On July 6, the Federal Reserve Board, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency (together, the Agencies) issued an interagency statement (Statement) regarding the impact of the recently enacted Economic Growth, Regulatory Relief, and Consumer Protection Act (the tongue-tying EGRRCPA), which we previously summarized. The new law amended the Dodd-Frank Act to streamline certain of its systemic regulation requirements, and provide a modest level of relief for midsized banks and community banking institutions. The Statement addressed some of the immediate impacts of EGRRCPA and the Agencies’ responses to those provisions that took effect immediately. The Federal Reserve Board also issued a separate conforming statement addressing the impact of EGRRCPA on bank holding companies subject to its supervision (FRB Statement).

Among other things, EGRRCPA increases the Dodd-Frank Act enhanced prudential supervision threshold for bank holding companies with $50 billion in total consolidated assets by exempting bank holding companies with total consolidated assets of less than $100 billion immediately upon enactment (May 24, 2018), and raising this threshold to $250 billion 18 months after the date of enactment (November 25, 2019). EGRRCPA also allows the application of any enhanced prudential standard to bank holding companies with between $100 billion and $250 billion in total consolidated assets.

There has been substantial physical and virtual ink spilled over recent financial regulatory announcements about a review of the Volcker Rule—the controversial Dodd-Frank Act provision that generally prohibits proprietary trading and private investment fund sponsorship/investment by covered banking organizations. But will these agency activities lead to any change? In our view, they may lead to some minor changes, but no major ones.

Acting Federal Trade Commission (FTC) Chairman Maureen Ohlhausen has released a list of changes to how the agency’s Bureau of Consumer Protection (BCP) will issue civil investigative demands (CIDs)—the principal consumer protection investigative tool the agency wields. These changes result from Chairman Ohlhausen’s previously announced effort to reduce administrative burdens on legitimate businesses.

The Consumer Financial Protection Bureau (CFPB) has issued its final regulation (Rule) limiting the use of mandatory pre-dispute arbitration by providers of covered consumer financial products and services. The Rule will become effective 60 days after publication in the Federal Register (which should occur in the next few days) and will apply to transactions commencing six months after the effective date (roughly April 2018).

The CFPB’s authority does not extend to broker-dealers and other firms regulated by the US Securities and Exchange Commission or US Commodity Futures Trading Commission, or to auto dealers, attorneys, and retailers acting as such, but these entities could be swept back under the ambit of the Rule if they act as service providers to a covered provider or otherwise assist and facilitate such a provider. For example, an auto dealer is exempt from application of the Rule, but to the extent that a dealer directly assists and participates in the auto loan or leasing business on behalf of or in concert with a financial institution, that dealer would likely be covered as to the specific transaction.

On June 22, senior officials from the three primary federal bank regulatory agencies—the Office of the Comptroller of the Currency (OCC), the Federal Reserve Board (Board), and the Federal Deposit Insurance Corporation (FDIC)—testified before the Senate Committee on Banking, Housing and Urban Affairs (Committee) on, among other things, financial services reform matters. In the wake of the Financial CHOICE legislation (CHOICE Act), which recently passed the House of Representatives, and the more recent US Department of the Treasury report (Treasury Report) recommending changes to the current financial regulatory framework, financial reform’s legislative center of gravity has now moved to the Senate, which is currently trying to develop its own version of such legislation.

After a relatively quiet May on the financial regulatory front, an item from an atypical source caught our attention. We don’t always troll the cable news outlets for authoritative information on financial regulatory matters, but the June 1 interview that Federal Reserve Board (Board) Governor Jerome H. Powell gave to CNBC sparked our interest because his remarks seemed to signal a course correction—but nothing more than that—in the federal government’s handling of bank regulation and supervision. Powell’s status as Chairman of the Board’s Committee on Supervision and Regulation means that he speaks with substantial authority on financial regulatory matters, so his remarks hold weight in this area and are worth sharing.

In a concise panel ruling (CFPB vs. Accrediting Council for Independent Colleges and Schools) that no doubt stings for the Consumer Financial Protection Bureau (CFPB), the US Court of Appeals for the DC Circuit has held that the CFPB failed to provide adequate notice of the purpose of a civil investigative demand (CID) it issued to an accrediting group for for-profit colleges, and has accordingly declined to enforce the CID.

The unanimous decision of the DC Circuit panel comes just a day shy of a year after a district court found that the CID was a “bridge too far.” As we reported at the time, that court also declined to enforce the CID.

Determined to push forward with its Dodd-Frank Act reform legislation agenda, on April 11 the US House Financial Services Committee (Committee) released a summary of changes that it intends to make to the Financial CHOICE Act (CHOICE Act)—Dodd-Frank Act reform legislation that was introduced in the House of Representatives last fall but was not enacted before the end of the 114th Congress. Dubbed “CHOICE 2.0,” the summary outlines a number of significant changes that the Committee says will be included in the legislation when it is reintroduced in the House, possibly later this spring. On April 19, the Committee released a CHOICE 2.0 discussion draft that reaches almost 600 pages. The Committee’s current plan is to hold hearings on CHOICE 2.0 later this month.

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.

Although not mentioned by name, the EO is aimed squarely at the Dodd-Frank Wall Street Accountability and Consumer Reform Act (Dodd-Frank Act)—as the president’s remarks at the signing event made clear.

In a post-inauguration interview with The Wall Street Journal, Consumer Financial Protection Bureau (CFPB) Director Richard Cordray forcefully asserted his and his agency’s independence from the incoming administration of President Donald Trump. Noting that the Trump administration “really shouldn’t change the job at all ... ; [w]e’re expected to work with different administrations of different points of view,” Director Cordray said the CFPB has “an independent mandate to do what we do and we will continue working to protect consumers.”

Cordray made it clear that the CFPB intends to proceed with its aggressive enforcement and regulatory agenda, and was noncommittal on whether the president’s directive to cease promulgating new regulations applies to Cordray’s agency, saying only that the CFPB’s lawyers are reviewing the matter.