Dodd-Frank News Center

Fed releases CCAR results

This story appeared in Bank Digest.                           

The Federal Reserve Board has released the results of its Comprehensive Capital Analysis and Review, which evaluates the capital planning processes and capital adequacy of the largest U.S.-based bank holding companies, including the firms' planned capital actions, such as dividend payments and share buybacks. Of the 35 companies subject to the CCAR, the Fed objected to the capital plan of only one firm, DB USA Corporation, due to qualitative concerns such as material weaknesses in the firm's data capabilities and controls supporting its capital planning process, as well as weaknesses in its approaches and assumptions used to forecast revenues and losses under stress. 

The Fed issued conditional non-objections to the capital plans of Goldman Sachs, Morgan Stanley, and State Street Corporation.

Fed proposes loosening up Volcker Rule restrictions

This story appeared in Bank Digest.                                     

The Federal Reserve Board has proposed amendments to regulations implementing Volcker Rule restrictions on the ability of banking entities to engage in proprietary trading and have certain interests in, or relationships with, a hedge fund or private equity fund. The proposal was developed jointly with the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Securities and Exchange Commission, and the Commodity Futures Trading Commission. 

 The proposed amendments are intended to clarify what activities are prohibited, focus requirements on entities with large trading operations, and simplify regulatory requirements. Fed Chair Jerome Powell said he views the proposal as a way to tailor requirements so firms that do modest amounts of trading will face fewer demands. 

But Sen. Jeff Merkley (D-Ore), a co-author of the Volcker Rule, called the proposal "a brazen attempt by big bank CEOs and their Trump-appointed allies to reopen the Wall Street casino, less than 10 years after the passage of financial reform." 

Two information collections were issued with the proposal, which has a 60-day comment period.

OIG says CFPB should strengthen controls over contracting processes

This story appeared in Bank Digest.   

The Office of Inspector General for the Consumer Financial Protection Bureau and the Federal Reserve Board has issued a report assessing the Bureau's compliance with applicable laws, regulations, and internal policies and procedures related to the award and management of its contract with GMMB for advertising and marketing services, which it awarded in August 2013. The OIG found that while the Bureau competitively awarded the GMMB blanket purchase agreement and performed technical and price reasonableness evaluations in compliance with the Federal Acquisition Regulation, it can improve controls to help ensure compliance with other aspects of the FAR and can improve contract management. 

The OIG issued recommendations designed to strengthen the Bureau's controls over its contracting processes. The recommendations included enhancing existing policy and associated training related to contract financing and improving contract management practices.

OIG finds FHFA followed procedures for documenting Enterprise Scorecard target changes

This story appeared in Bank Digest.                                     

The Federal Housing Finance Agency’s Office of Inspector General has issued a compliance review to test the FHFA's implementation of recently adopted Scorecard procedures for Fannie Mae and Freddie Mac (the Enterprises) during 2017. According to the report, the FHFA annually issues to the Enterprises a Scorecard with objectives for them to achieve in furtherance of the agency's strategic goals for their conservatorships. The agency groups the objectives into projects, which are comprised of discrete tasks called "targets" with scheduled completion dates. 

The OIG cited a 2016 audit report in which it found that the FHFA had revised Scorecard targets or extended the time within which they were to be completed but failed to document those changes. The OIG recommended that the agency adopt standards by which revisions to Scorecard targets would be documented, and the FHFA adopted such Scorecard procedures in June 2016. 

In the current report, the OIG found that of the 30 projects in the 2017 Scorecard, the FHFA had revised targets or their completion dates associated with 14 of the projects. The OIG conducted independent testing of the agency's process for tracking and documenting target modifications and found that the agency had adhered to its procedures.

Corker supports Administration plan to reform Fannie Mae and Freddie Mac

This story appeared in Bank Digest.   

Senator Bob Corker (R-Tenn) has issued a statement on the Trump Administration's proposal to reform government-sponsored enterprises Fannie Mae and Freddie Mac that was included in a plan to reform and reorganize the federal government. 

With regard to the government-sponsored enterprises, the plan proposed "ending the conservatorship of Fannie Mae and Freddie Mac, reducing their role in the housing market, and providing an explicit, limited Federal backstop that is on-budget and apart from the Federal support for low- and moderate-income homebuyers." The plan also proposed "transitioning Fannie Mae and Freddie Mac to fully private entities." 

Corker said, "It is long past time to end the failed model of private gains and public losses, and I agree with the administration that creating competition is a critical step as we work to shrink Fannie and Freddie and put an end to 'too big to fail' mortgage companies." He added that the framework put forth by Office of Management and Budget Director Mick Mulvaney "is the right one and closely resembles the approach we laid out in recent legislative drafts developed on a bipartisan basis in the Senate."

President intends to nominate Kraninger to lead CFPB, Hood for NCUA board

This story appeared in Bank Digest.   

President Donald J. Trump intends to nominate Kathy Kraninger to serve as the next director of the Consumer Financial Protection Bureau for a term of five years. She would replace current CFPB Acting Director Mick Mulvaney, who also serves as Office of Management and Budget Director. Kraninger currently serves as the OMB's Associate Director for General Government. 

President Trump also intends to nominate Rodney Hood to be a member of the National Credit Union Administration board for the remainder of a six-year term expiring Aug, 2, 2023. Hood currently serves as a corporate responsibility manager for JPMorgan Chase and Co. 

Opposing Kraninger's nomination, Senate Banking Committee Ranking Member Sherrod Brown (D-Ohio) said, "For months I have called for a CFPB Director with a track record of holding Wall Street and payday lenders accountable. The White House should pick an experienced, serious, independent leader." Similarly, House Financial Services Committee Ranking Member Maxine Waters (D-Calif) said, "Given Ms. Kraninger's apparent lack of qualifications for this role, it appears that her nomination may be less about securing her confirmation as Director, and more about allowing Mick Mulvaney to continue to operate as Acting Director, which this nomination will potentially allow him to do through 2020 if she is not confirmed." 

But House Financial Services Committee Chairman Jeb Hensarling (R-Texas) supported the nomination, saying he was "especially pleased that President Trump nominated an individual with management and budget experience--two qualities that are desperately needed at an agency which has been plagued with cost overruns and unnecessary spending and does not have a full-time and an independent Inspector General."  

Pelosi issues statement on new proposed CFPB director

This story appeared in Bank Digest.   

House Democratic Leader Nancy Pelosi (D-Calif) has issued a statement regarding President Donald Trump's selection of Office of Management and Budget official Kathy Kraninger to be the new Consumer Financial Protection Bureau director to replace current Acting Director Mick Mulvaney. 

According to Pelosi, "The Trump Administration's nominee to lead the Bureau has an opportunity to be a champion for consumers and not the financial industry. But her apparent lack of experience in consumer finance, coupled with the Administration's hostility to consumer protection, raises questions about her qualifications to lead such an important agency." She added, "Democrats and the American people will hold Republicans accountable for their cynical big bank and big corporate donor-first agenda that puts the interests of big banks and corporations before those of hard-working families."

Fed limits credit exposure of large bank holding companies and foreign banking organizations

This story appeared in Bank Digest.                                  

The Federal Reserve Board has approved a final rule to establish single-counterparty credit limits for large U.S. bank holding companies and foreign banking organizations pursuant to Sec. 165(e) of the Dodd-Frank Act. The Fed's release said that consistent with the recently passed Economic Growth, Regulatory Reform, and Consumer Protection Act, the limits in the final rule will apply only to global systemically important bank holding companies (GSIBs) and bank holding companies with at least $250 billion in total consolidated assets. The final rule is effective 60 days after its publication in the Federal Register, but compliance will not be required until Jan. 1, 2020, for GSIBs and until July 1, 2020, for all other firms.

Under the rule, a GSIB will be limited to a credit exposure of no more than 15 percent of its tier 1 capital to another systemically important financial firm, while a bank holding company with $250 billion or more in total consolidated assets will be restricted to a credit exposure of no more than 25 percent of its tier 1 capital to a counterparty. 

Foreign banks operating in the U.S. with $250 billion or more in total global consolidated assets, and their intermediate holding companies with $50 billion or more in total U.S. consolidated assets, will be subject to limits similar to those applicable to bank holding companies with $250 billion or more in assets, the Fed said.an foreclosure.

FHFA releases report on Enterprise sales of non-performing loans

This story appeared in Bank Digest. 

The Federal Housing Finance Agency has released its "Enterprise Non-Performing Loan Sales Report," which provides information about the sales of non-performing loans by Fannie Mae and Freddie Mac (the Enterprises) and borrower outcomes after the sales. The report includes information about NPLs sold through Dec. 31, 2017, and reflects borrower outcomes as of Dec. 31, 2017, on NPLs sold through June 30, 2017. 

According to the FHFA, the sale of NPLs reduces the number of delinquent loans held in the Enterprises' inventories and transfers credit risk to the private sector. The FHFA and the Enterprises impose requirements on NPL buyers designed to achieve more favorable outcomes for borrowers than foreclosure.

CFPB blog post discusses value of bank accounts for young people

This story appeared in Bank Digest.

A Consumer Financial Protection Bureau blog post emphasizes the value to young people of having a savings or checking account, notes challenges some young people have in obtaining banking services, and lists resources related to checking and savings accounts for young people.

According to the post, the FDIC's 2015 National Survey of Banked and Unbanked Households found that people who are banked build savings at a higher rate than those who are not. But the post noted that "some youth employment programs have told us that it can be difficult for participants under the age of 18 to open their own accounts, due to concerns from financial institutions about how federal or state laws may apply to noncustodial accounts for customers under age 18."

The post goes on to list three resources for entities seeking to help young people access transaction and savings accounts. The author said, "As youth employment programs increasingly focus on developing the financial capability of young workers entering the workforce, there is an opportunity for financial institutions and youth employment programs to work together to offer young adults checking and savings account options that work for them."