The Republican author of a bill to roll back Obama-era financial regulations has agreed to remove a controversial provision concerning debit-card swipe fees that had divided GOP lawmakers and threatened to derail passage of the sweeping legislation next month, the Wall Street Journal reported today. Rep. Jeb Hensarling of Texas, the chairman of the House Financial Services Committee, agreed to remove a provision that repealed a cap on debit-card transaction fees known as the Durbin amendment — an issue that pits retailers and banks against each other and was bitterly fought as the legislation progressed to the House floor. “We won’t let this one provision hinder passage of an important priority bill,” Hensarling said. While the Choice Act is now expected to pass the House along party lines in early June, it faces dim prospects in the Senate, where Republicans are writing their own legislation to ease financial regulations.
A federal appeals court today will consider whether the Consumer Financial Protection Bureau (CFPB) that was created after the 2008 financial crisis is constitutional, and whether the president has the authority to fire its director at will, the Wall Street Journal reported. The oral argument presents an opportunity for the Trump administration to lay out its case for curtailing the power of the CFPB, an independent agency fighting to keep its current structure headed by a single director. The hearing by the full bench of the U.S. Court of Appeals for the District of Columbia Circuit comes after a three-judge panel of the same court ruled in October that the bureau’s structure was unconstitutional and gave the president the power to fire its director for any reason. After a request from the CFPB, the appeals court vacated the panel’s ruling and scheduled a hearing by more judges. Currently, the CFPB chief can be removed only for “inefficiency, neglect of duty, or malfeasance,” a provision designed by a Democratic-controlled Congress to ensure the agency’s independence.
The fate of the Consumer Financial Protection Bureau and its chief, Richard Cordray, is in the hands of a Washington appeals court that will hear arguments Wednesday. The CFPB asked the court to reconsider its 2016 decision involving the agency’s punishment of New Jersey mortgage company PHH Corp. The outcome could take months. It’s expected to provide ammunition for one side or the other in the years-long tug of war over the agency’s existence.
Republicans condemn the CFPB for snuffing economic activity by burdening lenders with red tape, and they’ve intensified their attacks since the election of President Donald Trump. They say that Cordray’s power is unconstitutional -- he can be fired only by the president and only for cause -- and the agency oversteps its mandate. Last year, the appeals court agreed, while at the same time rejecting calls to dismantle the agency.
A fierce internal House GOP dispute over debit-card swipe fees is threatening to delay a sweeping Republican bill to scale back banking regulations enacted after the 2008 financial crisis. The behind-the-scenes tug of war is pitting House Financial Services Chairman Jeb Hensarling (R-Texas), author of the so-called Financial CHOICE Act, against some of his own committee members — all while an army of lobbyists has stormed the Hill to try to kill or save the legislation. The fight centers on a single sentence in the nearly 600-page text that would give banks greater freedom to hike debit card fees for retailers. Those fees were capped as part of the 2010 Dodd-Frank law, which strengthened banking rules after the 2008 crisis
During the year, the U.S. Trustees made 2,158 criminal referrals. Despite the declines in bankruptcy filings in recent years, this was the most referrals made in a year in the 11 years that the EOUST has been reporting this information. The five most common allegations contained in the FY 2016 criminal referrals involved tax fraud (47.8 percent), false oath or statement (24.9 percent), concealment of assets (21.5 percent), bankruptcy fraud scheme (19.7 percent) and identity theft or use of false/multiple Social Security numbers (16.1 percent). The report is located: Criminal Referrals by the United States Trustee Program by Fiscal Year.
In a rare display of political courage and bipartisanship last week, Rep. John Katko (R-N.Y.) filed the Discharge Student Loans in Bankruptcy Act with Rep. John Delaney (D-Md.). This bill will return standard bankruptcy protections to all student loans, both federal and private. Katko is well ahead of the conservative curve on this issue and has a unique opportunity to revitalize the Republican party in the current session by stepping up to lead the fight on this. President Obama federalized the student loan system, and during his eight years in office, nearly $1 trillion was added to the nation’s student debt tab. Today, the federal government profits well over $50 billion per year on the program, and even makes a profit on defaulted student loans. This is something that no other lender for any other loan in this country can claim. This is, in fact, a defining hallmark of a predatory lending system. During the same time period, the price of college rose far faster than any other market, including healthcare, and this trend is only accelerating today.
The total debt held by American households reached a record in early 2017, exceeding its 2008 peak after years of retrenchment against a backdrop of financial crisis, recession and modest economic growth, The Wall Street Journal reported yesterday. Much has changed over the past eight-and-a-half years. The economy is larger, lending standards are tighter and less debt is delinquent. Mortgages remain the largest form of household borrowing but have become a smaller share of total debt as consumers take on more automotive and student loans. “The debt and its borrowers look quite different today,” New York Fed economist Donghoon Lee said. “This record debt level is neither a reason to celebrate nor a cause for alarm.” The total-debt milestone, announced by the Federal Reserve Bank of New York, was a long time coming. Americans reduced their debts during and after the 2007-09 recession to an unusual extent: a 12 percent decline from the peak in the third quarter of 2008 to the trough in the second quarter of 2013. New York Fed researchers described the drop as “an aberration from what had been a 63-year upward trend reflecting the depth, duration and aftermath of the Great Recession.” The data weren’t adjusted for inflation, and household debt remains below past levels in relation to the size of the overall U.S. economy. In the first quarter, total debt was about 67 percent of nominal gross domestic product versus roughly 85 percent of GDP in the third quarter of 2008. Balance sheets look different now, with less housing-related debt and more student and auto loans. As of the first quarter, about 68 percent of total household debt was in the form of mortgages; in the third quarter of 2008, mortgages were roughly 73 percent of total debt. Student loans rose from about 5 percent to around 11 percent of total indebtedness, and auto loans went from roughly 6 percent to about 9 percent.
A divided U.S. Supreme Court ruled that debt collectors can use bankruptcy proceedings to try to collect liabilities that are so old the statute of limitations has expired. Voting 5-3, the court said companies don’t violate the U.S. Fair Debt Collection Practices Act when they file bankruptcy claims on that type of years-old debt. Justice Stephen Breyer joined the court’s conservative wing in the majority. Critics accused debt collectors of violating the law by filing tens of thousands of outdated claims with bankruptcy courts in the hope that some debtors won’t object. “The result of decision appears to give creditors a free pass to file stale claims without fearing FDCPA liability,” Andrew Muller, a partner at Stinson Leonard Street LLP, said in an interview. “The flip side is that trustees and debtors’ lawyers may be under increased pressure to more closely review claims to determine whether the claims are subject to a statute of limitations defense,” Muller said.
President Donald Trump is weeks away from naming anyone to the board of the Federal Reserve, meaning that it could be the fall before three currently empty seats are filled, Reuters reported yesterday. The vacancies on the Fed's seven-member Board of Governors include the position of vice chair in charge of banking oversight, a critical role in Trump's plan to revamp financial rules. The White House wants to get all nominees vetted by the Federal Bureau of Investigation and the Office of Government Ethics before they name them publicly and that process can take months. If the vetting drags on, it runs the risk of delaying those people from taking their jobs until sometime this fall, complicating Trump's plan to reshape regulation of Wall Street. The Fed positions require confirmation by the Senate and could be delayed further by a five-week congressional recess from the end of July to the beginning of September.
House Republicans took a major step toward their goal of unwinding the stricter financial rules created after the 2008 crisis, pushing forward sweeping legislation that would undo much of President Barack Obama's banking law, the Associated Press reported today. A House panel approved Republican-written legislation that would gut much of the Dodd-Frank law enacted in the wake of the financial crisis and the Great Recession. The party-line vote in the Republican-led House Financial Services Committee was 34-26. "I can't do a good James Brown, but I feel good," said Rep. Jeb Hensarling, referring to the singer often called the godfather of soul. Hensarling wrote much of the overhaul legislation. Republicans argued that the Dodd-Frank law is slowing economic growth because of the cost of compliance and by curbing lending. President Donald Trump has denounced Dodd-Frank and promised that his administration would "do a big number" on it. Still, getting the new bill to Trump's desk could be a hard road. It now goes to the GOP-dominated House for a vote, but supporters admit that the path will be much more difficult in the Senate, where Democratic support will be needed. The bill would repeal about 40 provisions of the Dodd-Frank Act.