Dodd-Frank News Center

Agencies propose alternative method for calculating derivative exposures

This story appeared in Bank Digest.                                     

The Federal Deposit Insurance Corporation, Federal Reserve Board, and Office of the Comptroller of the Currency have issued a proposed update to their standards for how firms measure counterparty credit risk posed by derivative contracts under the agencies' regulatory capital rules. According to the joint press release, the proposed changes are designed to better reflect the current derivatives market and incorporate risks observed during the 2007-2008 financial crisis. Comments on the proposed rule must be submitted 60 days after publication in the Federal Register. 

The proposal would provide the "standardized approach for measuring counterparty credit risk," also known as "SA-CCR," as an alternative approach to the agencies' current exposure methodology for calculating derivative exposure under regulatory capital rules. The agencies believe that SA-CCR better reflects the current derivatives market and would provide important improvements to risk sensitivity, resulting in more appropriate capital requirements for derivative contracts exposure. Banking organizations with $250 billion or more in total consolidated assets or $10 billion or more in on-balance sheet foreign exposure would be required to use SA-CCR to calculate both standardized total risk-weighted assets and the supplementary leverage ratio.

OCC proposes revising 'stress test reporting template' information collection

This story appeared in Bank Digest.                                   

The Office of the Comptroller of the Currency is proposing to revise a currently approved information collection entitled "Company-Run Annual Stress Test Reporting Template and Documentation for Covered Institutions with Total Consolidated Assets of $100 Billion or More under the Dodd-Frank Wall Street Reform and Consumer Protection Act." The OCC is proposing to revise its reporting requirements to mirror the Federal Reserve Board's proposed revisions to its Comprehensive Capital Analysis and Review reporting form FR Y-14A for covered institutions with total consolidated assets of $100 billion or more. 

The OCC is also proposing to remove or modify certain items on the OCC supplemental schedule, which collects additional information not included in the FR Y-14A. Comments on the proposal must be received by Dec. 31, 2018.

 

FDIC requests renewal of 'Resolution Plans' information collection

This story appeared in Bank Digest.                                   

The Federal Deposit Insurance Corporation is proposing to renew an existing information collection entitled "Resolution Plans Required for Insured Depository Institutions With $50 Billion or More in Total Assets." The collection is related to the requirement that an insured depository institution with $50 billion or more in total assets submit periodically to the FDIC a contingent plan for the resolution of the institution in the event of its failure. 

On July 30, 2018, the FDIC requested comment for 60 days on the proposal and is now giving notice of its plan to submit to the Office of Management and Budget a request to approve the renewal of the collection. Comments on the current notice must be submitted by Nov. 28, 2018.

CFPB settles with payday lender over debt collection practices

This story appeared in Bank Digest.                                   

A payday lender has agreed to pay a $200,000 penalty and $32,000 in restitution to settle Consumer Financial Protection Bureau charges arising from the company's methods of collecting unpaid loans. According to the Bureau, Cash Express, LLC, sent consumers dunning letters that misrepresented its collection methods and improperly withheld amounts needed to repay prior loans when it cashed subsequent checks for consumers. The company did not admit any violations of the law in agreeing to the settlement. 

According to the consent order, Cash Express and an affiliate, First Cash Express, LLC, provide short-term, small-dollar loans and check cashing services in Alabama, Kentucky, Mississippi, and Tennessee. Cash Express has been in operation since 1998. In addition to making the required payments, the two companies are obligated by the consent order to meet other conditions, including refraining from making certain misrepresentations and creating a compliance plan.

 

CFPB blog post highlights role of Ombudsman's Office

This story appeared in Bank Digest.                                   

A blog post by Consumer Financial Protection Bureau Ombudsman Wendy Kamenshine noted that October 11 was the first Ombuds Day, which she said was intended to increase awareness and understanding of the ombudsman profession. According to Kamenshine, an ombudsman "employs alternate ways to informally resolve conflict and advocates for a fair process rather than someone's desired outcome."                                  

She said the CFPB Ombudsman's Office is "an independent, impartial, and confidential resource that helps consumers, financial entities, and others, resolve process issues arising from their interactions with the Bureau. In short, we advocate for fair process in consumer financial protection." The post goes on to list ways the CFPB Ombudsman's Office provides assistance.

FDIC issues guidance on CFPB's rule clarifying HMDA amendments

This story appeared in Bank Digest.                                   

The Federal Deposit Insurance Corporation has issued a financial institution letter regarding the Consumer Financial Protection Bureau's interpretive and procedural rule to implement and clarify amendments to the Home Mortgage Disclosure Act made by the Economic Growth, Regulatory Relief, and Consumer Protection Act. According to the FDIC, the Economic Growth Act's HMDA amendments provide eligible insured depository institutions with a partial exemption from reporting certain data points with respect to closed-end mortgage loans, open-end lines of credit, or both. 

The CFPB's rule became effective on Sept. 7, 2018, but as interpreted by the Bureau, the HMDA amendments became effective when the Economic Growth Act was signed into law on May 24, 2018.

 

CFPB blog post discusses ways to increase income

This story appeared in Bank Digest.                                     

A Consumer Financial Protection Bureau blog post discusses ways consumers can increase their income in order to help pay down their debt and save money for the future. According to the author, the two main ways to increase income are: (1) a one-time activity, such as a garage sale; and (2) bringing in more money on a regular basis by getting a part-time job or applying for benefits you may qualify for. The post also includes a list of other ways to save money, as well as links to CFPB resources.

 

CFPB settles with companies over alleged delay in sending payments to third-party debt buyers

This story appeared in Bank Digest.                                   

The Consumer Financial Protection Bureau has reached a settlement with Bluestem Brands, Inc.; Bluestem Enterprises, Inc.; and Bluestem Sales, Inc. (the Bluestem companies) to resolve the Bureau's allegations that after consumers made payments to the Bluestem companies on debts that the companies had already sold, the Bluestem companies substantially delayed sending those payments to the third-party debt buyers. According to the CFPB's release, the Bluestem companies are headquartered in Eden Prairie, Minn., and do business throughout the United States under the names Fingerhut and Gettington.com. 

Under an administrative consent order, the Bluestem companies must pay a civil money penalty of $200,000 and improve their processes to timely identify and forward customer payments on accounts that they have sold to third-party debt buyers, among other conditions.

Sanders and Sherman introduce bill to cap size of financial institutions

This story appeared in Bank Digest.                                   

Senator Bernie Sanders (I-Vt) has introduced the Too Big to Fail, Too Big to Exist Act (S. 3542), which would break up the nation's biggest banks and risky financial institutions in order to safeguard the economy and prevent another costly taxpayer bailout. Representative Brad Sherman (D-Calif) will introduce a companion bill in the House. According to a press release issued by Sanders, the bill would cap the size of the largest financial institutions so that a company's total exposure is no more than 3 percent of GDP. 

The release said that by applying a cap on the size of financial institutions, the bill would break up the six largest banks in the country: JP Morgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley. The bill also addresses large nonbank financial service companies such as Prudential, MetLife, and AIG.

Waters introduces bill to support CFPB

This story appeared in Bank Digest.                                     

House Financial Services Committee Ranking Member Maxine Waters (D-Calif) has introduced the Consumers First Act (H.R. 6972), which a committee minority press release said was intended "to block the Trump Administration's anti-consumer agenda" and reverse the Administration's efforts, led by Consumer Financial Protection Bureau Acting Director Mick Mulvaney, to "dismantle" the Bureau. 

According to Waters, the bill "would reverse the harmful changes the Trump Administration has imposed on the Consumer Bureau by restoring the agency's supervisory and enforcement powers and increasing the transparency and accountability needed for the agency to carry out it's important mission."