Duffy (R-Wis) and Ed Perlmutter (D-Colo) have introduced the Give Useful Information to Define Effective Compliance (GUIDE) Compliance Act, which seeks to regularize the Consumer Financial Protection Bureau's process of providing rules and guidance to better protect consumers, according to Duffy's press release. Duffy said the Bureau "has historically ignored requests for guidance and clarification from American businesses, consumers, and Congress--especially in relation to the Know Before You Owe rule." He added that the bill would "bring predictability and transparency to the CFPB's rule-making process."

Senate votes to rescind CFPB auto lending guidance

This story appeared in Bank Digest.  

The Senate voted to proceed on a Congressional Review Act resolution to rescind the Consumer Financial Protection Bureau's 2013 Auto Lending Guidance. The measure, S. J. Res. 57, passed by a 51 to 47 vote.

The joint resolution of disapproval applies to the Bureau's 2013 guidance document entitled "Indirect Auto Lending and Compliance with the Equal Credit Opportunity Act." An indirect loan is financing offered to a consumer through an automobile dealer instead of directly from a consumer's bank or credit union.

In prepared remarks on the Senate floor in favor of the resolution, Senate Banking Committee Chairman Mike Crapo (R-Idaho) said the CFPB's guidance was an attempt "to make substantive policy changes through guidance rather than through the rulemaking process governed by the Administrative Procedures Act." He added that the guidance "was also an attempt to regulate auto dealers who were explicitly exempted from CFPB supervision and regulation under the Dodd-Frank Act."

But in his prepared floor speech, Banking Committee Ranking Member Sherrod Brown (D-Ohio) said the resolution "would tell Wall Street banks and shady lenders it's ok to discriminate against borrowers" and that it "threatens thousands more protections for workers and families vulnerable to repeal by Congress."

House votes to give Fed exclusive Volcker Rule authority, exempt community banks

This story appeared in Bank Digest.                                     

By a vote of 300-104, the U.S. House of Representatives voted to pass the Volcker Rule Regulatory Harmonization Act (H.R. 4790). The bill would grant exclusive rulemaking authority under the Volcker Rule to the Federal Reserve Board and would exclude banks under certain asset thresholds from the Rule.                                  

Exclusive authority for the Fed. The Volcker Rule was added to the Bank Holding Company Act of 1956 by Section 619 of the Dodd-Frank Act. It places certain limits on financial institutions' proprietary trading and relationships with hedge funds and private equity firms. Currently, the federal banking and market regulatory agencies share rulemaking authority under the rule (the Federal Reserve Board, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, Securities and Exchange Commission, and Commodity Futures Trading Commission). Upon enactment, the Federal Reserve Board would have exclusive authority to issue and amend rules under Section 13(b) of the Bank Holding Company Act of 1956. 

House Financial Services Committee Chairman Jeb Hensarling (R-Texas) said that having five different regulators interpreting and enforcing the rule can create conflicts and confusion for regulated entities. However, Democrats argued that the exemption to the Volcker Rule "makes it easier for the Trump Administration to pursue a full repeal, and could once again put taxpayers on the hook if Wall Street is left unchecked," said Minority Leader Nancy Pelosi (D-Calif).

 

CFPB requests operational funds from Fed for third quarter of FY 2018

 This story appeared in Bank Digest.                                     

In a funding request letter to the Federal Reserve Board, Consumer Financial Protection Bureau Acting Director Mick Mulvaney said that $98,500,000 would be necessary to carry out the authorities of the Bureau for the third quarter of fiscal year 2018. As required by law, each fiscal quarter the Fed transfers to the CFPB the amount of funds formally requested by the director. 

In his letter, Mulvaney asserted that the Bureau should be funded through congressional appropriations and that the current funding mechanism "denies the American people their rightful control over how the Bureau spends their money, which undermines the Bureau's legitimacy." In spite of this, Mulvaney acknowledged that he was "bound to execute the law as written" and proceeded to request the funds for the third quarter.

Budd and Mooney call for eliminating Office of Financial Research

This story appeared in Bank Digest.                                     

Representatives Ted Budd (R-NC) and Alex Mooney (R-WVa) are calling for the Office of Financial Research to be closed. In a statement, Budd said, "The OFR is supposed to forecast financial markets through data collection and market patterns to best inform lawmakers in order to avert a financial crisis. However, this 'one world view' of the financial system has had disastrous consequences. My biggest fear surrounds the OFR's unbridled ability to collect data and spending habits of everyday Americans--while also having the power to subpoena banks for individual loan information, without going to court." 

He added that there are a number of other "federal divisions, departments, committees and bureaus" that can collect and analyze the same data the OFR collects and that eliminating the OFR "will result in one less redundant federal division."

House passes bills on FSOC designation process, stress testing

This story appeared in Bank Digest.                                     

The House of Representatives has passed two bipartisan bills from the House Financial Services Committee that improve stress test requirements for banks and reform the designation process for nonbank financial institutions, according to a committee press release. Specifically, the House passed the Financial Stability Oversight Council Improvement Act of 2017 (H.R. 4061) by a vote of 297 to 121 and the Stress Test Improvement Act of 2017 (H.R. 4293) by a vote of 245 to 174. 

According to the release, H.R. 4061 would enhance the transparency and procedural fairness of the Financial Stability Oversight Council's nonbank systemically important financial institution designation process. H.R. 4293 would streamline the current regime for stress testing banks, make the company-run stress test an annual exercise, and reduce the number of supervisory scenarios from three to two. The bill would also limit the ability of the Federal Reserve Board to object to a company's capital plan based solely on qualitative deficiencies, the release said. 

Financial Services Committee Ranking Member Maxine Waters made statements on the House floor opposing H.R. 4061 and H.R. 4293.