#credit card

12 04, 2024

Al041524

2024-04-12T16:37:57-04:00April 12th, 2024|3- This Week|

The CFPB Stand-Off

On Tuesday, the HFSC Financial Institutions Subcommittee holds yet another hearing which Republicans hope will so embarrass the CFPB that their decades-long quest to redesign or even kill it gains traction ahead of critical litigation and the national election.  The nominal topic of the hearing is the Bureau’s financial audit, and Republicans will surely make as much of it as they can to damage Director Chopra’s leadership.  However, the real target is the Bureau’s race to finalize a series of substantive actions ahead of its own political challenges should litigation and the election go against it.  The most immediate rule on the GOP’s firing line is the credit-card late-fee standard (see FSM Report CREDITCARD37), a rule now enmeshed in court decisions and challenges of unprecedented intricacy that nonetheless appear likely leading to a near-term injunction blocking the rule as lenders devoutly desire.

Al041524.pdf

29 03, 2024

DAILY032924

2024-03-29T12:07:52-04:00March 29th, 2024|2- Daily Briefing|

Treasury, FinCEN Pulled Into Firearm MCC Fray

Following her December letter to major payment networks, Sen. Warren (D-MA) and Rep. Dean (D-PA) lead 31 Democratic lawmakers urging Treasury, FinCEN, and the banking agencies to issue clear guidance instructing financial institutions and payment-card networks to implement the new Merchant Category Code (MCC) for firearm and ammunition retailers.   Notably, they now press Treasury to use powers they seem to presume Treasury has to set a federal mandate for code use that would then preempt state prohibitions on transaction identification in this high-impact political arena.  The letter also calls on FinCEN to issue an advisory about acts that may precede gun crime and firearm-purchase scenarios that should trigger SARs.  Answers to questions pressing these policies are due by April 11.

Daily032924.pdf

28 03, 2024

Daily032824

2024-03-29T10:36:38-04:00March 28th, 2024|2- Daily Briefing|

House GOP Resolution Challenges CFPB Credit-Card Late-Fee Rule

As promised, the GOP resolution to overturn the CFPB’s credit-card late-fee rule has now been introduced (see FSM Report CREDITCARD37).  HFSC Rep. Ogles (R-TN) introduced H.J. Res. 121 on Tuesday, adding another attack to the rule which is already being challenged in court.

FinCEN Advances Limited KYC Reform

Acting on its longstanding promise, FinCEN in consultation with banking agency and NCUA staff today issued a RFI examining new KYC approaches, including permitting banks to collect partial SSN information directly from the customer backed by third-party sources that provide full SSN prior to account opening.

BIS: Statement Revisions Augur Greater Bank Risk

Doubtless reflecting Credit Suisse’s failure, the BIS today released a study on risk information derived from pre-publication revisions to bank financial statements sent to supervisors, finding that the frequency of revisions is highly correlated with a bank’s subsequent CAMELS rating downgrade, higher future average probability of borrower default, and greater distance to default score.

Daily032824.pdf

26 03, 2024

DAILY032624

2024-03-26T16:39:52-04:00March 26th, 2024|2- Daily Briefing|

CBO Flags Long-Term Fiscal Risk to Financial Stability

CBO’s latest long-term fiscal forecast now includes a financial-stability warning absent from the Fed’s recent analysis (see Client Report SYSTEMIC97) and FSOC’s annual report (see Client Report FSOC29): the rising U.S. debt burden.

Chopra Expands CFPB Attack to Card Rewards

Undaunted by a CBA audience suing him on many actions, CFPB Director Chopra today gave a rousing defense of his agency’s credit-card late fee rule (see FSM Report CREDITCARD37), making clear he will vigorously defend it in the courts.

CFPB/FTC Press for More Tech-Finance Enforcement

Building on the Bureau’s recent efforts to limit AI use in comparison-shopping and other consumer-finance applications (see FSM Report CONSUMER56), the CFPB joined the FTC today in issuing a statement coordinating federal and state enforcement efforts against generative AI in particular and digital consumer-finance products more generally.

HFSC, AG Republicans Press SEC on Crypto-Custody Standards

HFSC Chair McHenry (R-NC) and House Ag Chair Thompson (R-PA), alongside 46 Republican members today sent a letter to SEC Chair Gensler calling for clarification the position on special purpose broker dealer’s (SPBD) ability to custody non-security digital assets, the agency’s willingness to address SPBD non-compliance, the regulatory classification of ETH, and the SEC’s position regarding Prometheum’s custody services announcement.

Daily032624.pdf

21 03, 2024

DAILY032124

2024-03-21T17:00:13-04:00March 21st, 2024|2- Daily Briefing|

FDIC Plans Merger Squelch

Both the policy and politics of the FDIC’s proposed merger policy follow that of its 2022 RFI (see FSM Report MERGER9), a very stringent approach to bank-merger review that split the FDIC 3-2 on party lines.  We will shortly provide clients with an in-depth analysis of the proposed approach, approved on a 3-2 vote.  It tracks much in the OCC’s proposal (see FSM Report MERGER14) but is still more stringent in several key areas.  Notably, it does not rely on qualitative financial-stability considerations, instead setting a $100 billion threshold for additional scrutiny.

Chopra Wants Far Tougher Bank-Merger Policy

CFPB Director Chopra elaborated today on his comments at the FDIC meeting, saying that he thinks the proposal is fine as far as it goes but that federal policy should go considerably further to curtail bank consolidation.  Actions he advocates include hard caps on bank growth and size (presumably meaning a limit on organic growth as well as via acquisition) and a roll-back of the systemic exemption in failing-bank acquisitions to block any future JPM/FRC-style transactions.

Daily032124.pdf

20 03, 2024

DAILY032024

2024-03-20T16:23:55-04:00March 20th, 2024|2- Daily Briefing|

Gottheimer Confirms Bipartisan Basel Worries

Rep. Josh Gottheimer (D-NJ) today told the ABA summit that there is bipartisan concern over the impact the Basel III endgame proposal could have on American competitiveness, calling the requirements “overly-burdensome.”

FHFA Advancing FHLB Troubled-Bank Funding Limits

Speaking today at the ABA summit, the Deputy Director of the FHFA’s Division of Banking Regulation  Joshua Stallings indicated that the agency is following up on the FHLB100 report by working with the FRB to set cut-off points between acceptable FHLB funding and the discount window.

Tester Slams Fed Interchange Proposal, Durbin-Marshall Bill

Sen. Tester (D-MT) today told the ABA Summit that the Fed’s debit interchange fee proposal (see FSM Report INTERCHANGE12) is a “mistake,” creating uncertainty and adversely affecting community banks and rural America.

Powell: Retail CBDC A Long Way from Anywhere

Reiterating comments made to Sens. Cramer (R-ND) and Lummis (R-WY) in his last appearance on Capitol Hill, Chair Powell today said the Fed is a long way from making any decision about offering a retail CBDC.

Daily032024.pdf

15 03, 2024

Al031824

2024-03-15T17:23:21-04:00March 15th, 2024|3- This Week|

Answered Prayers?

Banks have been asking regulators for years – decades? – to update 1995 merger guidance.  So the banking agencies are beginning to do, but not exactly as banks would have liked to see it done.  Although Sen. Warren (D-MA) thinks the OCC’s proposed merger policy is too soft, our analysis (see FSM Report MERGER14) and that of many others finds it a formidable barrier to all but the simplest, smallest transactions.  Now comes the FDIC.  As the schedule below makes clear, it plans on Thursday to issue a proposal based on its 2021 RFI (see FSM Report MERGER9).  We doubt any bank-merger policy influenced as strongly by CFPB Director Chopra will be a bank merger policy banks will like any better than the OCC’s, although some compromises may have to be made if Republican members of the FDIC board are willing to contemplate at least some of what Mr. Chopra, surely seconded by Chair Gruenberg, wants done.

Al031824.pdf

14 03, 2024

CREDITCARD37

2024-03-14T15:57:19-04:00March 14th, 2024|1- Financial Services Management|

Credit-Card Late Fee Regulation

Following a very controversial proposal, the CFPB has finalized credit-card late-fee restrictions in a final rule that does not differ significantly from the proposal on its key point:  elimination of the manner in which inflation adjustments are now made by credit-card lenders when it comes to late fees.  The rule will sharply curtail issuer revenue related to these fees, likely affecting the market as a whole rather than the large issuers expressly covered by the new rule.  Although the Bureau did not go as far as proposed in several areas, its core late-fee standard could lead lenders to raise interest rates, curtail rewards, reduce high-risk exposures, or otherwise redesign products with adverse implications for borrowers who meet their monthly-payment requirements in a timely fashion.

CREDITCARD37.pdf

8 03, 2024

DAILY030824

2024-03-08T16:54:53-05:00March 8th, 2024|2- Daily Briefing|

Biden Continues Junk Fee Campaign

The President continued his attack on junk fees in the State of the Union, applauding the CFPB’s new credit-card late fee rule.  The President also boasted about recent monetary data, calling the American economy “the envy of the world” and called for Congress to pass Sen. Casey’s (D-PA) bill to stop shrinkflation.

FRB Finalizes FMU OpsRisk Update

The FRB today unanimously voted to finalize an update to rules governing operational risk-management for certain systemically-important financial market utilities (FMUs).

CFPB Lays Groundwork for Mortgage Closing-Cost Regulation

Continuing its campaign against junk fees, the CFPB today released a blog post focusing on mortgage closing cost fees, stating that the agency will issue rules and guidance “as necessary” to improve competition and affordability in the coming months.  The post states that median total loan costs increased 22 percent on home purchase loans from 2021 to 2022, noting that many of these costs are fixed and not affected by interest rates.

Daily030824.pdf

5 03, 2024

Daily030524

2024-03-05T16:37:23-05:00March 5th, 2024|2- Daily Briefing|

CFPB Fires All Cylinders on Credit Card Fees

In conjunction with a new White House “price-gouging” initiative today ahead of the President’s address, the CFPB finalized its controversial credit-card late-fee proposal (see FSM Report CREDITCARD36).

Presidential Strike Force Targets Financial-Services Fees, Mergers

In conjunction with the CFPB’s new credit-card fee standard, the White House today announced a “strike force” attacking what it believes to be price-gouging across the U.S. economy.

Interchange, Small-Dollar Lending Bills Added to House Docket

Although Thursday’s HFSC Financial Institutions’ hearing will be a largely partisan review of the “politicized” nature of bank regulation, bills on the docket include a draft measure from Rep. Luetkemeyer (R-MO) requiring the FRB to conduct a quantitative study of the implications of its pending interchange rule before finalization (see FSM Report INTERCHANGE12).

McHenry Supports At Least Some Liquidity-Reg Rewrite

Redoubling his campaign against the capital proposal, HFSC Chairman McHenry (R-NC) today made it clear that he does support at least some revisions to liquidity rules.

IMF Looks Under U.S. Bank “Weak Tail”

Looking at U.S. bank failures one year later, the IMF today released a global financial stability note finding that the “weak tail” of U.S. banks continues to present a possible systemic risk despite ongoing supervisory and regulatory efforts.

Daily030524.pdf

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