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On Tuesday, June 25, the Consumer Financial Protection Bureau (the “CFPB”) convened the first in a new series of symposia on consumer protection topics. The symposium series was announced in Director Kathleen Kraninger’s first major speech as the Bureau’s Director on April 17, 2019. The intent of the series is to initiate dialogue with stakeholders that will inform the Bureau’s future rulemakings. The topic of the first symposium, in which our colleague Eric Mogilnicki participated, was the meaning of “abusive acts or practices” under section 1031 of the Dodd–Frank Act. The “abusive” standard has been on the Bureau’s rulemaking agenda since the fall of 2018.  …
Continue Reading First CFPB Symposium Focuses on “Abusive” Acts or Practices Standard

On April 17, 2019, CFPB Director Kathleen Kraninger outlined her approach in executing the Bureau’s statutory mission in a speech to the Bipartisan Policy Center. This was Director Kraninger’s first major speech since taking the helm at the Bureau. Kraninger’s remarks were organized around the tools that the Bureau will utilize to advance its core…

In a November 9, 2018 speech, Federal Reserve Vice Chairman for Supervision Randal K. Quarles outlined potential adjustments to the revisions to the capital planning regime that the Federal Reserve proposed in April 2018.  Governor Quarles also said he will ask the Federal Reserve to exempt banks with less than $250 billion in assets from the Comprehensive Capital Analysis and Review (“CCAR”) quantitative assessment and supervisory stress testing in 2019 in order to facilitate capital planning moving to a biennial exercise for such banks.

Governor Quarles emphasized that the adjustments “are not intended to alter materially the overall level of capital in the system or the stringency of the regime.”  However, the cumulative impact of the changes outlined in his speech would be to ease the implementation of the SCB and streamline CCAR and capital planning.…

Continue Reading Capital Planning Framework to Continue its Evolution

On October 31, 2018, the Board of Governors of the Federal Reserve System (“Board”) released two draft notices of proposed rulemaking (“NPRs”) to tailor its enhanced prudential standards (“EPS”) in accordance with Section 401 of the Economic Growth, Regulatory Relief and Consumer Protection Act (“EGRRCPA”).

One NPR, issued by only the Board, would tailor the application of EPS relating to capital stress testing; risk management; liquidity risk management, liquidity stress testing, and liquidity buffer requirements; and single-counterparty credit limits to U.S. bank holding companies (“BHCs”) and apply EPS as tailored to covered savings and loan holding companies (“SLHCs”).  The other NPR, a joint proposal with the Office of the Comptroller of the Currency (“OCC”) and the Federal Deposit Insurance Corporation (“FDIC”), would tailor requirements under the agencies’ regulatory capital rules, the liquidity coverage ratio (“LCR”) rules, and proposed net stable funding ratio (“NSFR”) rules.  At the Board’s open meeting, Governor Brainard voted against the NPRs, saying in her prepared remarks that the proposals go beyond the provisions of EGRRCPA.

The proposals would establish a revised framework for applying EPS to large U.S. banking organizations, with four categories that reflect the different risks of covered firms in each category:

  • Category IV Firms: $100-$250 billion in total assets and does not meet Category I, II or III standards.
  • Category III Firms: $250 billion-$700 billion in total assets or $100 billion-$250 billion in total assets with $75 billion or more of a risk-based indicator (weighted short-term wholesale funding, nonbank assets, or off-balance sheet exposure), and does not meet Category I or II standards.
  • Category II Firms: $700 billion or more in total assets or cross-jurisdictional activity of $75 billion or more, and does not meet Category I standard.
  • Category I Firms: U.S. global systemically important BHCs.
    Continue Reading Federal Reserve Releases Proposals to Tailor Enhanced Prudential Standards

On October 24, 2018, the Bureau of Consumer Financial Protection (“BCFP” or the “Bureau”) announced that it had reached a settlement with Tennessee-based small-dollar lender and check casher, Cash Express LLC, which agreed to resolve the Bureau’s claims by paying a $200,000 fine and approximately $32,000 in restitution to affected consumers.  The consent order includes a finding that, among other allegations, Cash Express had engaged in “abusive” acts and practices in violation of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), notwithstanding recent indications from Acting Director Mick Mulvaney that the “abusive” standard lacks clarity.
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Continue Reading BCFP Reaches Settlement with Small-Dollar Lender in Connection with Allegedly “Abusive” Practice

On October 17, 2018, the Bureau of Consumer Financial Protection (“BCFP” or the “Bureau”) announced the release of its Fall 2018 semiannual update of its rulemaking agenda, which is included in the Unified Agenda of Federal Regulatory and Deregulatory Actions (the “Unified Agenda”), published by the Office of Information and Regulatory Affairs (“OIRA”). The BCFP’s updated rulemaking agenda is available on the OIRA web site. The agenda lists twelve rulemakings in the prerule, proposed rule, and final rule stages and another eight potential rulemakings in the long-term actions stage. These items include a number of new and revised rulemaking items, reflecting recent legislative enactments and evolving Bureau priorities.
Continue Reading BCFP Releases Fall 2018 Rulemaking Agenda

On September 4, 2018, in a speech at the City Guildhall in London, Chairman Giancarlo previewed a new approach to cross-border application of Dodd-Frank swaps provisions, which will be memorialized in a forthcoming white paper.

Chairman Giancarlo began his remarks with a historical overview of cross-border swaps regulation, highlighting post Dodd-Frank reforms. He then summarized the current regulatory regime, emphasizing the substantial progress that has been made in the world’s primary swaps trading jurisdictions to implement commitments made after the 2008 financial crisis at the Pittsburgh G-20 summit.

The Chairman went on to offer a Mea culpa and an apologia, stating that the CFTC’s current approach to applying swaps rules to its cross-border activities has resulted in a number of problems. The Mea culpa was offered for the 2013 cross-border guidance which imposed CFTC transaction rules on swaps traded by U.S. persons even in jurisdictions committed to G-20 swaps reforms. Chairman Giancarlo expressed his view that such an approach “alienated many overseas regulatory counterparts and squandered important American leadership and influence in global reform efforts.” The Chairman allowed that CFTC’s “over-expansive assertion of jurisdiction” may have been understandable in 2013 when other G-20 jurisdictions had not yet implemented swaps reforms. However, today, he views the approach as increasingly out of sync with the world’s major swaps trading regimes, which have since adopted comparable swaps reforms.…

Continue Reading Past is Prologue: A New Approach to Cross-Border Application of Dodd-Frank Swaps Provisions

On August 29, 2018, the U.S. Senate confirmed Dawn Stump and Dan Berkovitz as Commissioners of the Commodity Futures Trading Commissioner (“CFTC” or “Commission”). Each has extensive experience in the derivatives markets. Ms. Stump, among other things, has served as Executive Director and Senior Vice President of U.S. Policy for the Futures Industry Association. Mr. Berkovitz, among other things, served as General Counsel of the CFTC from 2009-2013. Ms. Stump and Mr. Berkovitz were sworn in last week, meaning the CFTC now has a full slate of Commissioners for the first time since 2014. Even without a full Commission, the CFTC under Chairman Giancarlo has undertaken various initiatives, including its regulatory simplification program Project KISS (which has led to several proposed and final rules), but now with a full Commission, it is likely that the CFTC will be able to move on several major rulemakings.
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Continue Reading With New CFTC Commissioners Onboard, Major CFTC Rulemakings Likely to Follow this Fall

Yesterday afternoon, Acting Director Mulvaney sent an email to the entire CFPB staff in which he drew a sharp contrast with the views of his predecessor, Director Richard Cordray, and outlined a new direction  for the Bureau.

In explaining how “things would be different” at the Bureau, Acting Director Mulvaney  criticized the agency’s aggressive approach…

Today the Federal Reserve issued its semiannual regulatory flexibility agenda for fall 2017, which lists regulatory matters the agency anticipates having under consideration during the period from November 1, 2017 through April 30, 2018.

The agenda is notable in two respects.  First, the Federal Reserve anticipates issuing, together with the Office of the Comptroller of…