Dodd-Frank News Center

Agencies tell Warren, Brown that Wells Fargo has not satisfied consent order obligations

This story appeared in Bank Digest.                                   

Senators Elizabeth Warren (D-Mass) and Sherrod Brown (D-Ohio) have released new letters from the Federal Reserve Board, Office of the Comptroller of the Currency, and Consumer Financial Protection Bureau in response to inquiries they sent the regulators in March 2019 regarding Wells Fargo.

In separate letters sent to the OCC and CFPB and to the Fed, the senators had expressed concern about Wells Fargo's apparent unwillingness to compensate customers harmed by the bank's illegal auto-lending practices, despite an obligation to do so under its settlement with the OCC and CFPB, and urged the agencies to use their enforcement tools to remove then-CEO Tim Sloan. The senators' letter to the Fed also cited a recent Securities and Exchange Commission fine for overcharging retail mutual fund investors and urged the Fed to refrain from lifting Wells Fargo's growth restriction until Sloan was replaced.

According to Warren's press release, the agencies said in their response letters that Wells Fargo has not satisfied its obligations under existing consent orders, which require the bank to remediate customers harmed by its wrongdoing and impose reforms to end the bank's unlawful activity.

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."

FDIC-supervised institutions notified of proposed Volcker Rule amendments

This story appeared in Bank Digest.  

The Federal Deposit Insurance Corporation has notified institutions it supervises that the agency, along with the Federal Reserve Board, Office of the Comptroller of the Currency, Securities and Exchange Commission, and Commodity Futures Trading Commission, has issued a proposed rule that would amend the Volcker Rule to provide banking entities with clarity about what activities are prohibited, improve supervision and implementation of the rule, and simplify compliance.

According to the FDIC, the proposal would, among other things, tailor the application of the Volcker Rule based on the size and scope of trading activities of a banking entity, rather than total consolidated assets. The proposal has a 60-day comment period.

Financial Services Committee passes Financial CHOICE Act

This story appeared in Bank Digest.

The House Financial Services Committee has passed the Financial CHOICE Act, a Republican alternative to the Dodd-Frank Act, on a party-line vote of 34-26. A number of representatives issued statements either supporting or opposing the committee's action. In addition, several banking or financial services groups issued statements generally approving of the bill, while some nonprofit organizations issued statements opposing it.

• Rep. Blaine Luetkemeyer (R-Mo) statement
• Rep. Joyce Beatty (D-Ohio) statement
• Statement by Rob Nichols, President and CEO, American Bankers Association
• Financial Services Roundtable press release

 

Tipton reintroduces TAILOR Act

This story appeared in Bank Digest.

Representative Scott Tipton (R-Colo) has reintroduced the Taking Account of Institutions with Low Operation Risk (TAILOR) Act (H.R. 1116), which is intended to provide smaller community banks and credit unions relief from "onerous regulatory compliance burdens." The bill would require federal regulatory agencies to tailor regulations to fit the business model and risk profile of institutions instead of imposing one-size-fits-all mandates. 

Under the current system, according to Tipton, "regulations designed and intended for big banks are also applied to small community and independent banks or credit unions," and the resulting compliance costs "are often unworkable for small community banks." He added, "The TAILOR Act would allow federal regulators to better focus their oversight efforts, and allow small banks and credit unions to focus their time and assets on investing in their communities, helping to generate economic growth and job opportunities."

 

Tester seeks answers from Wells Fargo Board on fraud investigation

This story appeared in Bank Digest.

Senator Jon Tester (D-Mont) and several other Democratic senators have written a letter to Wells Fargo's board of directors requesting that the board respond to questions about the bank's ongoing fraud investigation over deceptive sales practices. The letter said that "failure to answer questions--especially basic questions--about the causes and consequences of the fraud that Wells Fargo permitted for many years does nothing to restore the trust of Wells Fargo's customers and shareholders, many of whom are our constituents."

The letter also requested that the Wells Fargo Board answer the Senate Banking Committee's questions, including who is leading the investigation, why the investigation wasn't launched earlier, and what the board is doing to ensure this kind of systematic fraud and abuse does not happen again. This letter is a follow-up to one Tester and his colleagues sent back in September.

Senators call on Fed to simplify capital and Call Report requirements for community banks

This story appeared in Bank Digest.

Senators Mike Crapo (R-Idaho) and Jon Tester (D-Mont) have written to Federal Reserve Board Chair Janet L. Yellen encouraging the Fed to provide a simplified capital framework and reporting requirements for community banks through the Economic Growth and Regulatory Paperwork Reductions Act process.

In their letter, the senators stated that the regulatory capital rules in effect since Jan. 1, 2015, have added complexity to the capital framework for community banks and that feedback from EGRPRA outreach meetings has questioned the need for "four capital minimum requirements, a capital conservation buffer, and the complexity in the definition of tier 1 capital." They also cited the need for regulatory relief regarding the quarterly Call Reports, noting that the time required to complete the Call Reports is "significant and has increased over the years."

FDIC issues FAQs on Hoenig's recommendations for regulatory relief

This story appeared in Bank Digest.

The Federal Deposit Insurance Corporation has issued a list of frequently asked questions, along with the agency's answers, on recommendations made by FDIC Vice Chairman Thomas Hoenig for regulatory relief for traditional banks. The list includes questions on what criteria are recommended for banks to be eligible for regulatory relief under Hoenig's plan, the size threshold for banks to be eligible for regulatory relief, what banks currently are eligible, and what specific relief is recommended for eligible banks, along with several others.

Leutkemeyer reintroduces bill to promote risk-based regulation for banks

This story appeared in Bank Digest.

Representative Blaine Luetkemeyer (R-Mo) reintroduced the Systemic Risk Designation Improvement Act, which would more closely base the regulation of financial institutions on risk rather than arbitrary asset size. The legislation would enhance the criteria used to make Systemically Important Financial Institution, or SIFI, designations to ensure that those with the SIFI designation, and therefore subject to stricter regulatory standards, are those institutions that are not only large in size, but also globally interconnected and complex.

"This legislation supports economic growth in the country because not only does it allow our community and regional banks to lend without certain burdens of lending, but it more closely bases the regulation of financial institutions on risk rather than arbitrary asset size," Luetkemeyer said. "After decades of being in the community banking and insurance businesses, I know firsthand the importance of creating standards that account for risk and the varying structures of small, mid-size, and large financial institutions. Decisions on what institutions are deemed systemically important should be based not on size alone, but also on activity and other factors that actually demonstrate systemic risk."

CFPB updates TILA, RESPA exam procedures

This story appeared in Bank Digest.

The procedures that will be used by the Consumer Financial Protection Bureau in examining banks and mortgage companies for compliance with its mortgage lending rules have been updated. The Truth in Lending Act exam procedures and Real Estate Settlement Procedures Act exam procedures cover borrowers' ability to pay, qualified mortgage criteria, higher-priced loan appraisals, and escrow accounts, the bureau said. Recent credit card amendments also are covered.