Dodd-Frank News Center

Waters 'deeply troubled' over CFPB settlement with State Farm Bank

This story appeared in Bank Digest.                                   

House Financial Services Committee Ranking Member Maxine Waters (D-Calif) has issued a statement on the Consumer Financial Protection Bureau's settlement with State Farm Bank, FSB, over the alleged misuse of consumer credit information, in which the Bureau did not impose a civil penalty. In her statement, Waters said, "To cap off his harmful tenure at the Consumer Bureau, Mick Mulvaney has chosen to once again turn a blind eye to predatory behavior."

She added that she was "deeply troubled by the Consumer Bureau's announcement that State Farm Bank will not be held accountable for violating the law by improperly obtaining consumer reports and providing credit bureaus with inaccurate information. Financial institutions that abuse consumers need to face real consequences and State Farm Bank, which has over $16 billion in assets, is no exception."

Waters expresses concerns over CFPB proposal to revise no-action letter policy

This story appeared in Bank Digest.                                     

House Financial Services Committee Ranking Member Maxine Waters (D-Calif) has issued a statement regarding the Consumer Financial Protection Bureau's proposed Policy on No-Action Letters and the BCFP Product Sandbox. Waters said she was "very concerned" by the Bureau's proposal, which she said would "significantly loosen its 'no-action letter' policy in a way that could let bad actors that abuse consumers off the hook entirely from enforcement action by the agency."

The Bureau is proposing to revise its 2016 Policy on No-Action Letters and proposing the BCFP Product Sandbox, which would provide no-action relief substantially the same as that available under the No-Action Letter policy, as well as two additional forms of relief. The proposed policy contains revised information collection requirements which consist of the information that should be submitted in applications for admission to the BCFP Product Sandbox. Written comments on the proposal must be received by Feb. 11, 2019.

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."

Loudermilk introduces Financial Reporting Threshold Modernization Act

This story appeared in Bank Digest.                                   

Representative Barry Loudermilk (R-Ga) has introduced the Financial Reporting Threshold Modernization Act (H.R. 6850), which would raise the monetary thresholds for reporting certain financial transactions under the Bank Secrecy Act. 

According to Loudermilk, "The Bank Secrecy Act of 1970 has not been updated in almost five decades and has resulted in massive paperwork burdens on community banks, credit unions, payment processors, and other companies. The law requires these companies to send a report to law enforcement any time there is a single-day cash transaction of $10,000 or more, in an effort to track and combat money laundering and terrorism financing. But the law hasn't been adjusted for inflation since it was first enacted, and this threshold would be more than $60,000 in today's dollars." 

H.R. 6850 would raise the currency transaction report threshold from $10,000 to $30,000, the suspicious activity report threshold for financial institutions from $5,000 to $10,000, and the suspicious activity report threshold for money services businesses from $2,000 to $3,000.

House Subcommittee examines capital regimes for financial institutions

This story appeared in Bank Digest.                                     

The House Financial Services Subcommittee on Financial Institutions and Consumer Credit held a hearing entitled "Examining Capital Regimes for Financial Institutions" on July 17, 2018. The hearing was held to examine the existing regulatory structure for prudentially regulated financial institutions and explore avenues that Congress and regulators can address through legislative and regulatory policy changes. 

The Dodd-Frank Act imposed a series of new capital regimes on financial institutions with more than $10 billion in total consolidated assets, but the Economic Growth, Regulatory Relief, and Consumer Protection Act (signed in May 2018) exempts certain financial institutions from the enhanced supervisory standards of Dodd-Frank.

 

Johnson named CFPB acting deputy director

This story appeared in Bank Digest.                                     

Consumer Financial Protection Bureau Acting Director Mick Mulvaney has named Brian Johnson, who currently serves as principal policy director at the Bureau, to be the Bureau's acting deputy director. Mulvaney said that Johnson's "steady character, work ethic, and commitment to free markets and consumer choice make him exactly what our country needs at this agency."                                 

House Financial Services Committee Chairman Jeb Hensarling (R-Texas) issued a statement saying he was pleased with the choice. He added, "Brian's deep understanding of the law and the Bureau's structure was an invaluable asset to me during his time at the Financial Services Committee. There is no one who understands the Bureau more or who is more committed to ensuring the Bureau lives up to its mission of truly protecting consumer access to financial choice and freedom."               

Economic Growth, Regulatory Relief, and Consumer Protection Act signed into law

This story appeared in Bank Digest.                                     

President Donald J. Trump has signed into law the Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155), an act that is intended to ease many of the post-recession restrictions that were imposed on the financial services industry by the Dodd-Frank Act. At a signing ceremony, President Trump said, "This is truly a great day for America and a great day for American workers and small businesses all throughout the nation."

While the President, and a fact sheet released post-signing by the White House, focused on the impact of the law on community banks, which are often defined as those under $10 billion in assets, significant provisions will change which bank holding companies are subject to enhanced prudential standards, benefiting much larger banks.

Senate Banking Committee Chairman Mike Crapo (R-Idaho), the bill's sponsor, said the "bill's passage marks one of our greatest achievements in the 115th Congress," and House Financial Services Committee Chairman Jeb Hensarling (R-Texas) said the bill "takes a major step toward allowing the banking system to serve the needs of American businesses and American families instead of working in the interest of Washington bureaucracy." But Senate Banking Committee Ranking Member Sherrod Brown (D-Ohio) said, "Today, special interests win again. The President signed in to law a giveaway that loosens rules for the same big banks that helped crash the economy a decade ago, leaving Americans taxpayers responsible for a $239 billion bailout."

 

House passes regulatory relief bill

This story appeared in Bank Digest.                                     

The House of Representatives has passed the Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155) by a vote of 258 to 159, with 10 not voting. A House Financial Services Committee press release called the bill, which would modify provisions of the Dodd-Frank Act and related laws governing financial services, "the most significant pro-growth financial regulatory reform package since the passage of Gramm-Leach-Bliley nearly a generation ago." The Senate previously passed S. 2155 on March 14, 2018, by a vote of 67 to 31. 

 Republicans in the House and Senate praised passage of the bill, with Senate Banking Committee Chairman Mike Crapo (R-Idaho) saying, "This step toward right-sizing regulation will allow local banks and credit unions to focus more on lending, in turn propelling economic growth and creating jobs on Main Street and in our communities." Similarly, Senate Majority Leader Mitch McConnell (R-Ky) said House passage of the bill "represents a major victory for America's local lenders and the communities they support." 

House Speaker Paul Ryan (R-Wis) called passage of the bill "a major step forward in freeing our economy from overregulation," while House Majority Leader Kevin McCarthy (R-Calif) said that "House passage of this bill is yet another major step for America's comeback." 

However, Democrats were critical of the bill, with House Financial Services Committee Ranking Member Maxine Waters (D-Calif) saying in a prepared floor statement that "the bill is packed with poisonous provisions that benefit megabanks like Wells Fargo and companies like Equifax" and House Minority Leader Nancy Pelosi (D-Calif) calling the legislation "a bad bill under the guise of helping community banks." 

Comptroller of the Currency Joseph M. Otting issued a statement saying the bill "restores an important balance to the business of banking," while Treasury Secretary Steven Mnuchin said the bill "will lead to increased investment in communities across the United States and foster greater economic growth for our country."           

CFPB's 2013 indirect auto lenders bulletin nullified

This story appeared in Bank Digest.                                     

On Monday, May 21, 2018, President Donald J. Trump signed into law S.J. Res. 57, which used Congressional Review Act authority to nullify the Consumer Financial Protection Bureau's 2013 bulletin regulating indirect auto lenders for compliance with the Equal Credit Opportunity Act. The Senate had approved the resolution by a 51-47 vote on April 18, and the House of Representatives followed suit with a vote of 234-175 on May 8. 

The CFPB issued the guidance to ensure compliance with the ECOA and to institute more rigorous oversight of the automobile financing process to eliminate discriminatory practices. But Section 1029 of the Dodd-Frank Act forbids the Bureau from regulating auto dealers, and the bulletin was issued without allowing public comment. In addition, some auto dealers feel it threatens their ability to negotiate the terms of loans with their customers and that the guidance has been used to sanction auto financing companies. 

A CFPB press release noted, "Today's action also clarifies that a number of Bureau guidance documents may be considered rules for purposes of the CRA, and therefore the Bureau must submit them for review by Congress."

Congress members oppose closing of CFPB's Office of Students and Young Consumers

This story appeared in Bank Digest.                                     

Several Congress members have issued statements following the announcement that the Consumer Financial Protection Bureau intends to dissolve its Office of Students and Young Consumers, which was created to support the mission of the CFPB's Student Loan Ombudsman, according to a press release by Senate Banking Committee Ranking Member Sherrod Brown (D-Ohio). The release said the office and the Student Loan Ombudsman empower and inform students on safer financial products and options, including student loans. 

In his statement, Brown said that CFPB Acting Director Mick Mulvaney "has defaulted on his obligation to help the thousands of Americans who are struggling with unfair student loans." Similarly Sen. Brian Schatz (D-Hawaii) said the decision "is a total dereliction of duties by the CFPB."

According to House Financial Services Committee Ranking Member Maxine Waters (D-Calif), "The closing of the Office of Students and Young Consumers is deeply concerning and will most certainly set back the progress the Consumer Bureau had made to protect our nation's students and consumers."