InfoBytes Blog
Filter
Subscribe to our InfoBytes Blog weekly newsletter and other publications for news affecting the financial services industry.
PHH Response Due Date Pushed Back as Solicitor General Permitted to Respond to CFPB's Petition in PHH Corp. v. CFPB by December 22
As discussed previously, the D.C. Circuit ordered PHH to respond to the CFPB’s petition for en banc review of the October 2016 three-judge panel decision in PHH Corp. v. CFPB. In an Unopposed Motion for Leave to file the United States' Response, filed December 1, the Office of the Solicitor General sought permission to file its own responsive briefing on or before December 22. In an Order issued December 1, the D.C. Circuit granted the Solicitor General’s request, but also moved back the due date for PHH’s responsive papers so that both responses are now due on December 22.
Earlier in the week, on November 30, two groups filed amicus briefs in support of the CFPB’s petition together along with motions requesting an invitation from the court. The first brief was submitted by a group of leading consumer protection organizations, while the second brief was filed by a group of 21 current and former members of Congress.
White to Testify Before House Financial Services
SEC Chair Mary Jo White is scheduled to testify later this month at separate House Financial Services Committee hearings, a spokesman for the panel said. White will appear before the committee on November 15 to answer questions regarding the SEC’s agenda, operations, and budget request. She will be the only witness.
House Considers Further Narrowing FDIC Scope on Brokered Deposits
On September 27, the House Financial Institutions and Consumer Credit Subcommittee heard testimony on HR 4116, a bill that would affect how the FDIC determines the amount of deposits at insured banks that qualify as “brokered deposits.” The Federal Deposit Insurance Act currently requires larger premiums for banks with higher ratios of brokered deposits as compared to traditional deposits. This bill would exclude reciprocal deposits from the definition of brokered deposits where the condition of the institution at its most recent examination was adjudged either good or outstanding, or where the total reciprocal deposits of the institution do not exceed either $10 billion or 20% of its total liabilities. This narrowed scope of brokered deposits would come on the heels of the FDIC’s decision to exclude smaller community banks from including reciprocal deposits are brokered deposits announced earlier this year.
Congress Seeks Answers from Bank CEO and Federal Bank Regulators
On September 20, the CEO of a major national bank faced questions from the House Financial Services Committee over consumer account practices uncovered during a recent enforcement action by the CFPB. The CEO will return to Capitol Hill on September 29 for additional testimony in front of the Committee. In addition, the Director of the CFPB and the Comptroller of the Currency faced scrutiny from the Senate Committee on Banking, Housing & Urban Affairs on their agencies awareness of, and failure to prohibit, the bank’s alleged actions for more than two years. In prepared testimony, Director Cordray indicated that the civil penalty levied against the bank was the “largest fine by far that the Consumer Bureau has imposed on any financial company to date” calling it a “dramatic amount as compared to the actual financial harm to consumers” but also “justified here by the outrageous and abusive nature of these fraudulent practices on such an enormous scale.” Director Cordray further stated that this enforcement action should help clarify how the CFPB will continue to analyze and enforce the prohibition on “abusive” practices under its mandate. Meanwhile Comptroller Curry explained how this enforcement action demonstrates the complimentary roles played by the OCC and the CFPB in supervising bank practices.
Congressman Responds to Comptroller on Fintech
On September 20, U.S. Representative David Schweikert (R-AZ) sent a letter to Comptroller of the Currency Thomas Curry, asking the OCC to consider a more flexible and uniform approach for regulating digital currencies and the use of blockchain technology. Specifically, the letter notes that much of the development of digital currencies does not originate within institutions that are already federally chartered. Representative Schweikert further argues that most institutions active in this area do not wish to engage in traditional lending or deposit-taking activity, and instead seek a more limited scope of regulation. Thus, the letter asks Comptroller Curry to consider the following questions as the OCC continues to formulate its policy on digital currencies: (i) can the OCC create a limited purpose charter for non-bank financial service firms operating in this area? (ii) can the OCC take steps to coordinate with AML/CTF authorities, and state regulators, to develop flexible approaches that would allow U.S. digital currency firms to be competitive in light of various foreign regulatory frameworks? and (iii) how can the OCC help to facilitate relationships between digital currency firms and national banks?
House Passes Bill to Bring Transparency to Iranian Finances
On September 21, the House of Representatives voted to pass the Iranian Leadership Asset Transparency Act. This bill, HR 5461, would require the Treasury Secretary to publish a list of assets held by senior Iranian political and military leaders, including where the assets were acquired, and how they are employed. The Treasury would also be required to identify new methods used to evade anti-money laundering laws and provide recommendations to improve techniques to combat illicit uses of the U.S. financial system by each official. The required report would be posted on the Treasury Department’s website in English, but also in the three major languages spoken within Iran.
Bill to Change SIFI Determination Postponed
The House of Representatives delayed discussion of HR 1309, the Systemic Risk Designation Improvement Act, in an effort to give the bill’s sponsor Blaine Luetkemeyer (R-MO) additional time to propose a method to fund the estimated $115 million cost of implementing the changes in regulatory oversight. The increased oversight costs stem, in part, from provisions in the bill that would require closer involvement by the Financial Stability Oversight Council (FSOC) in determining whether a bank holding company is a Systemically Important Financial Institution (SIFI), and thus subject to enhanced supervision and macro-prudential standards by the Federal Reserve. Under the current law, originating from Title I of the Dodd-Frank Act, the FSOC looks only to whether the bank holding company has $50 billion in assets. Whereas under HR 1309, the FSOC would also factor whether a bank was subject to material financial distress, as well as the nature, scope, size, scale, concentration, interconnectedness or mix of the bank’s activities in making the SIFI designation.
Congress Considers Cybersecurity Bills
On September 21, the House approved HR 5064, the Improving Small Business Cyber Security Act. This bill envisions cooperation between the Department of Homeland Security (DHS) and the Small Business Administration to share cyber threat information and to provide cybersecurity consulting services through small business development centers. Although it was scheduled for debate, there was no action on HR 5459, the Cyber Preparedness Act of 2016. This legislation would rely on the National Cybersecurity and Communications Integration Center to share information about cybersecurity best practices, as well as cyber threat indicators and defensive measures with state, local, and regional officials.
House Financial Services Committee Approves Financial CHOICE Act
On September 13, the House Financial Services Committee approved by a 30-26 vote the Financial CHOICE Act, Congressman Jeb Hensarling’s (R-TX) legislative replacement to the Dodd-Frank Act. In his opening remarks, Hensarling claimed that the bill aims to end bailouts, support economic growth, and provide regulatory relief to community banks. House Democrats did not offer amendments to the bill, although many expressed adamant disapproval. Congresswoman Carolyn Maloney (D-NY) claimed that the “deeply disturbing” legislation “would take us back to the regulatory stone age.” Various Democrats referenced the CFPB’s recent enforcement action against a national bank to argue that the Financial CHOICE Act’s attempt to remove the CFPB’s authority over abusive practices was one of many reasons to oppose the bill. Democrats unanimously voted against the legislation, while all but one Republican, Congressman Bruce Poliquin (R-ME), voted in favor of moving the legislation forward.
House Financial Services Committee Schedules Debate on Financial CHOICE Act
On September 13, the House Financial Services Committee will meet to discuss the Financial CHOICE Act. As previously covered in InfoBytes, the Financial CHOICE Act is a Republican alternative to the Dodd-Frank Act. The Committee is scheduled to debate potential amendments to the Financial CHOICE Act and to vote on the legislation.