A federal consumer-finance regulator’s probe of the data breach at Equifax Inc. hasn’t changed since the Trump administration took over the agency, the interim head of the agency said Tuesday, dismissing a report suggesting that it had pulled back from the investigation, the Wall Street Journal reported. “I can tell you, senator, there has been no change in the position from the previous leadership of the CFPB regarding Equifax,” Mick Mulvaney, acting director of the Consumer Financial Protection Bureau, said at a Senate Budget Committee hearing. Mulvaney, who also serves as the White House budget chief, was addressing a lawmakers at a hearing on a Trump administration budget proposal released on Monday. More than 30 Democratic senators sent a letter last week to Mulvaney about the Equifax investigation, following a news report that the CFPB may have halted its probe of the Equifax hack, which compromised personal data of 145.5 million Americans.
Total household debt rose by $193 billion to an all-time high of $13.15 trillion at year-end 2017 from the previous quarter, according to the Federal Reserve Bank of New York's Center for Microeconomic Data, Bloomberg News reported. Mortgage debt balances rose the most in the December quarter rising by $139 billion to $8.88 trillion from the previous quarter. Credit card debt had the second largest increase of $26 billion to a total of $834 billion. The report said it was fifth consecutive year of annual household debt growth with increases in the mortgage, student, auto and credit card categories.
The White House yesterday proposed a major restructuring of the Consumer Financial Protection Bureau (CFPB) that would significantly cut the watchdog agency’s budget and limit its enforcement power, the Washington Post reported. Under the proposal, included in President Trump’s 2019 budget plan, the CFPB would be funded through Congress rather than the Federal Reserve, giving lawmakers more influence over the agency’s priorities. The CFPB’s 2019 budget would also be capped at its 2015 level, $485 million, compared with a projected $630 million this year. The plan, which would take two years to implement, also calls for putting restrictions on the CFPB’s enforcement authority.
A revised strategic plan that the Consumer Financial Protection Bureau expects to release in the coming days says the agency, led by Acting Director Mick Mulvaney, intends to go “no further” than the requirements stipulated in the Dodd-Frank Act when it comes to regulating the financial industry, MorningConsult.com reported. Kirsten Sutton Mork, who’s chief of staff at the CFPB, wrote in an email sent to all agency employees that the CFPB plans to publish its updated strategic plan by Feb. 12. “If there is one way to summarize the strategic changes occurring at the Bureau, it is this: we have committed to fulfill the Bureau’s statutory responsibilities, but go no further,” she wrote. The new mission statement for fiscal years 2018-2022 borrows language from the 2010 Dodd-Frank language that established the agency, saying that the CFPB’s goal is “to regulate the offering and provision of consumer financial products or services under the Federal consumer financial laws and to educate and empower consumers to make better informed financial decisions,” according to the email.
Congress moved to end a five-hour government shutdown early Friday morning after the House voted to support a massive bipartisan budget deal that stands to add hundreds of billions of dollars in federal spending on the military, domestic programs and disaster relief, the Washington Post reported. The 240-to-186 House vote gaveled to a close just after 5:30 a.m., nearly four hours after the Senate cleared the legislation on a vote of 71 to 28, with wide bipartisan support. But action did not come soon enough to avoid a brief government shutdown — the second in three weeks — as Sen. Rand Paul (R-Ky.) delayed the Senate vote past midnight to mark his opposition to an estimated $320 billion addition to the federal budget deficit. President Trump is expected to sign the bill later today to officially end the shutdown.
Nine lenders have been warned by the U.S. that they will be kicked out of a top mortgage program within months unless they find ways to stop costly rapid refinances of veterans’ loans, Bloomberg News reported. The warnings stem from a probe by Ginnie Mae, a government-owned corporation that makes mortgages cheaper by protecting bond investors against homeowner defaults. Ginnie Mae guarantees about $2 trillion in bonds containing loans backed by agencies including the Department of Veterans Affairs. Some lenders have boosted their revenue through repeated, unneeded refinancing of veterans’ home loans, according to regulators. That process, called “churning,” lowers prices investors are willing to pay for bonds, effectively raising rates for veterans, first-time home buyers and others whose loans are included in Ginnie Mae-backed securities.
U.S. Treasury Secretary Steven Mnuchin said yesterday that he wants to know how the Consumer Financial Protection Bureau is handling a probe into a hack of credit bureau Equifax Inc. after a report that the agency’s chief has pulled back from investigating the matter, Reuters reported. Equifax disclosed in September that hackers had stolen personal data it had collected on some 143 million Americans. On Monday, Reuters reported that the acting chief of the Consumer Financial Protection Bureau (CFPB), Mick Mulvaney, had put the brakes on the agency’s Equifax investigation. “I haven’t spoken to Director Mulvaney about it but I will,” Mnuchin told the House of Representatives Financial Services Committee. “It is something I am going to discuss with him.” The CFPB said yesterday that it was examining the Equifax breach but declined to give details.
The Federal Reserve said yesterday that its stress tests for big banks will imagine a more severe economic downturn in 2018 than in last year’s version, as it announced the details of the hypothetical scenario banks must survive to pass the exams, the Wall Street Journal reported. The Fed’s latest “severely adverse” scenario imagines unemployment at 10 percent, severe stress in corporate and real-estate lending markets, and severely difficult economic conditions in developing Asian countries and Japan, the central bank said. Big banks must show the Fed they can survive the hypothetical scenario with enough capital to continue lending. If they fail, they face restrictions on payouts to shareholders. Test submissions are due in April and will be announced by the end of June, the Fed said.
A federal appeals court yesterday upheld the lawfulness of the single-director power structure of the Consumer Financial Protection Bureau, the Obama-era agency undergoing a dramatic shift in focus as Trump-appointed officials take over leadership slots, the National Law Journal reported. The U.S. Court of Appeals for the D.C. Circuit, sitting as a full court, said that the president can only remove the director of the agency for cause, not at will. The mortgage company PHH Corp. had argued the leadership scheme lacked accountability. “Applying binding Supreme Court precedent, we see no constitutional defect in the statute preventing the president from firing the CFPB director without cause. We thus uphold Congress’s choice,” Judge Nina Pillard wrote for the court. “Congress’s decision to provide the CFPB Director a degree of insulation reflects its permissible judgment that civil regulation of consumer financial protection should be kept one step removed from political winds and presidential will. We have no warrant here to invalidate such a time-tested course.” PHH still has a chance to challenge anew the $109 million penalty the agency imposed for alleged misconduct.
The House of Representatives passed five bipartisan bills from the Financial Services Committee this week, including H.R. 4292, the "Financial Institution Living Will Improvement Act of 2017," according to a press release. The bill is sponsored by Rep. Lee Zeldin (R-N.Y.) and would amend the “Dodd-Frank Wall Street Reform and Consumer Protection Act” to reform the resolution plan submission “living will” process by requiring bank holding companies to submit to the Federal Reserve Board (Federal Reserve) and the Federal Deposit Insurance Corporation (FDIC) resolution plans every two years. This bill requires the Federal Reserve and FDIC to provide feedback regarding a resolution plan within six months after a bank holding company submission. This bill would also require the Federal Reserve and FDIC to publicly disclose the assessment framework used to review the adequacy of resolution plans. Other legislation passed by the House includes:
• H.R. 1457, the Making Online Banking Initiation Legal and Easy (MOBILE) Act
• H.R. 1426, the Federal Savings Association Charter Flexibility Act of 2017
• H.R. 2255, the Housing Opportunities Made Easier (HOME)
• H.R. 4792, the Small Business Access to Capital After a Natural Disaster