The Trump administration is set to release its blueprint for overhauling regulation of U.S. markets, an expansive list of priorities that touches on the stock, bond and derivatives trading that fuels Walls Street profits, Bloomberg News reported today. The report, being prepared by the Treasury Department, could come as early as today. Rather than making specific demands, the document is meant to be a road map for agencies as they streamline rules. While some of the changes would require congressional action, most could be accomplished by re-writing regulations. The markets review was spurred by President Donald Trump’s February executive order calling for a broad rethink of financial regulations. Treasury issued a separate report on bank oversight reforms in June, and another on asset managers is set to be released in the coming days.
The Consumer Financial Protection Bureau (CFPB) yesterday imposed tough new restrictions on so-called payday lending, dealing a potentially crushing blow to an industry that churns out billions of dollars a year in high-interest loans to working-class and poor Americans, the New York Times reported. The rules announced by the CFPB are likely to sharply curtail the use of payday loans, which critics say prey on the vulnerable through their huge fees. Currently, a cash-strapped customer might borrow $400 from a payday lender. The loan would be due two weeks later — plus $60 in interest and fees. That is the equivalent of an annual interest rate of more than 300 percent, far higher than what banks and credit cards charge for loans.
The House Committee in Natural Resources will start analyzing actions to be taken regarding the recovery of Puerto Rico, which will include reviewing the implementation of PROMESA law, ElNuevodia.com reported yesterday. "It's all going to be on the table," said yesterday Rep. Rob Bishop (R-Utah), chairman of the Natural Resources Committee, who led a roundtable discussion with committee members and other congressmen on the possibility of enacting legislation. Bishop, however, seemed inclined to maintain "the structure we already have." During the closed-door session, Resident Commissioner Jenniffer González and delegate Stacey Plaskett submitted reports on the catastrophes caused by Hurricanes Irma and Maria in Puerto Rico and the Virgin Islands, respectively. Shortly after, the White House Office of Management and Budget sent Congress a resolution that would allocate $ 16 billion in emergency funds to pay debt claims under the flood insurance program and another $ 12.77 billion to finance the fund to address disasters of the Federal Emergency Management Agency (FEMA). The Resident Commissioner said that the possibility of promoting that the federal government authorizes an emergency short-term loan to prevent the government of Puerto Rico from becoming insolvent this month is under discussion. The other option is to consider if it is possible to be authorized by executive order. In a press call, prior to the roundtable, Bishop said that the House Committee on Natural Resources will be in charge of possible legislation for "the overall strategy of the reconstruction process" of Puerto Rico and the Virgin Islands.
Senators questioning Equifax Inc.’s former chief yesterday attacked the business model of the credit-reporting industry, asking why consumers shouldn’t have power over the data that these companies collect on them, the Wall Street Journal reported today. The hearing before the Senate Banking Committee was as much about the control consumers have over their personal data as it was about the Equifax hack, which has affected potentially 145.5 million Americans. Senators questioning former Equifax Chief Executive Richard Smith, who is appearing before a series of congressional panels this week, asked whether a large overhaul is needed for both private sector and government activities. “There is massive data collection being undertaken in this country,” said Banking Committee Chairman Sen. Michael Crapo (R., Idaho) during Wednesday’s hearing before his panel. Congress, he said, needs to address broader issues about “the collection and use and protection of personally identifiable information that is being collected by the government, by the private sector and others.” In terms of the big credit-reporting companies, which along with Equifax include Experian PLC and TransUnion, senators repeatedly raised a key point: Consumers don’t choose to share their data with these firms nor do they receive compensation for it, even though companies like Equifax profit by gathering it and selling it to lenders and other companies.
A pair of top U.S. regulators called for increased attention to cyber risks to the financial system Tuesday in the wake of the hack of the Securities and Exchange Commission’s corporate filing system, the Wall Street Journal reported today. Federal Reserve Governor Jerome Powell and Commodity Futures Trading Commission Chairman J. Christopher Giancarlo both cited cybersecurity as a fundamental risk point for the financial sector during a discussion at George Washington University Law School. In a broad conversation on financial regulation, they both also expressed confidence that they would make progress modifying the Volcker rule trading ban and other financial rules. Giancarlo said that the SEC hack raises questions about how much proprietary data should be held by market regulators. Since the 2016 hack was disclosed in September, companies have raised concerns about giving over closely held data such as trading source code to government regulators. The concerns threaten to trip up implementation of the SEC’s consolidated audit trail rule, which would keep track of every trade and order in U.S. stock and option markets, as well as efforts by the CFTC to expand regulators’ access to the computer code that drives automated trading strategies and bring more high-frequency traders under their oversight.
Two weeks after the storm plunged the island into a blackout, less than 10 percent of Puerto Rico’s 3.4 million people have seen power restored - and many will wait months. Restoring the grid after the worst storm to hit here in nine decades would be a monumental task even for a well-run utility. It will be much harder for the chronically underfunded Puerto Rico Electric Power Authority (PREPA), which went bankrupt in July amid mounting maintenance problems, years-long battles with creditors, a shrinking workforce and frequent management turnover. Interviews with more than two dozen officials and consultants who work for or with the U.S. territory’s government, PREPA or its creditors reveal a utility that was unprepared for a major storm despite the ever-present risk to this Caribbean island. When Maria hit, PREPA was trying to simultaneously finance an operational overhaul and dig out from about $8 billion in debt.
Equifax said yesterday that millions more people were affected by the credit bureau’s data breach than Equifax initially estimated, the New York Times reported today. The company increased its estimate on the number of Americans whose personal information was potentially exposed to 145.5 million, some 2.5 million more than it had previously disclosed. The additional accounts were found during a forensic review by Mandiant, a cybersecurity firm hired by Equifax to investigate the attack, according to a company statement. The material that was stolen included names, Social Security numbers, birth dates, addresses and, in some instances, driver’s license numbers.
The percentage of U.S. retailers with high-risk CCC ratings has doubled since the beginning of the year, according to a new report by S&P. Eighteen percent of U.S. retail ratings are in the CCC range, as the industry continues to grapple with increased competition, changing shopping patterns and steep discounts to attract shoppers. A CCC rating indicates that an obligation is vulnerable to nonpayment and that the ability to pay the obligation could hinge on whether business conditions are favorable. Along with the restaurant industry, retail and restaurants comprise the most distressed industry in the U.S., with roughly 21 percent of retail and restaurant companies now viewed as distressed by the S&P. As peers face downgraded ratings, retailers' attempts to refinance debt and avoid bankruptcy may be challenged, warns the credit rating agency.
The U.S. Trustee Program (USTP) yesterday announced a temporary waiver of the federal statutory requirements for credit counseling and personal financial management education for consumer bankruptcy filers in the District of Puerto Rico and the District of the U.S. Virgin Islands, due to the effects of Hurricanes Irma and Maria, according to a press release. The Bankruptcy Code permits U.S. Trustees to waive the credit counseling and financial education requirements within a judicial district where approved agencies and providers are not reasonably able to provide adequate services. Acting U.S. Trustee Guy Gebhardt made this determination with respect to the District of Puerto Rico and the District of the Virgin Islands. The waiver applies to bankruptcy cases filed on or after September 28, 2017.
The Senate on Wednesday night passed a scaled-back version of a bill that would up bankruptcy fees for some filers, extend 14 bankruptcy judgeships and add four new ones, sending the measure back to the House, Law360 reported yesterday. Revisions to the House-passed Bankruptcy Judgeship Act of 2017 passed the Senate by voice vote on Wednesday. Specifically the bill would add four five-year bankruptcy judgeships and extend 14 temporary ones in Delaware, Florida, Virginia, Maryland, Michigan, Nevada, North Carolina and Puerto Rico for an additional five years. Here is the engrossed amendment of the Bankruptcy Judgeship Act of 2017.