Trump administration

On September 11, 2018, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Bureau of Consumer Financial Protection (the “Bureau”, and, collectively, the “Agencies”) issued a statement “clarifying the role of supervisory guidance.” The release affirms that the Agencies “do not take enforcement actions based on supervisory guidance” and that such guidance “does not have the force and effect of law.” This statement continues a recent pattern in regulatory policy of downplaying the force of guidance documents, at least as they relate to enforcement actions.

The statement explains that, rather than create binding rules with the force and effect of law, guidance “outlines supervisory expectations or priorities” and/or provides examples of practices the Agencies consider acceptable under applicable legal standards, such as safety and soundness standards. Further, the Agencies state that guidance is often issued in part as a response to requests from supervised institutions to “provide insight to industry” and help “ensure consistency in the supervisory approach.”

Continue Reading Banking Regulators Issue Joint Policy Statement Downplaying the Role of Supervisory Guidance in Enforcement

On Friday, April 21, President Donald Trump signed two presidential memoranda, directing the Secretary of the Treasury (the “Secretary”), Steve Mnuchin, to review two major provisions of the Dodd-Frank Act: orderly liquidation authority (“OLA”) for financial companies under Title II, and the decision-making processes of the Financial Stability Oversight Council (“FSOC”). Consistent with the Trump Administration’s February Executive Order ordering the Secretary to review financial regulations—which we discussed in a client alert—these memoranda highlight the Administration’s concerns with certain provisions of Dodd-Frank but will not effect major changes on their own.

Continue Reading Trump Directs Treasury to Review Dodd-Frank Orderly Liquidation Authority and FSOC Processes

As has been widely reported, FDIC Vice Chairman Thomas Hoenig put forward in remarks to the Institute of International Bankers on Monday, March 13, a “Market-Based Proposal for Regulatory Relief and Accountability” (the “Hoenig Proposal” or the “Proposal”).  If adopted, the Hoenig Proposal would substantially change the regulation of large and complex banking organizations doing business in the United States.

The Hoenig Proposal advances ideas that the Vice Chairman has long advocated concerning a new framework for bank regulation.  In 2015 and 2016, Mr. Hoenig proposed various types of regulatory relief for what he described as traditional commercial banks that maintained an equity-to-assets ratio (i.e., a leverage ratio) of at least 10 percent and met certain additional criteria.  The Proposal put forward earlier this week would apply to banking firms engaged in what are described as nontraditional activities—i.e., it would apply to financial holding companies (“FHCs”).  While the Proposal has no asset size threshold, embedded in it is a new systemic risk framework that would replace much of the approach of the Dodd-Frank Act applicable to the largest and most interconnected banking organizations.  The Proposal is of particular salience in light of statements from the White House that favor a reinstatement of Glass-Steagall-like restrictions of a sort set out in the Proposal, as well as speculation that Vice Chairman Hoenig is a contender to become the Federal Reserve’s Vice Chair for Supervision.

The most significant features of the Hoenig Proposal, some of which are intended to set a baseline for further discussion or development, appear after the jump.

Continue Reading FDIC Vice Chairman Hoenig’s Proposal for Regulation of Financial Holding Companies

On March 7, 2017, Mark Calabria, chief economist to Vice President Mike Pence, commented on the Trump administration’s likely approach to the CFPB during a panel at the National Association for Business Economics’ annual economic policy conference. The comments provide rare insight given that President Trump has not publicly detailed his thinking on reforming the

Having released executive orders directing federal agencies to curb the issuance of new regulations and requiring a regulatory review of financial regulations, President Trump issued a new executive order on February 24, 2017 (the “Order”) to create a process within the federal agencies for implementing his administration’s deregulatory agenda.

The Order contains two general

On January 30, 2017, President Trump issued an Executive Order to reduce the number of federal regulations and control regulatory costs (the “Order”).

The Order, which applies to any “executive department or agency”—

  • forbids any such department or agency from issuing a new regulation unless it identifies two existing regulations to be rescinded, unless prohibited by law;
  • forbids any such department or agency from issuing a new regulation unless the incremental costs of the new regulation are offset by eliminating existing costs associated with at least two existing regulations, to the extent permitted by law;
  • requires that, in the fiscal year 2017, the total incremental cost of all new regulations, including repealed regulations, be no greater than zero, unless required by law or consistent with advice of the Director of the Office of Management and Budget (“OMB”);
  • requires, beginning in the fiscal year 2018, each such department and agency to submit annual regulatory cost submissions to OMB;
  • forbids any such department or agency from issuing a regulation unless the regulation was included on the most recent version of the department or agency’s Unified Regulatory Agenda, unless required by law;
  • requires the Director of OMB to identify to agencies the total amount of incremental costs allowed for each agency in issuing new regulations each year; and
  • requires the Director of OMB to provide guidance to the heads of such departments and agencies on how to implement the Order’s requirements.

Continue Reading Trump Administration Issues Executive Order to Curb New Regulations

On Inauguration Day, January 20, 2017, the Trump administration issued a freeze on new regulations by executive agencies, and on January 23, 2017, the administration ordered a freeze on hiring employees by executive agencies.  Each of these actions has the potential to affect federal financial regulation.

Continue Reading Trump Administration Issues Regulatory and Hiring Freezes