#UDAAP

29 01, 2024

CONSUMER55

2024-01-29T15:15:54-05:00January 29th, 2024|1- Financial Services Management|

NSF Fees

The CFPB has followed up a controversial proposal to set prices for larger-bank overdrafts exempt from certain consumer standards with a proposal to simply ban certain non-sufficient fund (NSF) fees when banks decide in real time to decline a consumer-payment request.  The Bureau readily acknowledges that banks in fact generally do not now charge NSF fees in these cases, but it fears they might and wishes to preemptively prohibit this as part of the Administration’s campaign against “junk fees.”  Although the rule is aimed principally at electronic declinations, it would apply to check and ACH transactions as declination capability grows via instant-payment system adoption.

CONSUMER55.pdf

20 12, 2023

DAILY122023

2023-12-20T16:49:55-05:00December 20th, 2023|2- Daily Briefing|

CFPB Small-Business Reporting Reg Remains

In conjunction with his expected veto last night of legislation that would have overturned the CFPB’s small-business reporting rule, President Biden indicated that the Bureau’s rule is central to CRA implementation and would bring transparency to small-business lending.

FSB, IOSCO Try Get-Tough Approach to OEF Illiquidity

As promised, the FSB and IOSCO today finalized recommendations designed to enhance OEF resilience.

HFSC GOP Demands CFPB Nonbank Delay, Clarification

HFSC Chairman McHenry (R-NC) and nineteen Committee Republicans sent a letter to CFPB Director Chopra urging the Bureau to extend by thirty days the comment deadline for its proposal to supervise large nonbank payment providers (see FSM Report PAYMENT27).

FERC Passive-Ownership Inquiry Poses Challenges to Funds, Banks

The Federal Energy Regulatory Commission has opened another avenue scrutinizing the extent to which large asset managers may control the companies in which they invest.

FDIC Approves Significantly Revised Sign, Advertising Standards

The FDIC Board today unanimously approved a final rule modernizing requirements for use of the FDIC’s official sign and clarifying what constitutes misrepresentation and misuse of the FDIC’s name or logo.

Daily122023.pdf

4 10, 2023

DAILY100423

2023-10-04T16:40:00-04:00October 4th, 2023|2- Daily Briefing|

Bowman Unbending in Demands for Better Reg Analytics, Community-Bank Mergers

In what might have been only perfunctory introductory remarks, FRB Gov. Bowman today instead continued her all-out campaign to force far more independent research before the Fed finalizes pending rules.

Brown Asks for No Wells Fargo Mercy

Senate Banking Chairman Brown (D-OH) today sent a letter to FRB Vice Chair Barr and OCC Acting Comptroller Hsu taking serious issue with what he calls unfair labor relations practices, consumer abuses, and compliance failures at Wells Fargo, urging the regulators to take stronger action to change the bank’s culture.

McKernan Counters Gruenberg on Endgame’s Nonbank Effects

Fleshing out official comments made in dissent against pending rules, FDIC Board member Jonathan McKernan today countered Chair Gruenberg’s recent comments that any migration of bank activities to nonbanks due to the capital rules should not be considered in the regulatory process.

Gruenberg Reiterates His Top Risk Worries

As with Gov. Bowman earlier today, FDIC Chair Gruenberg used his remarks later in the day to emphasize continuing concerns: in this case, uninsured deposits, maturity mismatches, and rapid growth.

Daily100423.pdf

26 07, 2023

DAILY072623

2023-07-26T16:37:20-04:00July 26th, 2023|2- Daily Briefing|

Senate Democrats Stand Firm On “Junk Fee” Campaign

Today’s lightly-attended Senate Banking Financial Institutions Subcommittee hearing on banking and consumer fees showcased broad Democratic alignment with the Administration’s “junk fees” campaign and persistent Republican aversion to this effort as well as to the CFPB.

CFPB Flags UDAAP, Other Problematic Practices for Enforcement

The CFPB’s latest supervisory report not only details recent actions and priorities, but also expressly stipulates that certain activities identified in the course of supervision that have yet to be addressed by formal agency action are UDAAP.

SEC Targets AI Advice

Acting as anticipated following Gary Gensler’s fiery talk last week about AI risk, the SEC today voted 3-2 to propose new rules curtailing what it believes to be broker dealer and investment-adviser conflicts of interest due to predictive analytics.

Crypto-Jurisdiction Bill to Advance; Stablecoin Measure Likely to do so Tomorrow

Chairman McHenry (R-NC) and Ranking Member Waters (D-CA) announced at today’s HFSC markup that bipartisan negotiations on the committee’s stablecoin bill continue and despite the absence of any breakthrough.

DOJ Officials Seeks Merger Answers

In remarks today, Policy Director David Lawrence of DOJ’s Antitrust Division went beyond new, draft DOJ/FTC merger guidelines (see FSM Report MERGER12) to lay out questions on which the agencies particularly seek answers.

Powell Stresses Bank Discount Window Readiness

FRB Chairman Powell’s press conference today focused almost entirely on monetary policy, but the chair agreed that the discount window performed badly during the recent crisis and that banks need to …

11 07, 2023

DAILY071123

2023-07-11T16:38:06-04:00July 11th, 2023|2- Daily Briefing|

FRB-NY Staff: Climate Tradition Risk Meaningful, Manageable

new blog post from Federal Reserve Bank of New York staff concludes that climate-transition risk in bank loan portfolios is meaningful, but also manageable.  The paper uses general-equilibrium models to focus on forward-looking climate risk in scenarios based on current policy as well as orderly and disorderly transitions, an approach it believes differ from much retrospective analysis of carbon emissions as a measure of transition risk.

CFPB, OCC Team Up To Sanction BofA Transaction, Card Account Practices

The CFPB and OCC today took action against Bank of America in ways that renew questions about potential overlaps between the CFPB’s jurisdiction and that of the banking agencies.  The costlier of the two actions from the CFPB ordered the bank to pay over $170 million in civil monetary penalties and restitution for a range of practices the Bureau regards as abusive and deceptive (see FSM Report CONSUMER39).

GOP Urges Supreme Court to Uphold Fifth Circuit CFPB Decision

Continuing the GOP’s longstanding campaign to redesign the CFPB, HFSC Chairman McHenry (R-NC), Senate Banking Ranking Member Scott (R-SC), and 130 Members of Congress filed an amicus brief today urging the Supreme Court to uphold the Fifth Circuit’s decision declaring the CFPB’s funding mechanism unconstitutional.

Daily071123.pdf

29 06, 2023

DAILY062923

2023-06-29T17:22:46-04:00June 29th, 2023|2- Daily Briefing|

Powell Stands by Big-Bank Reg Rewrite

In remarks today, Chair Powell echoed Vice Chair Barr’s “humble” comments yesterday about the need to anticipate additional risks despite banking-system resilience, noting that rules and supervision require review.  Building on the Fed’s internal SVB review (see Client Report REFORM218), Mr. Powell suggested that the Fed had succumbed to the “natural tendency” to fight the last war and needs now to update its standards to address new risks.

FTC Finalizes Tough New Guidance On Deceptive Reviews And Endorsements

The FTC today finalized an updated version of its Endorsement Guides, setting new standards for the advertising and endorsement behavior that may constitute unfair or deceptive practices.  These include implementation of a Consumer Review Fairness Act ban on standardized contract provisions penalizing consumers for negative reviews, a practice the CFPB last year called “gag” clauses that are banned  under this law.

Banking Agencies Encourage Banks To Go Easy On CRE Borrowers

The banking agencies and NCUA today finalized changes to troubled-loan standards in a policy statement that is substantially similar to last year’s proposal.

Daily062923.pdf

14 06, 2023

CONSUMER51

2023-06-14T16:55:35-04:00June 14th, 2023|5- Client Report|

Chopra Holds His Own Under GOP SVB, Consumer-Protection Attack

With Rep. Andy Barr (R-KY) leading the attack with an accusation of CFPB “McCarthyism,” today’s HFSC hearing with Director Chopra tracked much in yesterday’s Senate Banking session.  As before, Republicans strongly attacked the credit-card late-fee proposal (see FSM Report CREDITCARD36) and new small-business reporting requirements.  However, the lengthy session also allowed Members on both sides of the aisle to probe issues to which Senate Banking failed to turn.  One of these was the FDIC’s decision to establish bridge banks for SVB and Signature and to sell FRC to JPM.  Mr. Chopra vigorously denied any role of what some have called progressive ideology in opposing bids for SVB, noting also systemic concerns at that time partly due to fears about Credit Suisse.  The agency’s controversial data-rights proposal will be out in October, with Director Chopra saying also that the proposal covers nonbanks by virtue of the data to be covered.  Provider cyber-security will also be addressed.  This report covers additional high-impact issues at the hearing including AI, UDAAP, and systemic designation.

CONSUMER51.pdf

26 04, 2023

Daily042623

2023-04-27T10:27:37-04:00April 26th, 2023|2- Daily Briefing|

Senate Banking Housing Plans Focus on Affordability, Access

At today’s Senate Banking hearing on affordable housing, Chairman Brown (D-OH) framed the committee’s legislative agenda in his opening statement but did not indicate any timing or future action.

CFPB Targets Piggyback-Mortgage Collection

The CFPB today issued guidance on debt collection practices it asserts violate the Fair Debt Collection Practices Act by attempting to collect time-barred debt where the statute of limitations has expired.

Comment Deadline Set For Sweeping FHFA Equitable Housing NPR

The Federal Register today includes FHFA’s NPR codifying Sandra Thompson’s equitable- and fair housing agenda in a body of rule that future directors would find more difficult to reverse and FHFA could enforce with more punitive standards.

HFSC GOP Demands FHFA Reverse LLPA Changes

HFSC Chairman McHenry (R-NC) and Rep. Davidson (R-OH) sent a letter to FHFA Director Thompson today demanding that the agency reverse changes to the GSEs loan level pricing adjustments (LLPAs).

LIBOR Transition Still Too Slow, Agencies Say

The Fed, FDIC, NCUA, OCC, and CFPB along with state bank and state credit union regulators today issued a joint statement reminding supervised institutions that USD LIBOR panels will end on June 30.

FDIC, OCC Deploy UDAP Powers for Targeted Deposit Fees

So far without the Fed, the FDIC and OCC today released supervisory guidance asserting that authorize-positive, settle-negative (ASPN) charges are an unfair practice under UDAAP criteria and present consumer compliance risk.

HFSC GOP Leaders Press Banking Agencies on Digital “Chokepoint” Policy

HFSC Chairman McHenry (R-NC) was …

20 04, 2023

GSE-042023

2023-04-20T15:30:53-04:00April 20th, 2023|4- GSE Activity Report|

From Plans To Purpose

FHFA yesterday proposed a sweeping rule that would codify Sandra Thompson’s equitable- and fair-housing standards in a rule that any future FHFA director would have to work a lot harder to reverse.  Indeed, not only would new plans become a mandatory part of the GSEs’ mission, but violations of them  by Fannie or Freddie or any other fair-lending, equity, or related standard by all of the housing agencies could be sanctioned as unfair or deceptive acts or practices (UDAP), a page from the CFPB’s rulebook that affords a far greater scope to call an action discrimination and then punish it at even greater legal and reputational cost.  Even if spared new plans – and that’s a big if – Home Loan Banks would also be brought into a far more exacting equity construct far beyond current adherence to statutory AHP requirements.

GSE-042023.pdf

12 04, 2023

DAILY041223

2023-04-12T17:20:45-04:00April 12th, 2023|2- Daily Briefing|

Hill Charts Different FDIC Course

In remarks today, newly-confirmed Republican FDIC Vice Chairman Travis Hill for the first time lays out his thinking ahead of a raft of FDIC decisions in SVB’s wake.

CFPB UDAAP Policy Now Effective

The Federal Register today includes the CFPB’s policy statement expanding the scope of the Bureau’s UDAAP framework, which is now effective upon this publication.

Scott Lays Out Housing Plan

In conjunction with advancing his Presidential campaign, Senate Banking Ranking Member Scott (R-SC) late yesterday announced his new federal housing framework via planned legislation, the Renewing Opportunity in the American Dream (ROAD) to Housing Act.

Basel Turns to Capital, LCR Revamp

The Basel Committee’s head, Pablo Hernández de Cos, today spoke out strongly against regulatory liberalization, implicitly criticizing the U.S. tailoring rules and urging jurisdictions to adhere tightly to Basel’s “multi-metric” standards given their proven value in the recent crisis.

Daily041223.pdf

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