Sen. Elizabeth Warren (D-Mass.) is concerned about Mick Mulvaney’s decision to freeze the collection of consumer data at the Consumer Financial Protection Bureau, HousingWire.com reported. According to a letter from Warren sent to Mulvaney last week, Mulvaney on Dec. 4 halted the collection of all personal information by the CFPB, citing information security concerns. Warren’s letter states that Mulvaney made the move in response to a report from the CFPB inspector general, but Warren states that Mulvaney’s response went too far and is impacting the bureau’s ability to regulate the companies it oversees. According to Warren, the CFPB “cannot fulfill its core functions” without collecting personal information from consumers. According to Warren, CFPB bank examiners “regularly” use account-level data to detect improper and unlawful activity.
The Federal Reserve reported that outstanding consumer credit rose by $27.95 billion in November from the prior month, the largest increase in 16 years, according to Dow Jones Newswires. This measure of non-real estate debt climbed at a 8.83 percent seasonally adjusted annual rate, the fastest pace in more than two years, the Fed said yesterday. Total outstanding credit had increased a revised $20.53 billion in October. Revolving credit outstanding, mostly credit cards, increased at a 13.3 percent annual pace in November. Non[-]revolving credit outstanding, mainly student and auto loans, rose at a 7.2 percent annual pace. Household debt totaled $12.955 trillion in the third quarter, up 0.9 percent from the spring, the Federal Reserve Bank of New York said in November. That was the most on record, though the figure wasn't adjusted for inflation.
Senate lawmakers have introduced a bill that would force struggling companies to file for bankruptcy protection in a courtroom close to their headquarters, closing a controversial loophole that has enabled the country’s biggest restructurings to unfold in New York and Delaware, WSJ Pro Bankruptcy reported. Sens. John Cornyn (R-Texas) and Elizabeth Warren (D-Mass.) said in a joint statement that the bill is meant to allow workers at bankrupt companies, small businesses, retirees and others to “participate in cases that will have tremendous impacts on their lives.” Cornyn said that the measure “will strengthen the integrity of the bankruptcy system and build public confidence.” Warren added that the bill would “prevent big companies from cherry-picking courts that they think will rule in their favor and to crack down on this corporate abuse of our nation’s bankruptcy laws.” Read more.
Banks seeing a spike of suspicious activity in the months following natural disasters can use the information to better prepare for future crime-fighting efforts, according to an analysis of filings the banks made to the federal government by data-management firm Enigma, the Wall Street Journal reported. The firm, which last month began a series analyzing suspicious-activity reporting by banks to the U.S. Treasury Department, said yesterday in its latest analysis that it examined the linkage between financial crime and 20 natural disasters. It found the issues go beyond mere fraud: Banks are in the middle of preventing insurance exploitation, identity theft and cyber-related crimes following disasters.
Bankruptcies among U.S. retailers reached a six-year high in 2017 amid declining foot traffic and the rise of e-commerce giants like Amazon, FoxBusiness.com reported. Some 50 retailers filed for bankruptcy this year, including one-time giants like Toys R Us, RadioShack and Payless. That’s the highest number of bankruptcies since 2011, when 59 companies filed for the protection, according to data from S&P Global. Mall-based stores and so-called “big-box” stores have been most affected by the retail crisis. Big-box stores like Macy’s and Sears accounted for 43 percent, or about 43 million square feet of shuttered U.S. retail space in 2017, Axios reported, citing data from real estate research firm CoStar. Of the 50 retail bankruptcies, some 21 occurred at major retailers. Other companies to file include Wet Seal, Hhgregg, Rue21, Gymboree, True Religion and Vitamin World.
A bipartisan group of U.S. senators wants federal housing agencies to extend a moratorium on foreclosures in Puerto Rico into 2019 after the devastation on the island and a big surge in mortgage delinquencies, the New York Times reported. The four senators said in a letter on Friday that a longer moratorium was needed because large swaths of Puerto Rico remained without electricity in the aftermath of Hurricane Maria and because many residents were still trying repair the damage to their homes. The senators noted that homeowners needed more time to “pick up the pieces of their lives” than was allotted under the current grace period, which expires in March. They want the moratorium extended until March 2019, along with a commitment that lenders will not seek to collect any mortgage payments in that period. The four senators — Marco Rubio (R-Fla.), Catherine Cortez Masto (D-Nev.) Robert Menendez (D-N.J.) and Bill Nelson (D-Fla.) — was sent to officials at the Department of Housing and Urban Development and the mortgage finance giants Fannie Mae and Freddie Mac. About one-third of the island’s 425,000 homeowners are behind on their mortgage payments to banks and Wall Street firms that previously bought up distressed mortgages. And some 90,000 of those borrowers became delinquent as a consequence of Hurricane Maria, according to the data firm Black Knight.
The Consumer Financial Protection Bureau (CFPB) said yesterday that the agency will review and reconsider aspects of two rules issued by its former director, Richard Cordray, The Hill reported. Under acting Director Mick Mulvaney, the CFPB announced plans to revise rules issued by Cordray regarding mortgage data collection and prepaid credit cards. One of the revisions: The bureau will no longer assess penalties against mortgage lenders and banks for errors collected in data next year that is subject to the Home Mortgage Disclosure Act (HMDA). The bureau also won't ask for lenders to resubmit such data if errors aren't "material" to the information provided. The CFPB also said it would begin the process of making a rule to revise parts of the CFPB’s 2015 rule regarding the HMDA. The bureau singled out institutional and transactional coverage tests, discretionary data points and lending-activity criteria that determine whether institutions are required to report mortgage data.
Comptroller of the Currency Joseph Otting said yesterday that he will make simplifying bank rules one of his priorities in the coming year, the Wall Street Journal reported. The new U.S. regulator of federally chartered banks pointed to rules on money laundering-prevention, community investment, small-dollar loans, and capital rules for small banks as areas where he and other federal regulators should look to make changes. Otting, a veteran banker, took questions from reporters around a conference table at the Office of the Comptroller of the Currency headquarters, wearing a dark suit and American flag cuff links. He said that the U.S. banking sector is “in the best shape that it’s ever been since I began working in this industry in 1981,” citing the strong capital positions of U.S. banks and their improved ability to understand and assess risks. Otting didn’t discuss specific policy matters. An OCC spokesman said that Otting is observing a general recusal from policy decisions while he divests himself of his investments in financial companies, which he has agreed to do within 90 days of his confirmation by the Senate on Nov. 16.
For a generation, gift cards have been the holiday present of last resort — the thing to buy when nothing comes to mind. This year, however, givers have more to worry about than whether the gift card will get shoved in the back of a drawer. The bigger issue is whether a gift card will become worthless if it involves a retailer that filed for bankruptcy protection. The retail industry saw a rash of bankruptcy filings as it lost sales to online retailers this past year — and that could only get worse in 2018. Some major retailers are hanging by a thread in trying to stave off bankruptcy filings. Some, like Toys R Us, have already filed and are trying to reorganize. And in the worst cases in the past year, some chains have moved directly to liquidate their businesses and close the doors. Each case has its own set of risks when it comes to gift cards. "Gift cards are, technically, unsecured debt of the bankrupt retailer and bankruptcy law gives them no special protection," said Melissa Jacoby, a law professor at the University of North Carolina at Chapel Hill, who teaches bankruptcy law. That's the bad news. The good news is that retailers filing Chapter 11 reorganizations often ask the court to let them continue to honor gift cards, she said. The request is often granted. It's important because it's hard for a business to continue if customers don't have assurances that gift cards will still be good for purchasing merchandise and that patrons can make returns. "If they go into Chapter 11, they immediately seek court authorization to honor gift cards," said Chuck Tatelbaum, senior attorney with the Tripp Scott law firm in Fort Lauderdale, Fla. "If they don't, it will kill sales."
Federal regulators yesterday announced they had approved the disaster plans for the nation's eight largest and most complex banks outlining the strategies they would deploy if they fell into bankruptcy, the Associated Press reported. The announcement by the Federal Reserve and the Federal Deposit Insurance Corp. came after the two agencies in April 2016 deemed that the plans of five of the eight banks were deficient. Congress imposed the requirement to write the plans, dubbed "living wills," in the 2010 Dodd-Frank financial overhaul legislation that sought to avoid a repeat of the 2008 financial crisis. While approving the plans of all eight banks, the regulators found in their latest review that the plans of four — Bank of America, Goldman Sachs, Morgan Stanley and Wells Fargo — had shortcomings that will need attention in the next round of review. Regulators found no shortcomings in the plans submitted by the other four — Bank of New York Mellon, Citigroup, J.P. Morgan Chase and State Street.