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  • Trump to Select Mulvaney as Interim CFPB Director

    Federal Issues

    According to media sources, President Trump is expected to select Mick Mulvaney, the current Director of the White House Office of Management and Budget (OMB), to serve as the interim Director of the CFPB upon Richard Cordray’s resignation at the end of this month. Mulvaney would keep his current position and serve as both the Director of OMB and Acting Director of the CFPB throughout the interim term.

    Federal Issues CFPB OMB Trump

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  • House Passes Flood Insurance Bill Reforming and Reauthorizing National Flood Insurance Program

    Federal Issues

    On November 14, the House voted 237-189 to pass legislation reforming and reauthorizing the National Flood Insurance Program (NFIP) for five years before it expires next month. As previously covered in InfoBytes, President Trump signed a three-month extension to the NFIP at the beginning of September in order to provide Congress additional time to establish a long-term financial solution for the program. The 21st Century Flood Reform Act (H.R. 2874) is designed to better facilitate compliance and clarify guidance for lenders and borrowers, and will, among other things, (i) change annual limits on premium increases for insurance obtained through the NFIP; (ii) require FEMA to consider the differences in flood risk between coastal and inland flood hazards when establishing premium rates; (iii) require FEMA to clearly communicate to policyholders the full flood risk to, and flood claims history of their property, and the effect of filing any additional claims; (iv) allow private insurers to continue selling policies on behalf of the NFIP, while also being allowed to sell their own private flood coverage; (v) revise federal flood mapping requirements, establish premium rates based on applicable flood insurance rate maps, and revise and clarify aspects of the appeals process; (vi) amend the Biggert-Waters Flood Insurance Reform Act of 2012 to clarify the time periods within which communities may consult with FEMA regarding mapping changes and submit data for consideration by the agency; (vii) revise the Flood Mitigation Assistance program to provide assistance for additional multiple loss properties; and (viii) amend the Flood Disaster Protection Act of 1973 to increase penalties against lenders and GSEs for violations of the mandatory purchase requirement from $2,000 to a maximum of $5,000 per violation.

    H.R. 2874 now heads to the Senate.

    Federal Issues U.S. House Flood Insurance National Flood Insurance Program Federal Legislation Disaster Relief Trump

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  • President Trump Signs Law to Prevent Elder Abuse and Exploitation

    Federal Issues

    On October 18, President Trump signed the Elder Abuse Prevention and Prosecution Act, which establishes new requirements aimed at improving the DOJ’s response to elder abuse crimes. Among other things, S 178 expands data collection and information sharing provisions to prevent financial crimes committed against seniors. The law also broadens the federal criminal code to include “email marketing” fraud, such as marketing measures designed to induce the commitment to a loan. Other notable provisions include enhanced penalties for fraud and increased training for federal investigators and prosecutors. Further, the law requires the FTC’s Bureau of Consumer Protection and the DOJ to appoint elder justice coordinators to oversee enforcement, consumer education efforts, and policy activities related to elder justice issues.

    Federal Issues Federal Legislation Consumer Finance FTC DOJ Elder Financial Exploitation Trump

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  • White House Releases Proclamation Announcing National Cybersecurity Awareness Month

    Privacy, Cyber Risk & Data Security

    On September 30, President Trump issued a Proclamation announcing October 2017 as National Cybersecurity Awareness Month. As part of the initiative, the Department of Homeland Security (DHS) issued tools and resources for both consumers and organizations to manage cybersecurity risk. As previously covered in InfoBytes, the President issued an Executive Order earlier this year entitled “Strengthening the Cybersecurity of Federal Networks and Critical Infrastructure” that requires agencies to submit risk management reports to DHS and develop recommendations for cybersecurity improvements affecting all critical infrastructure, including the financial services industry.

    Privacy/Cyber Risk & Data Security Federal Issues Risk Management Trump Department of Homeland Security Executive Order

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  • OFAC Amends Sanctions on Russia’s Financial and Energy Sectors

    Financial Crimes

    On September 29, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) amended Directive 1 and Directive 2 of its Ukrainian-/Russian-related Sectoral Sanctions, as required by the Countering America’s Adversaries Through Sanctions Act of 2017 (H.R. 3364), which was signed into law by President Trump in August. (See previous InfoBytes summary here.) As amended, Directive 1 prohibits U.S. persons from all dealings in equity issued on or after July 16, 2014, of persons determined by OFAC to be part of the Russian financial services sector. Directive 1 also prohibits U.S. persons from dealing in the following debt of such persons: (i) debt of over 90 days maturity issued on or after July 16, 2014, but prior to September 12, 2014; (ii) debt of over 30 days maturity issued on or after September 12, 2014, but before November 28, 2017; and (iii) debt of over 14 days maturity issued on or after November 28, 2017. As amended, Directive 2 prohibits U.S. persons from all dealings in the following debt of persons identified by OFAC to be part of the Russian energy sector: (i) all debt of over 90 days maturity issued on or after July 16, , but before November 28, 2017; and (ii) all debt of over 60 days maturity issued on or after November 28, 2017. OFAC also released updated FAQs to answer questions related to the amended directives.

    Financial Crimes OFAC Sanctions Executive Order Trump

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  • President Trump’s Executive Order Imposes New Sanctions Against North Korea

    Financial Crimes

    On September 21, President Trump announced the issuance of new sanctions targeting individuals, companies, and financial institutions that finance or facilitate trade with North Korea, in addition to tightening trade restrictions. The Executive Order approves broad limitations on any foreign financial institution that knowingly conducts “significant” transactions involving North Korea. This includes transactions that “originate from, are destined for, or pass through a foreign bank account that has been determined by the Secretary of the Treasury to be owned or controlled by a North Korean person, or to have been used to transfer funds in which any North Korean person has an interest.” These funds “are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in.” The restrictions also prohibit dealing with persons involved in North Korea’s “construction, energy, financial services, fishing, information technology, manufacturing, medical, mining, textiles, or transportation industries,” and further authorizes the Secretary of the Treasury to restrict U.S.-based correspondent and payable-through accounts.

    These sanctions are in addition to those previously passed by President Trump in August. (See previous InfoBytes coverage here.) Separately, as previously covered in InfoBytes, last month the Treasury Department’s Office of Foreign Assets Control (OFAC) imposed sanctions against certain Chinese and Russian entities and individuals, among others, for allegedly aiding North Korea’s efforts to develop weapons of mass destruction.

    In response to President Trump’s latest sanctions, OFAC released updates to its FAQs concerning the additional sanctions. OFAC also issued General License 10 concerning the authorization restrictions to certain vessels and aircraft, and General License 3-A, which addresses permitted “normal service charges.”

    Financial Crimes Trump Sanctions Executive Order OFAC Department of Treasury

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  • President Trump Signs Government Funding Package, Temporarily Extends National Flood Insurance Program

    Federal Issues

    On September 8, President Trump signed a government-funding package (H.R. 601) that temporarily extends the National Flood Insurance Program (NFIP), which was set to expire September 30, through December 8. The extension provides Congress additional time to establish a long-term financial solution. (See previous InfoBytes coverage on the NFIP here.) The Continuing Appropriations Act, 2018 and Supplemental Appropriations for Disaster Relief Requirements Act, 2017, also temporarily lifts the nation’s debt ceiling, funding the federal government through December 8, and delivers the first installment of emergency aid for victims of Hurricane Harvey.

    Federal Issues Federal Legislation National Flood Insurance Program Trump Disaster Relief Flood Insurance

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  • Former DOJ Fraud Compliance Counsel Resigns, Criticizes President

    Financial Crimes

    Hui Chen, formerly Compliance Counsel Expert in the DOJ Fraud Section, is speaking out about the reasons for her May 2017 resignation, which she has attributed to unacceptable conduct by the President and his Administration. Chen was hired by DOJ in November 2015 after serving as Global Head for Anti-Bribery and Corruption and Standard Chartered Bank. She was the first lawyer to hold this position at the DOJ.

    In a June 25 LinkedIn post, Chen unleashed several criticisms against the President, including regarding lawsuits, conflicts of interest, and ongoing investigations. She said that she would “not tolerate” those conducts in a company, but “worked under an administration that engaged in exactly those conduct.” Chen further elaborated on her criticisms in a July 4, 2017 interview with CNN, stating that the firing of FBI James Comey tipped the scales in favor of resignation. 

    The DOJ had previously posted an opening to hire a new Compliance Counsel, but that listing has now expired. It is not clear if anyone has been hired to replace Ms. Chen.

    Financial Crimes DOJ Trump Fraud

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  • White House Issues Statement Supporting Substitute Amendment to H.R. 10; CBO Releases Cost Estimate

    Federal Issues

    On June 6, the White House Administration issued a statement supporting the Substitute Amendment to the Financial CHOICE Act of 2017. In the statement, the White House announced it is “committed to reforming the Nation’s financial system” and believes the substitute amendment drafted by House Financial Services Committee Chairman, Jeb Hensarling (R-Tex.) reflects the Administration’s Core Principles in a number of ways. Specifically, the Administration supports the following provisions outlined in H.R.10: (i) eliminating taxpayer bailouts; (ii) simplifying regulations and holding regulators accountable; (iii) facilitating capital formation to encourage economic growth; (iv) allowing identified financial institutions to “opt out of certain regulatory requirements”; (v) reducing the independence of the CFPB; (vi) increasing the use of cost-benefit analysis by financial regulators; and (vii) easing regulatory burdens for community banks.

    “The administration supports these provisions, and looks forward to working with Congress to undo additional mandates from the Dodd-Frank law that unnecessarily raise costs and limit choices for consumers,” the White House asserted in the statement.

    On the same day the White House issued its statement, the Congressional Budget Office (CBO) released a requested analysis of Hensarling's amendment for H.R. 10. The CBO discovered that the changes from the version the House Financial Services Committee initially approved would reduce deficits by an additional $9.5 billion, for a total reduction of $33.6 billion over the 2017-2027 period. CBO stated the majority of the budgetary savings comes from “eliminating the FDIC’s authority to use the Orderly Liquidation Fund and changing how the [CFPB] and certain other regulators are funded.” However, CBO noted it would cost an estimated $11.6 billion over the referenced time period to implement the bill.

    Federal Issues Financial CHOICE Act Federal Legislation House Financial Services Committee CFPB Dodd-Frank Trump

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  • President Trump Releases 2018 Budget Proposal; Key Areas of Reform Target Financial Regulators, Cybersecurity, and Student Loans

    Federal Issues

    On May 23, the White House released its fiscal 2018 budget request, A New Foundation for American Greatness, along with Major Savings and Reforms, which set forth the President’s funding proposals and priorities. The mission of the President’s budget is to bring spending under control by proposing savings of $57.3 billion in discretionary programs, including $26.7 billion in program eliminations and $30.6 billion in reductions.

    Financial Regulators. The budget stresses the importance of reducing the cost of complying with “burdensome financial regulations” adopted by independent agencies under the Dodd-Frank Act. However, the proposal provides few details about how the reform applies to federal financial services regulators. Identifying the CFPB specifically, the budget states that restructuring the Bureau is necessary in order to “ensure appropriate congressional oversight and to refocus [the] CFPB’s efforts on enforcing the law rather than impeding free commerce.” Major Savings and Reforms assert that subjecting the Bureau to the congressional appropriations process would “impose financial discipline and prevent future overreach of the Agency into consumer advocacy and activism.” The budget projects further savings of $35 billion through the end of 2027, resulting from legal, regulatory, and policy changes to be recommended by the Treasury once it completes its effectiveness review of existing laws and regulations in collaboration with the Financial Stability Oversight Council. The Treasury review is being performed as a result of the Executive Order on Core Principals.

    Dept. of Housing and Urban Development. As previously reported in InfoBytes, the budget proposes that funding be eliminated for the following: (i) small grant programs such as the Self-Help Homeownership Opportunity Program, which includes, among others, the Capacity Building for Community Development and Affordable Housing Program (a savings of $56 million); (ii) the CHOICE Neighborhoods program (a savings of $125 million), stating state and local governments should fund strategies for neighborhood revitalization; (iii) the Community Development Block Grant (a savings of $2.9 billion), over claims that it “has not demonstrated results”; and (iv) the HOME Investment Partnerships Programs (a savings of $948 million). The budget also proposes reductions to the Native American Housing Block Grant and plans to reduce costs across HUD’s rental assistance programs through legislative reforms. Rental assistance programs generally comprise about 80 percent of HUD’s total funding.

    Cybersecurity. The budget states that it “supports the President’s focus on cybersecurity to ensure strong programs and technology to defend the Federal networks that serve the American people, and continues efforts to share information, standards, and best practices with critical infrastructure and American businesses to keep them secure.” Law enforcement and cybersecurity personnel across the Department of Homeland Security (DHS), Department of Defense, and the FBI will see budget increases to execute efforts to counter cybercrime. Furthermore, the National Cybersecurity and Communications Integration Center—which DHS uses to respond to infrastructure cyberattacks—will receive an increase under the budget.

    Student Loan Reform. Under the proposed budget, a single income driven repayment plan (IDR) would be created that caps monthly payments at 12.5 percent of discretionary income—an increase from the 10 percent cap some current payment plans offer. Furthermore, balances would be forgiven after a specific number of repayment years—15 for undergraduate debt, 30 for graduate. In doing so, the Public Service Loan Forgiveness program and subsidized loans will be eliminated, and reforms will be established to “guarantee that borrowers in IDR pay an equitable share of their income.” These proposals will only apply to loans originated on or after July 1, 2018, with the exception of loans provided to borrowers in order to finish their “current course of study.”

    Dept. of the Treasury. The budget proposes to, among other things: (i) eliminate funding for new Community Development Financial Institutions Fund grants (a savings of $220 million); and (ii) reduce funding for the Troubled Asset Relief Program by 50 percent, “commensurate with the wind-down of TARP programs” (a savings of $21 million).

    Response from Treasury. In a statement released by the Treasury, Secretary Steven T. Mnuchin said the budget “prioritizes investments in cybersecurity, and maintains critical funding to implement sanctions, combat terrorist financing, and protect financial institutions from threats.” Furthermore, it also would “achieve savings through reforms that prevent taxpayer bailouts and reverse burdensome regulations that have been harmful to small businesses and American workers.”

    Federal Issues Department of Treasury HUD Budget Privacy/Cyber Risk & Data Security Student Lending Bank Regulatory FSOC Trump

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