Dodd-Frank News Center

FDIC reduces company-run stress test requirements

This story appeared in Bank Digest.                                   

The Federal Deposit Insurance Corporation has amended its rules on company-run stress tests to ease test requirements in three significant ways. The amendments will: (1) increase the asset threshold to $250 billion, from the current $10 billion; (2) change the requirement of annual tests to a requirement of periodic tests; and (3) eliminate one of the three test scenarios. The amendments are consistent with changes made by the Economic Growth, Regulatory Relief, and Consumer Protection Act.

According to the FDIC’s notice, the changes will take effect 30 days after they are published in the Federal Register. The Federal Reserve Board and Office of the Comptroller of the Currency are expected to adopt identical amendments to their stress test rules.

Fed finalizes rules to align regulations with domestic, foreign bank risk profiles

This story appeared in Bank Digest.                                   

At its Oct. 10, 2019, open meeting, the Federal Reserve Board finalized rules that tailor its regulations for domestic and foreign banks to more closely match their risk profiles. According to the Fed, the rules "reduce compliance requirements for firms with less risk while maintaining the most stringent requirements for the largest and most complex banks."

In particular, the rules establish a framework that pigeonholes banks with $100 billion or more in total assets into four different categories based on several factors—including "asset size, cross-jurisdictional activity, reliance on short-term wholesale funding, nonbank assets, and off-balance sheet exposure." As communicated by the Fed, the rules "build on the Board's existing practice of tailoring its requirements and are consistent with changes made by the Economic Growth, Regulatory Relief, and Consumer Protection Act." The rules take effect 60 days after their publication in the Federal Register.

The Fed has also issued a notice of proposed rulemaking that would amend its assessment rule (Regulation TT) to raise the minimum threshold for being considered an assessed company from $50 billion to $100 billion in total consolidated assets for bank holding companies and savings and loan holding companies and adjust the amount charged to assessed companies with total consolidated assets between $100 billion and $250 billion to reflect changes in supervisory and regulatory responsibilities resulting from the Economic Growth, Regulatory Relief, and Consumer Protection Act. Comments must be received by Dec. 9, 2019.

Agencies Finalize Volcker Rule Revisions

This story appeared in Bank Digest.                                   

The Federal Reserve Board and four other federal financial regulatory agencies have finalized revisions to the "Volcker Rule," which generally prohibits banking entities from engaging in proprietary trading or investing in or sponsoring hedge funds or private equity funds. The changes were jointly developed by the Fed, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, Commodity Futures Trading Commission, and Securities and Exchange Commission.

The agencies' joint release said that under the revised rule, firms that do not have significant trading activities will have simplified and streamlined compliance requirements, while firms with significant trading activity will have more stringent compliance requirements. The revisions continue to prohibit proprietary trading, while providing greater clarity and certainty for activities allowed under the law.

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.

Quarles speaks at European Banking Summit on work of Financial Stability Board

This story appeared in Bank Digest.                                   

Federal Reserve Board Vice Chair for Supervision and Financial Stability Board Chair Randal K. Quarles spoke at the European Banking Federation’s European Banking Summit in Brussels, Belgium, on Oct. 3, 2019. The subject of his prepared remarks was “The Financial Stability Board at 10 Years—Looking Back and Looking Ahead.”

Noting that 2019 marks the 10th anniversary of the founding of the Financial Stability Board, Quarles said he wanted to “look back on the experiences of the past 10 years, what the FSB has accomplished, and also offer some perspective on just how it contributed to the construction of the post-crisis global financial architecture.” He also discussed “the new challenges facing the global regulatory community, such as innovations in financial technology, shifts in financial globalization and integration, and increasing nonbank financial intermediation.”

CFPB and South Carolina sue brokers of high-interest credit offers

This story appeared in Bank Digest.                                     

The Consumer Financial Protection Bureau and the South Carolina Department of Consumer Affairs have filed a lawsuit against Katharine Snyder, Performance Arbitrage Company, Inc., and Life Funding Options, Inc. The Bureau said the companies, which are owned and operated by Snyder, brokered contracts offering high-interest credit to veterans, many of whom are disabled, and to other consumers. The Bureau alleges that the companies and Snyder violated the Consumer Financial Protection Act’s prohibition against deceptive acts or practices.     

The complaint seeks an injunction against Snyder and her companies, redress to consumers, and the imposition of a civil money penalty.

CFPB sues Maryland debt collection entities and CEO over alleged FCRA, FDCPA violations

This story appeared in Bank Digest.                                   

The Consumer Financial Protection Bureau has filed a lawsuit against FCO Holding, Inc., and its subsidiaries, Fair Collections & Outsourcing, Inc.; Fair Collections & Outsourcing of New England, Inc.; and FCO Worldwide, Inc., as well as Michael E. Sobota, the chief executive officer, president, director, and owner of FCO Holding, Inc. All of the entities are Maryland-based debt collectors that operate collectively under the names Fair Collections & Outsourcing and FCO, the Bureau said.

The Bureau alleges that FCO violated the Fair Credit Reporting Act, Regulation V, and the Consumer Financial Protection Act by, among other things, failing to establish or implement reasonable written policies and procedures regarding the accuracy and integrity of the information it furnished to consumer reporting companies, specifically with respect to its handling of indirect disputes. The Bureau also alleges that FCO and Sobota violated the Fair Debt Collection Practices Act when FCO represented that consumers owed certain debts when FCO did not have a reasonable basis for such assertions.

The Bureau's complaint seeks an injunction, as well as damages, redress, disgorgement of alleged ill-gotten gains, and the imposition of a civil money penalty.                            

 

CFPB Files Amicus Brief in CFPA Case

This story appeared in Bank Digest.                         

The Consumer Financial Protection Bureau has filed an amicus brief in the case of Commonwealth of Pennsylvania v. Navient Corp., et al. This case concerns the authority of states to enforce the Consumer Financial Protection Act's prohibition against unfair, deceptive, or abusive acts or practices. The CFPA requires states bringing such actions to notify the CFPB, but the Bureau argued in its amicus brief that nothing in the relevant CFPA section, either explicitly or implicitly, prohibits a state from bringing an action that is parallel to one that the Bureau has already brought.

CFPB seeks to reinstate ‘disclosure testing’ information collection plan

This story appeared in Bank Digest.                                   

The Consumer Financial Protection Bureau is seeking to reinstate, with change, a previously approved information collection plan entitled “Generic Information Collection Plan for the Development and Testing of Disclosures and Related Materials.” According to the CFPB’s notice, the Bureau is requesting generic clearance for the development and testing of consumer financial disclosures and related materials for the purpose of producing recommendations for the development of and revisions to such disclosures and related materials.

The Bureau is modifying this generic information collection plan to provide for enhanced public notice and opportunity to comment to the Office of Management and Budget for each request submitted.

On June 14, 2019, the Bureau issued a 60-day notice (see 2019 No. 2146) requesting comments on the proposal. Written comments on the current notice must be received by Oct. 21, 2019, and will be will be reviewed by the OMB as part of its review of this request.

CFPB issues latest edition of ‘Supervisory Highlights’

This story appeared in Bank Digest.

The Consumer Financial Protection Bureau has issued its latest edition of “Supervisory Highlights,” which includes examination findings in the areas of automobile loan origination, credit card account management, debt collection, furnishing, and mortgage origination that were generally completed between December 2018 and March 2019 (unless otherwise stated). The CFPB said the information in the report is disseminated to help institutions better understand how the Bureau examines institutions for compliance with the requirements of relevant laws and regulations.

In addition, the report does not impose any new or different legal requirements, and all violations described in the report are based only on the particular facts and circumstances reviewed by the Bureau as part of its examinations.