Dodd-Frank News Center

Brown urges FSOC to address risks in leveraged loan market

This story appeared in Bank Digest.                                   

Senate Banking Committee Ranking Member Sherrod Brown (D-Ohio) has written a letter to Treasury Secretary Steven T. Mnuchin, who is also chair of the Financial Stability Oversight Council, urging the FSOC to take action to address heightened risks in the leveraged loan market. According to Brown, "The marked increase in the volume of leveraged loans originated by financial institutions has been accompanied by a notable decrease in underwriting standards. Like many financial activities, leveraged lending benefits banks and financial intermediaries that profit by packaging and selling risky loans."

He added that the "FSOC must consider whether this additional risk to the banking system serves as a public benefit to the real economy." Brown requested that he be provided with any FSOC analyses and documents relating to leveraged lending, along with other information.

 

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.

Fed, FDIC propose modifying resolution plan requirements for U.S., foreign banks

This story appeared in Bank Digest.

The Fed and FDIC are inviting public comment on a joint proposal to modify regulations implementing the resolution planning requirements of Section 165(d) of the Dodd-Frank Act for U.S. and foreign banking organizations.”

The rule changes are intended to conform with 2018 amendments made by the Economic Growth, Regulatory Relief, and Consumer Protection Act to the Dodd-Frank Act and to reflect desired improvements to resolution planning that the federal agencies have identified over the past several years.

Principally, the agencies’ proposal seeks to establish “risk-based categories for determining the application of the resolution planning requirement to certain U.S. and foreign banking organizations,” extend the “default resolution plan filing cycle,” and allow for “more focused resolution plan submissions.” According to the draft notice of the proposal, public comments are to be received by June 21, 2019.

CFPB requests renewal of RESPA information collection

This story appeared in Bank Digest.                                   

The Consumer Financial Protection Bureau is requesting to renew, without change, the Office of Management and Budget approval for an existing information collection entitled "Real Estate Settlement Procedures Act (Regulation X) 12 CFR 1024." Written comments must be received by June 7, 2019.

According to the Bureau's notice, the Real Estate Settlement Procedures Act of 1974, as amended, requires lenders, mortgage brokers, or servicers of certain home loans to provide borrowers with pertinent and timely disclosures regarding the nature and costs of the real estate settlement process, as well as servicing, including escrowing.

Regulation X, which implements RESPA, contains information collections in the form of third party disclosures and recordkeeping requirements.  

CFPB blog post urges consumers to work with credit card companies on debt

This story appeared in Bank Digest.                                   

Noting that overall credit card debt increased by 13 percent from 2015 to 2017, and by 22 percent for those with very low credit scores, the authors of a Consumer Financial Protection Bureau blog post advise consumers to work with their credit card companies to help address their debt, saying that many companies "will work with you to find a repayment plan that suits your current situation."

The post also discusses the use of debt settlement companies, which "are typically for-profit companies that often state that they can negotiate with your credit card company to reduce the amount you owe." The authors describe certain drawbacks to using such companies, noting that they typically advise consumers to stop making payments, which could negatively affect their creditworthiness. Such companies also often charge large fees, according to the authors, for work that consumers can do themselves.

 In addition, the post says consumers may want to work with a credit counselor to help them manage their money and pay off their debt.

 

Agencies propose rule to limit impact of large bank failures

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 rule that would limit the interconnectedness of large banking organizations and reduce the impact from large bank failures. According to the joint press release, it would discourage certain firms (generally, those with $250 billion or more in assets or $10 billion in foreign exposure) from purchasing large amounts of total loss-absorbing capacity (TLAC) debt by requiring the organizations to hold additional capital against substantial holdings of TLAC debt. Comments on the proposed rule will be due 60 days after its publication in the Federal Register.

CFPB updates ECOA baseline review procedures, HMDA examination procedures

This story appeared in Bank Digest.                                   

The Consumer Financial Protection Bureau has updated its Equal Credit Opportunity Act baseline review procedures and its Home Mortgage Disclosure Act examination procedures. The ECOA Baseline Review Modules will be used by examiners during ECOA baseline reviews to evaluate how institutions' compliance management systems identify and manage fair lending risks under ECOA.

HMDA requires certain financial institutions to collect, report, and disclose information about their mortgage lending activity. An HMDA review includes transactional testing for HMDA data accuracy and is conducted using the HMDA Examination Procedures within the CFPB Supervision and Examination Manual. The updated HMDA procedures include updates to reflect the Bureau's interpretive and procedural rule, issued in August 2018, which was issued to implement and clarify Section 104 of the Economic Growth, Regulatory Relief, and Consumer Protection Act.

CFPB issues examination procedures relating to prepaid accounts, updates EFTA and TILA procedures

This story appeared in Bank Digest.                                   

The Consumer Financial Protection Bureau has issued examination procedures to be used to examine institutions that offer prepaid accounts, as defined by the Prepaid Rule, for compliance with required disclosures and protections afforded to prepaid account holders (including government benefit accounts and payroll card accounts). The Bureau has also updated its examination procedures under the Electronic Fund Transfer Act and the Truth in Lending Act.

Cummings and Warren release GAO report on credit reporting agency regulation

This story appeared in Bank Digest.                                     

House Oversight and Reform Committee Chairman Elijah Cummings (D-Md) and Sen. Elizabeth Warren (D-Mass) have released the findings of a Government Accountability Office report that focuses on federal regulation of consumer credit reporting agencies and makes recommendations for actions to improve oversight and better protect consumers. They released the report in advance of a hearing of the House Oversight and Reform Subcommittee on Economic and Consumer Policy to examine the GAO's recommendations, as well as efforts by the Federal Trade Commission and the Consumer Financial Protection Bureau to oversee consumer reporting agencies' handling of consumer data.

According to an Oversight and Reform Committee press release, Cummings and Warren requested the report in September 2017, shortly after credit reporting agency Equifax publicly announced that the company had allowed a massive data breach that ultimately affected more than 145 million Americans. The release said the GAO recommended that the FTC be given stronger civil penalty authority to enforce laws that protect consumer data and that the CFPB improve its oversight and supervision of CRAs.

Fed adopts proposal to extend, revise 'Complex Institution Liquidity Monitoring Report'

This story appeared in Bank Digest.                                   

The Federal Reserve Board is adopting a proposal to extend for three years, with revision, an existing information collection entitled "Complex Institution Liquidity Monitoring Report." The revisions are applicable as of March 31, 2019. According to the Fed, this collection is used to monitor the overall liquidity profile of certain institutions it supervises.

On Dec. 28, 2018, the Fed published a notice at 83 Federal Register 67285 requesting public comment for 60 days on the proposal. The comment period has expired, and the Fed did not receive any comments, so the revisions will be implemented as proposed.