On May 24, 2017, Rep. Jeb Hensarling (R-TX), the chairman of the House Financial Services Committee, agreed to remove the repeal of the Durbin Amendment from the second discussion draft of the Financial CHOICE Act (“CHOICE 2.0”). The Durbin Amendment, an amendment to the Electronic Fund Transfer Act added by section 1075 of the Dodd-Frank

On April 19, 2017, the House Financial Services Committee released a new discussion draft of the Financial CHOICE Act, its comprehensive regulatory reform bill.  The Committee released the first version of the CHOICE Act in June 2016.  Buoyed by the election of a Republican president, and following several months of public and industry outreach, Committee

On March 9, 2017, the House Financial Services Committee and Senate Banking Committee conducted their first legislative mark-ups in the new Congress and approved bipartisan bills to amend several SEC-related laws.  Observers have speculated that the simultaneous advancement of this package of bipartisan bills in both chambers may indicate that key legislators are open to pursuing financial reform efforts in narrowly focused stages rather than through comprehensive legislation.

The approved bills are reintroduced versions of bills that received consideration previously — in some cases receiving near-unanimous approval by the full House — without final enactment. They are summarized below.

Continue Reading House and Senate Panels Advance SEC Proposals

The transition to a new administration with the election of Republican Donald J. Trump as President, along with continued Republican control of the Senate and House of Representatives, promises to bring substantial change to each of the federal financial regulatory agencies. Changes in leadership at those agencies will likely result in substantial changes in policy regarding regulations, compliance, enforcement, and transactions.  While these transitions will take place over different time frames depending on the agency, there is unique uncertainty regarding how quickly the transition will take place at the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) and what that transition will entail.

The uncertain situation at the CFPB results, in part, from the fact that the Bureau is a new agency that has not previously experienced a change in administration. Moreover, the Bureau has been a controversial agency from its inception and it currently faces substantial questions about the constitutionality of its single-Director structure,  threats of Congressional disapproval of its recent and planned regulations, and legislation designed to change its structure and funding.

Continue Reading Post-Election Outlook for Financial Regulatory Agencies: The Consumer Financial Protection Bureau

On Tuesday, the Government Accountability Office (“GAO”) issued a report to the House Financial Services Committee (the “Report”) regarding stress tests conducted by the Board of Governors of the Federal Reserve System (the “Fed”).

The Report grew out of a 2014 request from Rep. Jeb Hensarling, Chairman of the House Financial Services Committee, for the GAO to review the Fed’s stress test program because he was concerned that the Fed was not adequately transparent with the banks and the public about the program’s procedures and standards. In response to the request, the GAO conducted a comprehensive review of the Fed’s stress test program that included a review of Fed  rules, guidance, internal policies and procedures, and interviews with Fed staff and officials from 19 banking institutions.

In the final Report, the GAO recommends that the Fed make several changes to its stress test procedures, including increasing transparency with respect to qualitative assessments, evaluating a broader range of severe stress scenarios, and doing more to assess uncertainty associated with the Fed’s internal models for determining the test results.

Continue Reading GAO Issues Report on Fed Stress Tests