Cordray said Wednesday that he plans to resign as director at the end of the month. "It has been a joy of my life to have the opportunity to serve our country as the first director of the Consumer Bureau by working alongside all of you here. Together we have made a real and lasting difference that has improved people's lives," he said in a note to CFPB staff. Republicans have long loathed Cordray, who they see as having overstepped his regulatory authority and as lacking oversight. After President Trump's election, some called for his ouster. "It's time to fire King Richard," Sen. Ben Sasse of Nebraska said last January. But his departure may have more to do with his personal political aspirations than GOP pressure. Cordray is widely thought to be preparing a 2018 run for governor of Ohio. Before he was appointed to lead by the CFPB by President Obama in 2012, he served as Ohio's attorney general and treasurer. With Cordray gone, President Trump will have a chance to rework the consumer protection agency, which was created under the 2010 Dodd-Frank regulatory reform law following the 2008 financial crisis. "[Cordray's CFPB has] done a lot of good, but they've also been very controversial. It's been a real political football since its inception, and it will likely look and operate quite differently once Cordray leaves," Matt Schulz, a senior industry analyst with CreditCards.com, said in a statement.
Dozens of banks received the biggest signal yet that they may soon be freed from some of the most onerous rules put in place after the financial crisis, as lawmakers from both parties agreed to a plan that would enact sweeping changes to current law, the Wall Street Journal reported. The bipartisan Senate agreement released Monday would relieve small and regional lenders from a number of restrictions meant to limit the damage firms could cause to the economy in the event of another crisis. In what would be the biggest step to ease the financial rule book since Republicans took control of Washington, D.C., the proposal could cut to 12 from 38 the number of banks subject to heightened Federal Reserve oversight by raising a key regulatory threshold to $250 billion in assets from $50 billion. The legislation also would ease red tape affecting credit unions and community banks, allowing them to lend more, supporters said. The deal will “significantly improve our financial regulatory framework and foster economic growth by right-sizing regulation,” said Senate Banking Committee Chairman Michael Crapo (R-Idaho), who brokered the agreement between Republicans and a group of moderate Democrats.
The top Republican on the Senate Banking Committee is getting closer to striking a deal on a bipartisan bill to ease financial rules that could have wins for banks both big and small, Bloomberg News reported yesterday. Sen. Mike Crapo (R-Idaho), the panel’s chairman, is in talks with moderate Democrats including Jon Tester of Montana, Heidi Heitkamp of North Dakota and Joe Donnelly of Indiana on a plan for rolling back parts of the Dodd-Frank Act. A deal could come as soon as this week, Tester has said. Reducing the compliance burden for community banks has been identified as a top priority, but the lawmakers are also discussing ways to free bigger regional lenders from some of the strictest post-crisis regulations. Also on the table, lawmakers say, are tweaks to measures such as the Volcker Rule limits on banks’ trading, though it’s unclear what will make it into the final bill.
The Consumer Financial Protection Bureau plans to name Kristen Donoghue, the top deputy under outgoing enforcement chief Anthony Alexis, to lead of the Obama-era agency’s effort to police the financial industry, the National Law Journal reported. Donoghue is a longtime agency lawyer who was widely seen as a likely successor to Alexis, a former federal prosecutor and Mayer Brown partner who took over as acting enforcement chief in July 2013 before being appointed the division’s permanent director in January 2015. The CFPB confirmed yesterday that Donoghue had been picked to replace Alexis, whose last day will be Nov. 17.
The Republican tax plan unveiled yesterday takes aim at the most sacred of tax deductions: the provision that subsidizes homeownership by allowing the deduction of interest on mortgage debt, the New York Times reported. For most of America, the impact would be minimal. The proposed bill reduces the maximum deduction from $1 million to $500,000, or more than double the median home price in the U.S. of roughly $200,000. Less than 3 percent of home mortgages are more than $500,000, according to data from CoreLogic. But if the idea holds — and history suggests that will be difficult — it will echo loudly through higher-priced cities on the coasts. “The impact on the market is going to be recognizable,” said Ure R. Kretowicz, chief executive of Cornerstone Communities, a homebuilder in San Diego. “There’s going to be less incentive to build, and less incentive to buy.”
The White House has notified Federal Reserve governor Jerome Powell that President Donald Trump intends to nominate him as the next chairman of the central bank, the Wall Street Journal reported today. If confirmed by the Senate, Powell would succeed Fed Chairwoman Janet Yellen, the central bank’s first female leader, whose four-year term as Fed chief expires in early February. In his five years at the Fed, Powell has been a reliable ally of Yellen and would likely continue the Fed’s current cautious approach to reversing the central bank’s crisis-era stimulus policies as the economy expands. That would mean gradually raising short-term interest rates in quarter-percentage-point steps through 2020 while slowly shrinking the Fed’s $4.2 trillion portfolio of Treasury and mortgage-backed securities it purchased to lower long-term rates.
More store closings have been announced this year than in any other year before, as retailers across categories have collectively announced plans to close the doors on 6,700 brick-and-mortar locations in the U.S., with many declaring bankruptcy as well, PYMNTS.com reported. Fung Global Retail & Technology, a retail think tank — and the source of the data — found that the prior record, 6,163, was notched during the 2008 financial meltdown. Analysts expect that the downturn could get worse with some predicting as many as 8,600 more brick-and-mortar stores shuttering their doors this year, a figure that would add up to the loss of 147 million square feet of retail space.
Americans are saving less as the economy and stock market heat up and they boost their spending on big-ticket items, the Wall Street Journal reported today. The U.S. saving rate fell to a 10-year low of 3.1 percent in September, down from a recent peak of 6.3 percent in October 2015, the Commerce Department said yesterday. The saving rate has now sat below 4% for seven straight months. It likewise hovered at low rates in the late 1990s, when stock prices soared and the jobless rate fell below 5 percent, and again in the mid-2000s, when home prices soared and the unemployment rate again dropped. The Commerce Department report showed that household spending on durable goods rose 3.5 percent in September, adjusted for inflation, and at a robust 8.3 percent inflation-adjusted annual rate for the third quarter, after 7.6 percent annualized gain in the previous three-month period.
The congressional itch to "do something" on cybersecurity is especially pronounced after the Equifax breach, but whether lawmakers will go large, small or not at all is decidedly unclear. Equifax affected so many consumers that lawmakers from both parties seem more determined than usual to make something happen on consumer data security and breach notification legislation that has stalled over multiple Congresses. The Senate leadership, like that in the House, will be looking to see whether lawmakers can get over their jurisdictional and substantive differences this time before committing floor time to legislation. That will be the test for whether intense interest in “doing something" actually translates into a new national approach to data security and consumer notification of breaches — after 145 million Americans learned their most sensitive financial data was now for sale on the digital black market.
Consumer-debt levels are now well above those seen before the Great Recession. As of June, US households were more than half a trillion dollars deeper in debt than they were a year earlier. This according to the latest figures from the Federal Reserve. Total household debt now totals $12.84 trillion. The proportion of overall debt that was delinquent in the second quarter was steady at 4.8%. The New York Fed, though, warned over transitions of credit-card balances into delinquency, which "ticked up notably." Unlike government debt, consumer loans actually need to be paid back.