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SEC Seeks to Require Brokers to Put Their Clients First - ABI

In a long-expected move that would affect the roughly 43 million households with brokerage or retirement accounts, the Securities and Exchange Commission voted yesterday to propose rules that would require brokers to put their customers’ financial interests ahead of their own, the New York Times reported. But not everyone is convinced the rules — if passed as proposed — would go far enough to improve consumer protections, including some of the SEC’s own commissioners. Some of the five commissioners said that they had concerns with different pieces of the proposal, suggesting that it may be difficult for them to coalesce around a final rule. Kara M. Stein, an SEC commissioner, called the proposed rules a squandered opportunity to provide meaningful change, and suggested a new name for the proposal, now called Regulation Best Interest.


Senate votes to kill consumer bureau auto-lending restrictions - Politico

The Senate on Wednesday moved to eliminate a 2013 consumer protection measure intended to combat discrimination in auto lending, marking an expansive new use of its power to kill federal regulations.  The lawmakers voted 51-47 to gut the Consumer Financial Protection Bureau‘s guidance, which Republicans attacked as harmful to auto dealers and lenders. The House is expected to pass the measure soon, and President Donald Trump will likely sign it.  The consequences of the vote will ripple beyond the confines of the CFPB, which is already on a deregulatory path under the leadership of Mick Mulvaney, Trump‘s White House budget chief.  It was the first time the Senate has used its authority under the 1996 Congressional Review Act to strike down an action taken by an agency years ago, instead of just within the narrow window prescribed by the law. The move also marked a broadening of how Congress has generally used the Review Act to include regulatory guidance and not only formal agency rules that were recently issued.  "It's important for Congress to reassert its role in policymaking from the executive branch," said Sen. Jerry Moran (R-Kan.), who introduced the bill that would undo the regulation.


House Votes to Exempt Some Banks from One of the Biggest Dodd-Frank Rules - ABI

The House voted on Friday to allow community banks to escape one of the biggest regulations imposed by the 2010 Dodd-Frank law, the Washington Examiner reported. Republicans joined with 78 Democrats to pass a bill sponsored by Rep. French Hill (R-Ark.) to revise the “Volcker Rule,” the regulation that restricts banks’ ability to speculate in the market with deposits insured by the federal government. The rule is meant to prevent banks from making risky bets that are effectively backstopped by taxpayers. The bill, which passed 300-104 just before lawmakers left for the weekend, is one of several bipartisan measures the House passed this week that would alter the Dodd-Frank law. Republican leaders in the House have said they hope for negotiations with the Senate to attach some House-passed bills to package of regulatory reforms that the upper chamber cleared last month with 17 Democratic votes. Senators so far have resisted including bills advanced in the House, and argue that their package of relief measures for community and regional banks is carefully negotiated and would be upset by involving House negotiators.


Federal Judges Indicate They Could Remove Mulvaney as Acting CFPB Chief - ABI

Judges on a federal appeals court panel yesterday appeared hesitant to overrule President Trump and install the deputy director of the Consumer Financial Protection Bureau as the agency's temporary leader, the Los Angeles Times reported. But two of the three judges from the U.S. Court of Appeals for the D.C. Circuit indicated they had a problem with the person Trump selected to take the position, Mick Mulvaney, because he also heads the White House Office of Management and Budget. The 2010 law that created the bureau as an independent federal agency specifically said OMB should not have oversight or jurisdiction over it. That raised the possibility that the legal battle over the future of the watchdog agency could end with Mulvaney's removal as acting director — a move that would be cheered by Democrats and consumer advocates who have complained about his public opposition to the bureau's existence.


Federal judges indicate they could remove Mulvaney as acting CFPB chief - Los Angeles Times

Judges on a federal appeals court panel Thursday appeared hesitant to overrule President Trump and install the deputy director of the Consumer Financial Protection Bureau as the agency's temporary leader.  But two of the three judges from the U.S. Court of Appeals for the D.C. Circuit indicated they had a problem with the person Trump selected to take the position, Mick Mulvaney, because he also heads the White House Office of Management and Budget. The 2010 law that created the bureau as an independent federal agency specifically said OMB should not have oversight or jurisdiction over it.  That raised the possibility that the legal battle over the future of the watchdog agency could end with Mulvaney's removal as acting director — a move that would be cheered by Democrats and consumer advocates who have complained about his public opposition to the bureau's existence.  But Mulvaney would not be supplanted as they want by Deputy Director Leandra English, who brought the suit to remove him after his appointment by Trump last fall. Under such a ruling, English might be elevated to acting director for at best a day or so until Trump simply named another person to serve as acting director, pending appointment of a permanent director needing Senate confirmation. Or the administration might appeal such a ruling to the full appeals court.


Mulvaney to Tell Lawmakers CFPB Will Keep Policing Lending-Discrimination Rules - ABI

The acting head of the Consumer Financial Protection Bureau vowed to continue policing lending discrimination yesterday, a day before his first semiannual report to Congress on the CFPB, the Wall Street Journal reported. Mick Mulvaney, who has been interim director since November, will use today’s and Thursday’s sessions before lawmakers to outline his strategies for overhauling the bureau and his regulatory agenda for the coming months. Mulvaney said in remarks prepared for his testimony that enforcement and supervision of lending-discrimination rules will remain part of the CFPB’s powerful enforcement division, which will soon be renamed to reflect its updated role. “This will make enforcement and supervision more efficient, effective and accountable,” Mulvaney said of his fair-lending policy in the remarks. The announcement comes two months after Mulvaney removed the CFPB’s Office of Fair Lending and Equal Opportunity from the bureau’s enforcement division and placed it under his direct control. The bureau said at the time that the fair-lending group would focus on advocacy, coordination and education, without explaining what would happen to the sizable team of enforcement and supervision experts in the group. Mulvaney’s testimony clarifies that the fair-lending division has essentially been split, with advocacy under the director’s control but enforcement and supervision remaining under the enforcement division.


Retail Defaults Hit Record High in First Quarter, According to Moody’s - ABI

The number of retailers defaulting on loans hit a record high in the first quarter of 2018, a new report shows, affirming many chains in the sector are still struggling under suffocating debt loads and changing business needs, CNBC.com reported. There were 28 total defaults by corporations in the latest period, Moody's Investors Service found, compared with 23 defaults during the same period a year ago. "Stresses in the retail sector have weighed on the operating earnings of department stores, discount stores and drug stores in particular," said Sharon Ou, vice president and senior credit officer at Moody's. CNBC reported last month that Moody's is expecting retailers' maturities to spike in 2019, meaning many significant debts are coming due. Companies on that list with loans to pay include Sears, Neiman Marcus and Guitar Center. These companies are also targeted as ones that could struggle to refinance or fund their loans.


Mulvaney Urges Congress To Strip Agency’s Powers - The Hill

The acting director of the Consumer Financial Protection Bureau (CFPB) asked a House committee Wednesday to rein in the agency’s power to police the financial sector.  Mick Mulvaney, who is also the White House budget director, urged the House Financial Services Committee to impose several new restrictions on the bureau. He said lawmakers need to take control of the agency’s funding, make his successors fire-able at will by the president and install an inspector general, among other things.  "It's not accountable to you. It's not accountable to the public. It's not accountable to anybody but itself," Mulvaney said of the CFPB, telling lawmakers to “take back authority as the legislature of the country.”  Republicans showered praise on Mulvaney’s efforts to pull back the CFPB, an agency they’ve long accused of violating the law and abusing its powers to wage a crusade against financial institutions.


Analysis: Credit Card Signatures Are About to Become Extinct in the U.S. - ABI

Credit card networks are finally ready to concede what has been obvious to shoppers and merchants for years: Signatures are not a useful way to prove someone’s identity. Later this month, four of the largest networks — American Express, Discover, Mastercard and Visa — will stop requiring them to complete card transactions, the New York Times reported. The signature, a centuries-old way of verifying identity, is rapidly going extinct. Personal checks are anachronisms. Pen-and-ink letters are scarce. When credit card signatures disappear, handwritten authentications will be relegated to a few special circumstances, like sealing a big transaction like a house purchase. Card signatures won’t vanish overnight. The change is optional, leaving retailers to decide whether they want to stop collecting signatures.


Major Banking Group Sides with Senate in Dodd-Frank Overhaul - ABI

Leading banking groups yesterday called on House leaders to accept Senate-passed legislation easing financial rules adopted after the 2008 economic crisis, the Associated Press reported. Each chamber has already passed its own legislation on scaling back Dodd-Frank, but lawmakers disagree on how to move forward and pass a final version this year. The bank groups weighing in yesterday would seemingly give senators more leverage in the negotiations. In a letter to House Speaker Paul Ryan and Minority Leader Nancy Pelosi, the American Bankers Association said that it supports the desire among House Republicans to do more than what was passed in the Senate, but it believes the Senate bill will "make a very real difference to community banks across the country." The group called on the House to "move on" the Senate bill quickly and take up other House proposals later. State banking associations made a similar plea, calling on the House "to immediately take up and pass" the Senate bill.