ABA Dodd-Frank Tracker

Senate Bill Introduced to Extend New SEC Registration Thresholds

2013-05-08T11:44:00.002-04:00

Sen. Patrick Toomey (R-PA) and Sen. Mark Pryor (D-AR) have introduced ABA-supported legislation (S. 872) that would extend to savings and loan holding companies the new SEC shareholder registration and deregistration thresholds under the JOBS Act.

The JOBS Act raised the shareholder threshold for SEC registration from 500 to 2,000 for banks and bank holding companies, and also raised the deregistration threshold from 300 to 1,200. Unfortunately, the act did not explicitly extend the thresholds to savings and loan holding companies, even though it was not Congress’ intent to treat those institutions differently from banks and bank holding companies.

ABA has long-sought to correct this error, which S. 872 would accomplish. The bill is identical to legislation (H.R. 801) that the House Financial Services Committee approved yesterday by voice vote.

ABA, Associations Urge Fed to Reconsider Foreign Bank Rules

2013-05-01T07:44:00.000-04:00

ABA and other trade groups urged the Federal Reserve to reconsider, or at a minimum delay, new rules on the supervision of foreign banking organizations. Under the Dodd-Frank Act, the Fed has proposed to require foreign banks with significant U.S. operations to create intermediate holding companies for their U.S. subsidiaries, meet higher capital requirements and maintain stronger liquidity positions.

The groups argued that international bank regulation should be based on cooperation, and that the Fed’s “ring-fenced, balkanized approach . . . could both impair economic recovery and growth and increase, rather than decrease, systemic risk.”

They added that such ring-fencing -- especially if mandated reciprocally by other countries’ regulators -- might limit swift movement of capital in crises and create crippling layers of capital and liquidity burdens. The Fed’s proposal also jeopardizes progress on the development of international regulatory standards, they said.

Read the comment letter.

FSOC Urges Action on Money Markets, Libor

2013-04-26T08:14:00.006-04:00

The Financial Stability Oversight Council (FSOC) recommended that the SEC take action to reduce volatility and risk in money market mutual funds. It also urged regulators to develop alternative reference interest rates to Libor, which investigators found has been subject to manipulation.

The FSOC outlined three options for SEC action, based on FSOC proposals last fall: requiring a floating net asset value; requiring a stable NAV with a buffer to handle daily fluctuations; or combining a stable NAV and buffer with other measures, such as stricter diversification, disclosure or liquidity requirements.

The FSOC's annual report offered several other recommendations for greater stability, including increasing private activity in the mortgage market, raising awareness of interest rate risk, and resolving long-run fiscal imbalances.

Read the report.

FDIC to Hold Teleconferences on Mortgage Reform Rules

2013-04-26T08:14:00.002-04:00

The FDIC will hold nationwide banker teleconferences -- focused on the CFPB’s mortgage reform regulations -- on May 2, May 15 and June 6.

The first call will focus on the ability-to-repay/QM rule, the new escrow requirements and the loan originator compensation rule. The second call will address mortgage servicing. The final call will focus on the additional aspects of the loan originator compensation rule and the HOEPA amendments.

The FDIC encourages institutions to submit questions on teleconference topics in advance of the calls.

Read more.

Regulators Issue Proposed Guidance on Deposit Advance Products

2013-04-25T10:52:00.003-04:00

The FDIC has requested comments on a proposed supervisory guidance to FDIC-supervised financial institutions that offer or may consider offering deposit advance products. The proposal is intended to ensure that banks are aware of a variety of safety and soundness, compliance, and consumer protection risks posed by deposit advance loans.

Deposit advance loans are a type of small-dollar, short-term credit product that some depository institutions offer to customers maintaining a deposit account, reloadable prepaid card, or similar deposit-related vehicle. The customer takes out a loan, which is to be repaid from the proceeds of their next direct deposit.

The FDIC recognizes the need for safe, affordable and sustainable small-dollar credit products among consumers that are underwritten with consideration of the customer's ability to repay the loan without needing to borrow repeatedly to meet necessary expenses. A number of banks are currently offering such reasonably priced small-dollar loans at reasonable terms to their customers.

The proposed guidance will be published in the Federal Register, with a 30-day comment period.

Read more.

In addition, the OCC has issued proposed supervisory guidance related to deposit advance products at federal savings associations and national banks. The proposed guidance will be published next week in the Federal Register, with a 30-day comment period.

Read more.

Banks Report OCC Exams Improving

2013-04-25T08:36:00.002-04:00

Bankers find the quality of their OCC examinations improving, according to a report filed last week on the ABA-state bankers associations’ Regulatory Feedback Initiative.

Compiled using two years of data, the report found that the proportion of respondents “very satisfied” with their safety-and-soundness and compliance exams rose from 17% to 22% from 2012 to 2013.

The report highlighted several areas for OCC improvement, particularly in applying guidance as if it were regulation, knowing about the banks and having helpful interactions with bank staff. Read the report.

The RFI enables bankers to share anonymous feedback on their recent exams. ABA has used the feedback to demonstrate the need for legislation to improve bank exams and provide more examiner accountability.

CFPB on Senior Designations for Financial Advisers

2013-04-22T07:54:00.003-04:00

The CFPB published a report highlighting problems with so-called “senior designation” credentials that many financial advisers use to market their services to older Americans. The CFPB found that there are more than 50 different senior designations that financial advisers use to indicate that they have advanced training or expertise in the financial needs of older consumers.

The report outlines policy recommendations for consideration by Congress’ and the SEC. The recommendations also refer to other policymakers, particularly at the state level, because they have primary authority over many senior designees and, therefore, are well positioned to improve the marketplace for consumers in this area.

The recommendations in this report seek to reduce consumer confusion and protect consumers by improving the:

dissemination of information and consumer education around senior designations;
standards for the acquisition of senior designations;
standards for senior designee conduct; and
enforcement related to the misuse of senior designations.

Read the report.

GAO Report on SEC Internal Supervisory Controls

2013-04-19T08:03:00.002-04:00

Section 961 of the Dodd-Frank Act directs SEC to annually assess and report on internal supervisory controls for staff performing examinations, corporate financial securities filing reviews, and investigations. The act also requires the Government Accountability Office (GAO) to review SEC's structure for internal supervisory control applicable to staff working in those offices.

The GAO recently completed the review and released the findings. The report examining the steps the offices took to develop an internal supervisory control framework; internal supervisory controls each office has implemented; and the extent to which the internal supervisory controls have operated as intended.

GAO reviewed each office's section 961 assessments and reports; analyzed the offices' internal supervisory control framework; and tested a sample of 60 supervisory controls using random samples and nonprobability selections.

GAO identified deficiencies in about half of the 60 internal supervisory controls it tested. Specifically, GAO found that for 27 internal supervisory controls (1) the description of the control activity did not accurately reflect policy or practice; (2) documentation demonstrating execution of the control was not complete, clear, or consistent; or (3) the controls lacked clearly defined control activities. These control deficiencies may not prevent management from detecting whether the activities of the offices are conducted completely and in accordance with policy. However, similarities in the nature of deficiencies across all three offices suggest that management attention to the design and operation of internal supervisory controls is warranted.

The GAO recommended in order to help ensure that controls are properly designed and operating effectively, SEC should make certain that existing internal supervisory controls and any developed in the future have clearly defined activities and clear and readily available documentation demonstrating execution of the activities.

Read more.

ABA Expresses Strong Support for Exam Fairness Bills

2013-04-18T08:02:00.003-04:00

ABA President and CEO Frank Keating expressed bankers’ strong support for the House and Senate exam fairness bills—H.R. 1553 and S. 727–that were reintroduced on Monday. He also thanked the bills’ sponsors -- Reps. Shelley Moore Capito and Carolyn Maloney and Sens. Jerry Moran and Joe Manchin—for their leadership.

“Although no single piece of legislation could deal with the range of concerns bankers have about the current supervisory environment, [the exam fairness] bill would take a major step toward a more balanced and transparent approach regarding regulators’ decision making during the examination process,” Keating said.

Read the Senate letter.
Read the House letter.

McConnell’s Goal: Make ‘Reasonable’ Reforms to CFPB

2013-04-18T07:46:00.002-04:00

Calling the Dodd-Frank Act “a huge mistake,” Senate Minority Leader Mitch McConnell (R-Ky.) told attendees at ABA’s Government Relations Summit how Congress can mitigate the law’s harm to the banking industry -- especially through the Consumer Finance Protection Bureau.

“We need to change the structure of [the CFPB] to make it responsible to someone,” he explained. “We’ve said we need a supervisory board to which the director reports. We think the agency should come to Congress for its funding. And we think it needs to operate within the context of safety and soundness.”

“If we’re stuck with it,” McConnell added, “let’s try to make it better.”

ABA to Congress: It’s Time to Move from Good Intentions to Tangible Results for Community Banks

2013-04-16T13:53:00.000-04:00

The ABA testified on the critical steps needed to reduce community banks’ regulatory burden and assure our country has a healthy and vibrant community banking sector in the future.

Kenneth Burgess, chairman of FirstCapital Bank of Texas, testified on behalf of ABA before the House Subcommittee on Financial Institutions and Consumer Credit. FirstCapital is a $713 million bank serving Midland, Amarillo and Lubbock, Texas.

In his testimony, Burgess said that it’s time to move from good intentions to substantive changes that will have tangible results for community banks. He noted that recent actions taken by regulators on capital standards and mortgage lending can have unintended consequences that slow economic growth.

Read more.

Fed, FDIC Issue Guidance on Resolution Plans for Large Firms

2013-04-16T13:47:00.002-04:00

The Federal Reserve and the FDIC have issued guidance and clarification for the first 11 financial firms that filed plans for their potential orderly resolution, as required by the Dodd-Frank Act.

The firms—with nonbank assets of $250 billion and up—filed their initial plans last year. The agencies’ guidance provides further information on what the firms should include in their 2013 plans, including details on potential obstacles to an orderly resolution under the Bankruptcy Code and analysis of the plans’ underlying assumptions.

The agencies also extended the 2013 filing deadline from July 1 to October 1.

Read more.

Plagge Op-Ed: Big-Bank Break-Up Could Harm Community Banks

2013-04-16T13:45:00.000-04:00

It's difficult to see how community banks can be insulated from the negative effects of proposals to break up the country's largest banks, ABA Chairman-Elect Jeff Plagge said in an opinion piece published by American Banker.

"Some people assume that when big banks lose, community banks win. I'm not convinced," said Plagge, who is president and CEO of Northwest Financial Corp., a $1.5 billion bank community bank holding company in Arnolds Park, Iowa.

Plagge noted that a government-mandated break-up of a large bank could produce a dozen or more superregionals "that would make a direct play for the kinds of small business, agricultural and commercial real estate loans that are the bread and butter for banks like mine." He added that it would be more difficult for banks of any size to attract capital "once Uncle Sam has established his rights to further manage the business of banking."

Proposals that dramatically increase capital requirements also would force many banks to the sidelines of the economy while they bring their ratios in line, Plagge said. It would be hard to insulate community banks from the macroeconomic effects of such a disruption.

"So let's be careful what we wish for. Let's find solutions that first do no harm to the recovery and the economy in general," Plagge said. "Second, let's bring about positive change for community banks and the banking industry as a whole."

Read the op-ed.

Exam Fairness Bills Reintroduced in Congress

2013-04-16T13:41:00.001-04:00

ABA-backed legislation that would improve the examination process for financial institutions was reintroduced yesterday in both the House and Senate. Reps. Shelly Moore Capito (R-WV) and Carolyn Maloney (D-NY) introduced the House bill -- H.R. 1553 -- and Sens. Jerry Moran (R-KS) and Joe Manchin (D-WV) introduced S. 727.

The legislation, which is one of ABA’s top priorities for 2013, would allow banks to view information used to the make decisions during their examinations, codify guidance, create an ombudsman within the Federal Financial Institutions Examination Council, and institute an independent administrative-law appeals process.

Read more about the issue.

Federal Reserve Proposal Establishes Annual Assessments for Designated Institutions

2013-04-15T10:10:00.000-04:00

The Federal Reserve Board has requested comment on a proposal to establish an annual assessment of bank holding companies and savings and loan holding companies with $50 billion or greater in total consolidated assets and for nonbank financial companies designated by the Financial Stability Oversight Council (FSOC) for supervision by the Federal Reserve.

The Dodd-Frank Act directs the Federal Reserve to collect assessments, fees, or other charges equal to the expenses the Board estimates are necessary and appropriate to carry out its supervisory and regulatory responsibilities for these large financial companies.

The proposed rule outlines how the Federal Reserve Board would determine which companies are assessed, estimate the total expenses that are necessary or appropriate to carry out its supervisory and regulatory responsibilities for such companies, determine the amount of each company's assessment, and bill for and collect the assessments.

Under the proposal, 2012 would be the first assessment period and payments would not be collected until the rule is finalized. Using the methodologies in the proposal, the Board estimates that for 2012 there would be approximately 70 companies assessed and the Board would collect a total of approximately $440 million.

Comments on the proposed rule must be submitted by June 15.

Read the proposal.

CFPB Accepting Money Transfer Complaints

2013-04-08T10:33:00.001-04:00

The CFPB announced it is now accepting complaints about remittance transfers through the Consumer Response Portal. Consumers will be able to submit a money transfer complaint surrounding issues such as:

Money was not available when promised
Wrong amount was charged or received
Incorrect or missing disclosures or information
Other transaction issues (unauthorized transaction, cancellation, refund, etc.)
Other service issues (advertising or marketing, pricing, privacy, etc.)
Fraud or scams

Fed Finalizes Rule Defining Predominately Engaged in Financial Activity

2013-04-03T13:10:00.001-04:00

The Federal Reserve Board announced approval of a final rule that establishes the requirements for determining when a company is "predominantly engaged in financial activities." The requirements will be used by the Financial Stability Oversight Council (FSOC) when it considers the potential designation of a nonbank financial company for consolidated supervision by the Federal Reserve.

Under the Dodd-Frank Act, a nonbank financial company can be designated by the FSOC for supervision by the Federal Reserve only if it is "predominantly engaged in financial activities." A company is considered to be predominantly engaged in financial activities if 85% or more of the company's revenues or assets are related to activities that are defined as financial in nature under the Bank Holding Company Act.

Additionally, the FSOC may issue recommendations for primary financial regulatory agencies to apply new or heightened standards to a financial activity or practice conducted by companies that are predominantly engaged in financial activities.

The final rule also defines the terms "significant nonbank financial company" and "significant bank holding company."

The final rule will become effective on May 6, 2013.

Read more.

Federal Register Update: CFPB Large Participants, Regulation Z

2013-03-29T07:40:00.004-04:00

The CFPB published in the Federal Register a proposed rule defining larger participants of the student loan servicing market. The definition of student loan servicing would cover, among other things, the servicing of Federal and private student loans. The CFPB also proposes tests to identify larger participants of the market.

Comments are due May 28, 2013.
Read more.

The CFPB is amending Regulation Z, which implements the Truth in Lending Act, and the Official Interpretations of the regulation. Among other things, Regulation Z limits the total amount of fees that a credit card issuer may require a consumer to pay with respect to an account to 25% of the credit limit in effect when the account is opened. Regulation Z previously stated that this limitation applies prior to account opening and during the first year after account opening. The CFPB’s final rule amends Regulation Z to apply the limitation only during the first year after account opening.

The final rule is effective March 28, 2013.
Read more.

House Financial Services Committee’s Tentative Hearing Schedule

2013-03-22T07:52:00.002-04:00

House Financial Services Committee Chairman Jeb Hensarling (R-TX) announced his panel’s tentative April schedule that includes Financial Institutions Subcommittee hearings April 10 and 16 on regulatory relief for small community financial institutions.

Other scheduled hearings are:

April 11, Capital Markets Subcommittee -- review of legislation to reform Dodd-Frank Act derivatives provisions.
April 16, Oversight and Investigation Subcommittee -- the need to end “Too Big to Fail.”
April 17, full committee -- impediments to private capital in the housing finance system.

CFPB Defines Authority on Auto Lender Discrimination

2013-03-22T07:47:00.002-04:00

The CFPB released a bulletin explaining that indirect auto lenders that offer car loans through dealerships are responsible for unlawful, discriminatory pricing.

In the bulletin, CFPB Director Richard Cordray clarified the CFPB’s “authority to pursue auto lenders whose policies harm consumers through unlawful discrimination.”

The bulletin explains how the Equal Credit Opportunity Act applies to indirect auto lending, and it provides guidance on steps lenders can take to limit fair-lending risk.

Those steps include imposing controls on markup policies or revising them; monitoring and addressing the policies' effects; eliminating dealer discretion to markup buy rates; and fairly compensating dealers using mechanisms -- such as flat fees per transaction -- that don't result in discrimination.

Read the CFPB press release.

CFPB Issues Report on Fair Debt Collection

2013-03-21T09:11:00.002-04:00

The CFPB has presented an annual report to Congress on the Fair Debt Collection Practices Act (FDCPA.)

Under the CFPB’s recently adopted large participant rule, any firm with more than $10 million in annual receipts from consumer debt collection activities is now subject to CFPB supervisory authority. According to the CFPB, this new authority extends to about 175 debt collectors, which accounts for over 60 % of the industry’s annual receipts in the consumer debt collection market.

The report, among other topics, summarized the number and types of consumer complaints regarding debt collection received by the FTC; describes the CFPB’s supervision program as it relates to debt collection; presents recent law enforcement and advocacy program developments; and discusses recent research and policy initiatives.

Read the report.

Bernanke: Regulators Will Do More on 'Too Big to Fail' If Needed

2013-03-21T08:33:00.003-04:00

Regulators would take additional steps to address "too big to fail" if current efforts fell short, Federal Reserve Chairman Ben Bernanke said at a news conference following the two-day Federal Open Market Committee meeting.

Bernanke noted that regulators have made progress addressing too big to fail, including new capital and liquidity rules for the largest institutions.

He and other regulators have emphasized that the Dodd-Frank Act's too-big-to-fail provisions should be given an opportunity to work; and explained that it's an issue that can only be resolved gradually.

House Ag Committee Approves Seven Swaps Bills

2013-03-21T08:30:00.003-04:00

The House Agriculture Committee yesterday approved seven bills that would amend the Dodd-Frank Act’s swaps provisions.

The bills include the following:

H.R. 634, the Business Risk Mitigation and Price Stabilization Act, ensures that end-users can continue to use derivatives to manage business risks without being subject to costly margin requirements.

H.R. 677, the Inter-Affiliate Swap Clarification Act, ensures that transactions between affiliates within a single corporate group are not regulated as swaps.

H.R. 742, the Swap Data Repository and Clearinghouse Indemnification Correction Act of 2013, would allow data sharing between U.S. and international regulators and swap data repositories without adding an unnecessary layer of legal bureaucracy.

H.R. 992, the Swaps Regulatory Improvement Act, amends Section 716 of the Dodd-Frank Act to limit the swap desk push-out requirement so that it only applies to certain swaps based on certain asset-backed securities.

H.R. 1003 would require the CFTC to assess the costs and benefits of its actions.

H.R. 1038, the Public Power Risk Management Act, would allow producers, utility companies, and other non-financial entities to continue entering into energy swaps with government-owned utilities without being required to register with the CFTC as a swap dealer.

H.R. 1256, the Swap Jurisdiction Certainty Act, would direct the CFTC SEC to adopt a joint rule on how they will regulate cross-border swaps transactions as part of the new requirements created in the Dodd-Frank Act.

ABA in a memo outlined its positions on five of the measures.

Read the committee’s press release.

Rep. Maloney Introduces Overdraft Protection Bill

2013-03-21T08:22:00.004-04:00

House Financial Services Committee member Carolyn Maloney (D-N.Y.) introduced a bill (H.R. 1261) that would further regulate banks' overdraft protection plans.

The legislation, among other things, would require banks to obtain consumers' opt-in for overdraft protection; cap the number of overdraft fees institutions could charge an individual at one per month and six per year; require fees to be "reasonable and proportional" to the overdraft's amount; and ban manipulating transactions' posting order to maximize fees.

H.R 1261 has 45 original co-sponsors, including House Financial Services Committee ranking member Maxine Waters (D-Calif.).

Read Maloney’s press release.

Bill Would Extend Shareholder Registration Thresholds to SLHCs

2013-02-19T09:20:00.004-05:00

Reps. Steve Womack (R-Ark.) and Jim Himes (D-Conn.) introduced a bill that would extend to savings and loan holding companies the JOBS Act’s provisions that raised the SEC’s shareholder registration and deregistration thresholds.

The JOBS Act, among other things, raised the shareholder threshold for SEC registration from 500 to 2,000 for banks and bank holding companies, and also raised the deregistration threshold from 300 to 1,200.

Unfortunately, the act did not explicitly extend the thresholds to savings and loan holding companies, even though it was not Congress’ intent to treat those institutions differently from banks and bank holding companies, the lawmakers explained. The legislation would correct that oversight.

Read more.