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House GOP releases Dodd-Frank replacement bill, sets hearing

The new text for the bill, the Financial Choice Act of 2017, weighed in at 593 pages, far fewer than the 2010 law it is meant to supplant but longer than last year's version. The main premise of the bill is to cut back the rules imposed by the Dodd-Frank law. And for banks that opt to maintain a high level of capital, which would reduce the odds of bank failures and increase market discipline, the bill would provide for relief from several layers of regulation. Perhaps most notably, the legislation would reform the Consumer Financial Protection Bureau, which oversees financial products such as mortgages and credit cards, by scaling back its authority and ensuring that the president can fire its director at will. Last year's version took a different tack, making the bureau a five-member, bipartisan commission.


Justices Grill SEC Over Limiting Power to Make Wrongdoers Give Back Gains - ABI

The Supreme Court yesterday voiced skepticism toward a plea from Wall Street’s top cop that one of its main enforcement tools shouldn’t be subject to a federal statute of limitations, the Wall Street Journal reported today. Justices from both the conservative and liberal wings of the Court didn’t appear to accept the Securities and Exchange Commission’s view that disgorgement, or clawing back ill-gotten gains from wrongdoers, isn’t subject to a five-year limit on the government’s power that dates to 1839. Chief Justice John Roberts evoked the statement of an early chief justice, John Marshall, who said it would be “utterly repugnant” to have no expiration date on the government’s authority to go after a suspected wrongdoer. “It does seem to me we kind of have a special obligation to be concerned about how far back the government can go,” Justice Roberts said during an hour-long oral argument. The case, Kokesh v. SEC, stems from a civil lawsuit the commission filed in 2009 against Charles Kokesh, a fund manager who mostly invested in startup companies. The SEC accused Kokesh of looting $45 million from the funds to pay his and other corporate officers’ salaries and bonuses and to fund office rent. Kokesh argues that the statute of limitations should have limited the $34.9 million that a lower court decided he should pay in disgorgement.


CFPB Offers Clarification to Proposed Data Collection Update - DS News

In fall of 2015, the CFPB introduced new data reporting requirements which are set to take effect next year under the 1974 Home Mortgage Disclosure Act (HMDA), updating existing rules which will make lenders provide information on property value, the terms of the loan, the term of prepayment penalties and the duration of teaser or introductory interest rates. The HMDA was intended to address problems faced by minorities in gaining access to a mortgage, and requires lenders to collect data from the purchase, home improvements, and refinancing and report that data to federal regulators.  However, the increased amount of data which the CFPB has required lenders to report has led increased complications. Several lenders and trade groups have asked for clarification on the definition and reporting requirements for new HMDA reporting categories, such as “loan purpose” the unique identifier for the originator of the loan.


Banking Fails to Meet Needs of Most Valuable Consumer Segment - The Financial Brand

The 50+ generation of consumers is the most financial challenged in history. Numbering more than 110 million in America alone, they are confronting a future of complex options and less financial confidence than any previous generation. With most either entering retirement, or already in a post-employment phase, decisions this generation makes today will impact not only their life, but the financial lives of their children who may be forced to support them.  Although the 50+ segment represents only 35% of the entire U.S. population, they control more than half of the nation’s investable assets. The people in this generation are heavy users of almost all financial services, holding balances in their accounts that are coveted by banks, credit unions, insurers, financial planners and wealth managers. They are also the fastest growing segment of digital product users, becoming comfortable with the online and mobile solutions that other generations already depend on.  Most importantly, the 50+ generation is a huge segment with significant needs that are currently unfilled. And with future generations (including Millennials), not having faced these challenges to date, but directly impacted by the outcome of their parent’s financial decisions, meeting the needs of the 50+ consumer has the potential of impacting the banking loyalty of their children.


Republicans propose drastic overhaul of Dodd-Frank and CFPB - DS News

The updates to the leading Republican effort to replace the Dodd-Frank Wall Street Reform and Consumer Protection Act are out, which include possible changes to the leadership structure of the top housing agencies.
A memo first came out on potential plans reportedly from House Financial Services Committee Chairman Rep. Jeb Hensarling, R-Texas, back in February, revealing an even more aggressive version of the Financial CHOICE Act.
That memo showed that the Consumer Financial Protection Bureau was facing some of the most dramatic changes under the updated Act.  Previously, the CHOCIE Act 1.0 proposed leadership changes for not only the CFPB, but the Federal Housing Finance Agency, the Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation and the National Credit Union Administration as well.  But looking over the new summary of the CHOICE Act 2.0, the language walks back a lot of the initial CHOICE Act 1.0 proposals.


Commentary: The Trillion-Dollar Credit Card Question - Bloomberg News

After years of packing on debt, more American consumers are struggling to pay their credit-card bills.  Credit card charge-offs have been rising steadily, posting their biggest surge since 2015 in February. Lenders from Capital One Financial Corp. to Discover Financial Services have ratcheted up loan-loss provisions and reported increasing delinquencies. This has raised concern among analysts and investors alike, especially when paired with the fact that card loans outstanding just surpassed $1 trillion for the first time since the financial crisis.  The consequences could be significant for some lenders, especially private-label card companies including Synchrony Financial and Alliance Data Systems Corp., which both report earnings next week. These firms are likely to be canaries for broader weakness among consumers because they cater to subprime borrowers unlike, say, American Express Co. or JPMorgan Chase & Co.


Judiciary Seeks Bankruptcy Judgeships, Warns of “Crisis” - ABI

Warning that federal bankruptcy courts face a “debilitating workload crisis” in Delaware and eight other districts, the U.S. Judicial Conference urged Congress to authorize four new bankruptcy judgeships and convert 14 temporary judgeships into permanent positions, according to a press release on Friday. In a letter on April 3 to Congressional leaders, the Conference said that all 14 temporary judgeships are scheduled to lapse May 25, posing a particularly heavy impact on Delaware’s federal bankruptcy court. “These bankruptcy courts would face a serious and, in many cases, debilitating workload crisis if these temporary judgeships were to expire,” wrote James C. Duff, as secretary of the Judicial Conference. “The U.S. Bankruptcy Court for the District of Delaware, for example, would be crippled as five of their six authorized judgeships are temporary, all with the risk of expiring in 2017.” Other affected court districts are the Middle and Southern Districts of Florida, the Eastern District of North Carolina, the Eastern District of Virginia, and the Districts of Maryland, Michigan, Nevada and Puerto Rico.


House Votes to Create New Bankruptcy Rules for Banks - ABI

The House of Representatives voted yesterday to add a new section to the bankruptcy code just for banks, a measure meant to allow banks to fail without needing taxpayer bailouts or setting off a crisis, the Washington Examiner reported yesterday. The lower chamber passed the Financial Institution Bankruptcy Act of 2017 on a voice vote, a week after the bill cleared the Judiciary Committee also on a voice vote. Speaking on the House floor Wednesday, committee chairman Bob Goodlatte of Virginia said that the legislation "will better equip our bankruptcy laws to resolve failing firms, while also encouraging greater private counter-party diligence in order to reduce the likelihood of another financial crisis." The bill would set out a specific set of rules to help authorities sort out which creditors are owed in the event of a bank bankruptcy, in an effort to reduce the panic and uncertainty that can accompany these events. The House has passed the legislation in previous Congresses, but the Senate has not acted on it.


Cohn Backs Wall Street Split of Lending, Investment Banks - ABI

In a private meeting with lawmakers, White House economic adviser Gary Cohn said he supports a policy that could radically reshape Wall Street’s biggest firms by separating their consumer-lending businesses from their investment banks, Bloomberg News reported yesterday. Cohn, the ex-Goldman Sachs Group Inc. executive who is now advising President Donald Trump, said that he generally favors banking going back to how it was when firms like Goldman focused on trading and underwriting securities, and companies such as Citigroup Inc. primarily issued loans. The remarks surprised some senators and congressional aides who attended yesterday’s meeting, as they didn’t expect a former top Wall Street executive to speak favorably of proposals that would force banks to dramatically rethink how they do business. Yet Cohn’s comments echo what Trump and Republican lawmakers have previously said about wanting to bring back the Glass-Steagall Act, the Depression-era law that kept bricks-and-mortar lending separate from investment banking for more than six decades.


Volcker Rule Is Too Complicated, Outgoing Fed Regulator Says - ABI

A major provision of the new banking rules created after the 2008 financial crisis is too complicated and should be revised, the Federal Reserve's outgoing point man on financial regulation said yesterday, the Washington Examiner reported today. "Several years of experience have convinced me that there is merit in the contention of many firms that, as it has been drafted and implemented, the Volcker rule is too complicated," Fed governor Daniel Tarullo said in an exit interview at Princeton University. The rule, which is meant to prevent banks from speculating with deposits insured by the government, may be having a "deleterious" effect on market liquidity, Tarullo suggested, floating the idea that small banks might be exempted from it altogether.