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19 10, 2022

DAILY101922

2022-10-20T17:16:10-04:00October 19th, 2022|2- Daily Briefing|

CFPB Brings Older Adults Into Fair-Fee Focus

Following yesterday’s enforcement action and furthering its “fair-fee” policy agenda (see FSM Report CONSUMER38), the CFPB today published an Issue Brief on overdraft fees and economically-insecure older adults.

HUD Advances LIBOR Replacement As Deadline

Following its ANPR on replacing LIBOR last year, HUD today published a proposed rule to remove LIBOR as an approved index for forward ARMs and reverse mortgages, replacing it with SOFR.  For existing ARMs, HUD proposes to establish a spread-adjusted SOFR index to transition from LIBOR, with a lifetime five percent interest-rate cap for monthly adjustable rate reverse mortgages.

House Republicans Question PayPal’s Content Fine Mistake

Following revelations that PayPal had temporarily imposed a penalty fee on certain content, HFSC Ranking Member McHenry (R-NC), Energy and Commerce Ranking Member Rodgers (R-WA), and Reps. Emmer (R-MN) and Griffith (R-VA) sent a letter to PayPal CEO Dan Schulman requesting more information about PayPal mistakenly updating its Acceptable Use Policy to include a fine for sharing “objectionable” messages on the platform.

Fed Study Finds Little Evidence of Discrimination in Mortgage Lending

A new Fed study on racial bias in mortgage lending finds little evidence of discrimination, concluding instead that disparities in observable applicant risk explain most racial denial disparities.  The study uses confidential HMDA supervisory data from 2018-2019 that controls for credit scores, DTI, and LTV on top of automated underwriting systems (AUS) recommendations.

Daily101922.pdf

28 09, 2022

DAILY092822

2022-09-29T09:56:21-04:00September 28th, 2022|2- Daily Briefing|

CFPB Targets Repeat Offenders, Overdraft Fees

Continuing his campaign against repeat offenders, CFPB Director Chopra announced sweeping penalties against Regions Bank for “illegal, surprise overdraft” fees.  These are said to be “manipulative” fees charged after the bank had notified consumers of sufficient balances at the time of a transaction, with the release accompanying the order also alleging that Regions’ senior management continued these fees after staff warned against them following an earlier CFPB enforcement order and Fed warnings.

Fed’s Bowman strongly disputes assertion of undo banking-market concentration

In remarks today FRB governor Bowman made it clear that she will dissent for any new merger policy, concluding that regulated banking is currently over-concentrated.  In her talk, she provides extensive data on the transformation of retail banking, arguing that the current measures are particularly deceptive when it comes to community banks.

Daily092822.pdf

22 09, 2022

REFORM213

2022-10-12T17:04:04-04:00September 22nd, 2022|5- Client Report|

Senate Republicans Tackle Woke Banking; Democrats Turn Again to Zelle, Fees

Senate Banking’s hearing with big-bank CEOs proved much more combative than HFSC’s session yesterday (see Client Report REFORM212).  From the outset, Republican Senators condemned what they characterized as serious threats of banking politicization around social and cultural issues, with Ranking Member Toomey (R-PA) predicting a Republican counter-offensive should his party regain control.  He also said that the Fed’s decision to join other central banks and supervisors in implementing climate scenario analysis is a precursor to regulatory edicts pressuring banks to divest from energy companies.  Republicans also emphasized that high regulatory-capital requirements have undue macroeconomic effects.  As predicted, Democratic focused extensively on Zelle and bank fees.

REFORM213.pdf

21 09, 2022

DAILY092122

2022-09-27T16:31:10-04:00September 21st, 2022|2- Daily Briefing|

Liang Emphasizes Fed CBDC Views vs. Treasury Report

In remarks last night, Treasury Under-Secretary Liang took a decidedly more cautious stand on CBDC than Treasury’s recent report, emphasizing its caveats rather than over-arching conclusions.  Differing from the report (see Client Report CBDC14), she reiterated Fed concerns that CBDC might undermine financial intermediation even as the report argues that it might well not do so if nonbanks were given access to it and to instant payments.

Senate Democrats Lambast More Big Banks

Ahead of their hearing with big-bank CEOs tomorrow, Senate Banking Democrats today released additional “snapshots” similar to those published earlier this week, this time highlighting Wells Fargo and JP Morgan Chase. These “megabank” snapshots follow the same format as those for the large regional banks, providing a list of headlines highlighting not only alleged instances of consumer discrimination and abuse, but also Wells Fargo’s fake accounts scandal and JP Morgan’s oil lending practices.

Daily092122.pdf

18 08, 2022

DAILY081822

2023-01-04T11:25:52-05:00August 18th, 2022|2- Daily Briefing|

CFPB Plans to Change Credit-Card Filings

The CFPB is seeking comments on revisions to reports it receives on credit-card terms and those related to certain cobranding agreements.  Although the new data are not described, the Bureau is likely planning to gather more information supporting its campaign to limit “junk fees, (see FSM Report CONSUMER38), govern credit-card late fees (see FSM Report CREDITCARD35), and otherwise restructure this sector.

IMF Blog: Climate Finance Should Blend Public/Private Sectors

An IMF blog post today by its managing director Kristalina Georgieva and Tobias Adrian advocates for blending public and private sector finance as a way of de-risking climate finance.  Advocating options that pose challenges under both U.S. law and longstanding-policy tradition, the Fund recommends public-sector equity investments and credit enhancements, highlighting additional financing practices it says would reduce impediments to private capital such as public-private partnerships, multi-sovereign guarantees, and separate underwriting for risks such as political instability.

FDIC Takes Concrete Anti-Overdraft Action

Although the CFPB has blasted overdraft fees and Acting Comptroller Hsu has suggested that they may pose supervisory concerns, the FDIC today took concrete action against them.  In a new supervisory edict, it announced that state nonmember banks receiving multiple NSF fees for the same transaction risks supervisory sanction because such fees are unsafe and unsound.

Daily081822.pdf

10 08, 2022

DAILY081022

2023-01-04T12:52:02-05:00August 10th, 2022|2- Daily Briefing|

Penalizes Fintech for Taking Consumer Funds Instead of Encouraging Savings

Striking at the heart of the purported financial-inclusion benefits of fintech, the CFPB today took action against Hello Digit under both its UDAAP powers (see FSM Report CONSUMER39) and its more recent stand on AI (see FSM Report FAIRLEND11).

Sen Dems Demand More re Rental Housing, Short-Term Loans in CRA Standards

Yesterday’s HFSC CRA comment letter has been followed by one from Chairman Brown (D-OH) and eighteen Democrats.

Senate Banking GOP Ramps Up Fed Demands

Following Sen. Toomey’s (R-PA) diatribe last week, Senate Banking Republicans have followed through with direct demands for greater Fed transparency and recognition of the central bank’s duties to the Congress.

Waters Demands Bureau Halt Equifax Scoring Until Erroneous-Data Problems Revealed, Remediated

HFSC Chairwoman Waters today sent a letter to the CFPB calling on the Bureau to use all of its powers to ensure remediation for consumers harmed by Equifax’s alleged credit-reporting error, as well as institute greater protections for consumers in the “broken” credit-reporting system.

CFPB Sweeps Up Bigtech in Scope of Consumer-Protection Standards

Building on its inquiry into bigtech and a controversial interpretive rule expanding its power to nonbanks (see FSM Report CONSUMER41), the CFPB today issued an expansive interpretive rule subjecting digital companies using behavioral or similar data to market consumer-finance products to the full thrust of federal consumer law.

Progresses Press Hsu on Crypto Authorizations

Sens. Warren (D-MA), Durbin (D-IL), Whitehouse (D-RI), and Sanders (D-VT) …

28 07, 2022

DAILY072822

2023-01-04T15:35:02-05:00July 28th, 2022|2- Daily Briefing|

End-August Deadline Set for LIBOR Comments

The Federal Register today includes the Fed’s proposal to implement the LIBOR Act.  Comments are due by August 29.  As we noted (see FSM Report LIBOR8), a smooth transition from LIBOR by its effective end date in June 2023 appears unlikely, with the Fed leaving several questions unresolved in its NPR in favor of meeting this deadline.

HFSC Votes in On Key Bills

Turning to recorded votes from yesterday’s markup, the HFSC today approved several bills including reforms to overdraft fees and credit reporting.  The overdraft bill, H. R. 4277 (Maloney, D-NY), passed 27-22.  Also voted on were H.R. 8485 (Williams, D-GA), and H.R. 8478 (Pressley, D-MA).  Both passed the Committee 28-23.

FSOC Agency Heads Report Climate-Risk Progress

At today’s FSOC open meeting, member agency heads reported their climate-risk progress following the President’s executive order.  Chairman Powell reiterated that the Fed is updating work on climate risk assessments without providing timing or details.  SEC Chairman Gensler mentioned the SEC’s proposed climate disclosure proposal, stating that hundreds of issuers already disclose climate-related information.

Daily072822.pdf

27 07, 2022

DAILY072722

2023-01-04T15:37:13-05:00July 27th, 2022|2- Daily Briefing|

Waters: Stablecoin Bill Would Authorize CBDC

At the opening of today’s HFSC markup, Chairwoman Waters (D-CA) and Ranking Member McHenry (R-NC) announced that they were close to a bipartisan draft of stablecoin legislation and hope to complete one by the August recess.  Chairwoman Waters said the bill would include authorization for CBDC to ensure U.S. global competitiveness.  We would expect this to follow the outline of the draft Rep. Himes (D-CT) released this spring.

Revised Overdrafts, Credit Data Bills Advance

The HFSC today, although postponing recorded votes, lightly approved H.R. 4277, Rep. Maloney’s (D-NY) overdraft protection bill.  The bill would limit overdraft fees banks can charge customers to no more than one per month or six per year, allowing the CFPB to raise that limit; require the fees to be reasonable and proportional to the amount overdrawn and the cost of providing coverage for the overcharge; prevent institutions from posting transactions in an order that would maximize overdraft fees; and require banks to let customers decide if they want coverage.  It appears that the bill will not have the option for the CFPB to impose a 24-month moratorium included in the legislation when it last came before the Committee, but we will review the bill as reported to determine if that is the case.

Daily072722.pdf

25 07, 2022

DAILY072522

2023-01-04T15:47:24-05:00July 25th, 2022|2- Daily Briefing|

Stablecoin Bill Still in Limbo

As we noted last week, the fate of stablecoin legislation at this week’s HFSC mark-up has been uncertain.  The committee staff memo today does not include a bill in this area; it is our understanding that negotiations continue on a draft amenable to both Chairwoman Waters (D-CA) and Ranking Member McHenry (R-NC).

OCC Seeks Fintech, Nonbank Analyses

The OCC today calls for academic and policy-focused papers on the impact of fintech and nonbanks on banking and the markets for lending, deposit-taking, and payment services.  This sweeping inquiry is designed to inform the agency as policy continues to take shape in these high-profile areas, with the announcement today providing no insight into whether these papers – which will doubtless come also from trade associations and other advocacy groups – will do more than provide a symposium’s worth of discussion.

Stablecoin Rules – or Lack Thereof – Likely to Remain

As noted in media this afternoon, HFSC will in fact not mark up a stablecoin bill on Wednesday.  Instead, some staff indicate that a discussion draft will be released so that the process of crafting a bill can continue in August in hopes of a September vote.  However, even if one were to occur, the odds of legislation in this Congress are slim to none at so late a date in the absence of any meaningful Senate Banking action in this arena.

Daily072522.pdf

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