After a relatively quiet May on the financial regulatory front, an item from an atypical source caught our attention.
LATEST REGULATORY DEVELOPMENTS IMPACTING
THE FINANCIAL SERVICES INDUSTRY
THE FINANCIAL SERVICES INDUSTRY
In a rare judicial rebuke of the Consumer Financial Protection Bureau’s (CFPB’s) oft-criticized efforts to seek penalties despite no damages for allegedly “unfair, deceptive, or abusive acts or practices” (UDAAP) conduct, the US District Court for the District of North Dakota in CFPB v. Intercept Corporation has dismissed without prejudice a complaint (Complaint) filed by the CFPB against Intercept (a third-party payment processor for payday and title lenders and debt collectors) and two of its officers for failure to state a plausible claim under Fed. R. Civ. P. 12(b)(6).
As we previously reported, a three-judge panel of the US Court of Appeals for the DC Circuit held in October 2016 that the Consumer Financial Protection Bureau (CFPB) was unconstitutionally structured in that too much authority is concentrated in its unitary director.
US President Donald Trump issued an executive order (EO) on February 3 that directs the secretary of the US Department of the Treasury and the heads of the major federal financial regulatory agencies to review “existing laws, treaties, regulations, guidance, reporting and recordkeeping requirements, and other government policies” for their consistency with a series of newly created “Core Principles” for the oversight and regulation of the financial sector, and to report back with their findings within 120 days.
As the incoming administration of President-elect Donald J. Trump prepares to roll back federal regulations impacting a wide variety of industries, the battleground will not just be in Washington, DC—it may emerge in the states.
In a wide-ranging speech on November 16 before the Exchequer Club of Washington, DC, US House of Representatives (House) Financial Services Committee (Committee) Chairman Jeb Hensarling outlined the Committee’s and House’s legislative and regulatory priorities for the next session of US Congress.
The election of Donald J. Trump as president and continued Republican control of both the US Senate and House of Representatives may provide the new president the opportunity to immediately remake the Consumer Financial Protection Bureau (CFPB) after he takes office in January 2017.
In a post-holiday “back-to-school” development for the banking industry, the Federal Reserve Board (Board), Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) have issued an anticipated and long-overdue report ( Report ) under Section 620 of the Dodd-Frank Act that recommends that Congress repeal, or the agencies restrict, several types of bank and bank holding company activities that banking organizations have conducted in recent years.
Presumably to no one’s surprise, the Federal Reserve Board (Board) has just formally extended until July 21, 2017 the Dodd-Frank Act (Act) Section 619 (Volcker Rule) conformance period for banking organizations to divest ownership in certain “legacy” investment funds and terminate relationships with such funds that are prohibited under the Volcker Rule.