Dodd-Frank News Center

House files Supreme Court motion to defend for-cause removal provision for CFPB director

This story appeared in Bank Digest.                                   

Speaker of the House Nancy Pelosi (D-Calif) and House Financial Services Committee Chairwoman Maxine Waters (D-Calif) have announced a filing by the House of Representatives with the Supreme Court in support of the independence of the Consumer Financial Protection Bureau. As described in Pelosi's press release, the House's motion in Seila Law LLC v. CFPB to file an amicus brief follows a recent announcement by Consumer Financial Protection Bureau Director Kathy Kraninger that the Bureau would no longer defend the constitutionality of the for-cause removal provision regarding the CFPB director, which is designed to provide a degree of independence to the agency and to prevent the President from removing the director at will.

The release said the Justice Department has also urged the Supreme Court to consider the case in order to strike down the for-cause removal protection for the CFPB director.

Committee finds megabanks coming up short in closing CEO-to-worker pay gap

This story appeared in Bank Digest.                                     

Although the banking industry has made modest changes to close the CEO-to-worker pay gap, which was a subject of Financial Services Committee hearings in March and April, "it has a long way to go," according to a press release issued by Committee Chair Maxine Waters (D-Calif). The release stated that, under the Dodd-Frank Act, publicly traded companies, including megabanks, are required to disclose the ratio of what they pay their CEO to the median annual compensation of their workers.

Following the hearings, Waters asked megabanks for more information on their CEO compensation packages, worker pay, and the CEO-to-worker pay gap. Having considered that information, she said Committee Democrats will continue to push prudential regulators and megabank CEOs to ensure just compensation for workers.

Waters made the following recommendations: all megabanks should increase their minimum wage to at least $20 per hour by the end of the year, and to at least a "living wage" in the next two years, so that all workers have enough to meet their basic needs, including food, housing, and clothing; all boards for megabanks should consider ways to narrow excessive CEO-to-median worker pay ratios; and financial regulators should finalize meaningful executive compensation rules that curb inappropriate compensation practices.

Velázquez, Porter urge FSOC to oversee tech giants

This story appeared in Bank Digest.                                   

Rep. Nydia M. Velázquez (D-NY) and Rep. Katie Porter (D-Calif) have written to the Treasury Secretary, as head of the Financial Stability Oversight Council (FSOC), encouraging the FSOC to consider designating the three leading cloud-based computing storage providers for the financial industry as systemically important financial market utilities (SIFMUs) in light of the data breach at Capital One Financial Corporation, which exposed the personal information of approximately 106 million Capital One credit card customers and applicants. The personal data of millions of Americans that Capital One was storing was being hosted in a cloud provided by Amazon Web Services, and was breached by a former Amazon employee. The letter calls on the FSOC to consider designating Amazon Web Services, Microsoft Azure and Google Cloud as SIFMUs under the Title VIII of the Dodd-Frank Act. A SIFMU designation would subject the tech firms to enhanced oversight by the Federal Reserve Board to ensure a cloud failure of a leading financial institution would.

 

 

Perdue sponsors bill to subject CFPB to congressional appropriations process

This story appeared in Bank Digest.                                   

Senator David Perdue (R-Ga) has led 17 other Republican senators in sponsoring the CFPB Accountability Act of 2019, which would subject the Consumer Financial Protection Bureau to the annual congressional appropriations process to provide greater oversight of the Bureau. According to Perdue, the Dodd-Frank Act "gave the CFPB unprecedented power with no Congressional oversight whatsoever." He added, "The American people deserve a closer look at the CFPB to understand how its actions will impact consumers."

CFPB moves to eliminate payday lenders' underwriting obligations

This story appeared in Bank Digest.                                   

The Consumer Financial Protection Bureau is proposing amendments to its 2017 final rule governing "Payday, Vehicle Title, and Certain High-Cost Installment Loans" that would allow lenders to extend short-term, high-cost loans to consumers without needing to satisfy regulatory underwriting requirements. In addition to proposing to eliminate the underwriting requirements, the Bureau is proposing to extend the Aug. 19, 2019, compliance date of the rule's mandatory underwriting provisions until Nov. 19, 2020, which would enable the CFPB to eliminate the requirements before they take effect.

Senate Banking Committee Ranking Member Sherrod Brown (D-Ohio) issued a statement saying, "Eliminating these common sense protections will result in millions of hardworking families trapped in a cycle of debt and poverty." Similarly, House Financial Services Committee Chairwoman Maxine Waters (D-Calif) said she was "deeply troubled by the Consumer Bureau's proposal to gut a much-needed rule that would have reined in payday lenders and ensure consumers can afford to pay off their loans."

But House Financial Services Committee Ranking Member Patrick McHenry (R-NC) said the Bureau's "announcement on an updated payday lending rule and extended comment period will allow all stakeholders another chance to weigh in and establish new underwriting criteria. Most importantly, it will give consumers the opportunity to make their own decisions on credit availability needs for themselves and their families."

Democrats request that CFPB resume supervisory role over MLA

This story appeared in Bank Digest.                                   

House Financial Services Committee Ranking Member Maxine Waters (D-Calif), committee member Denny Heck (D-Wash), and 21 other committee Democrats have sent a letter to Consumer Financial Protection Bureau Director Kathy Kraninger urging her to recommit the Bureau to fulfilling its supervisory role over consumer protection laws, including the Military Lending Act, which the representatives said provides protections for active-duty servicemembers and their families from predatory loans and credit gouging.

In their letter, the representatives expressed their "deep concerns that the Consumer Bureau has recently decided to cease supervising its regulated entities for compliance with the Military Lending Act ("MLA"), a failure to fulfill its responsibility under the law and which is nothing less than a dereliction of duty. We write to seek your written commitment that you will promptly ensure that the Consumer Bureau fulfills its explicit statutory purpose and mandates by resuming a consistent supervisory role over consumer protection laws, including the MLA, for the most robust and efficient protection of servicemembers and their families."

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.