Financial Reform News Center

CFPB Issues First Semi-Annual Report

This story appeared in Bank Digest.

As required by the Dodd-Frank Act, Richard Cordray, the Director of the Consumer Financial Protection Bureau released its first semi-annual report at a hearing (webcast) held by the Senate Banking Committee.

In his opening message for the report, Cordray noted that the Bureau “is well on its way” to be the “country’s first federal agency focused on protecting American consumers.” He added,  “We also take seriously the important role that Congress plays in overseeing our work. That is why we put so much effort into reports like this one. And that is why we have testified before Congress 12 times so far, with more to come. We understand that this open communication is critical for us to learn and do the best job we can.” Cordray concluded that although “the road ahead is long … We look forward to the challenge.”

CFPB Issues No FEAR Act Notice

This story appeared in Bank Digest.

The CFPB has provided notice to its employees, former employees and applicants for federal employment about the rights and remedies available to them under the federal antidiscrimination, whistleblower protection and retaliation laws. This notice fulfills the bureau's initial notification obligation under the Notification and Federal Employees Antidiscrimination and Retaliation Act (No FEAR Act), as implemented by Office of Personnel Management regulations.

Walsh Discusses Challenges for Community Bank Independent Directors

By Gregg D. Killoren, J.D., CCH State Banking Law Reporter, Bank Digest and Individual Retirement Plans Guide; co-author, Dodd-Frank Wall Street Reform and Consumer Protection Act—Law, Explanation and Analysis.

Acting Comptroller of the Currency John Walsh told an audience of banking professionals that the role of independent directors in community banks is essential “not just to the effective oversight of institutions of all sizes, but to the stability of our increasingly interconnected financial system as a whole.” Directors are expected “to challenge management; to understand the bank's risk appetite, internal controls, and strategy; and, more generally, to question the direction management is taking,” Walsh said. He then touted the OCC's program of workshops the agency holds specifically for bank directors.

Obama Urges Congress to Act on Refinancing Proposal

By Sarah Borchersen-Keto, CCH Washington News Bureau, Contributing Author, the CCH Federal Banking Law Reporter.

President Barack Obama is urging Congress to act on a proposal that would allow homeowners to refinance at historically low rates, with the cost of the $5-10 billion plan fully offset by using a portion of the administration’s proposed fee on the largest financial institutions.

Speaking Feb. 1, 2012, Obama elaborated on the plan he first announced in his State of the Union address last month. The broad-based refinancing plan is expected to save homeowners who are current on their payments an average of $3,000 per month, giving borrowers the chance to rebuild equity in their homes.

Cordray Defends Recess Appointment to Skeptical GOP

By Sarah Borchersen-Keto, CCH Washington News Bureau, Contributing Author, the CCH Federal Banking Law Reporter. 

Consumer Financial Protection Bureau Director Richard Cordray, appearing before the Senate Banking Committee Jan. 31, 2012, assured members that his recess appointment will have no negative impact on his work at the new bureau. GOP lawmakers, meanwhile, predicted constitutional challenges to rulemakings that will create uncertainty for the business community.

Cordray stressed that “my legal responsibility is to do the best job I can…that’s what I’m totally focused on doing.”

House Members Ask SEC to Delay Registration of Private Equity Fund Advisers

By James Hamilton, J.D., LL.M., Principal Analyst, CCH Federal Securities Law Reporter and Author of Jim Hamilton's World of Securities Regulation.

In a bi-partisan letter to the SEC, seventeen House Members, including Capital Markets Subcommittee Chair Scott Garrett (R-NJ), asked the Commission to delay the March 30, 2012 implementation of regulations requiring the registration of investment advisers to private equity funds and to exclude advisers of private equity funds that are not highly leveraged at the fund level from the registration. The Members believe that applying these new requirements to private equity is detrimental to capital formation and job creation and does little to protect consumers and address potential systemic risk. Given the lack of systemic risk associated with private equity funds and the sophistication of the investors in private equity funds, the substantial costs of registration outweigh any potential benefits.

FHFA Releases Statement in Response to Freddie Mac Refinance Story

This story appeared in Bank Digest.

The Federal Housing Finance Agency has issued a statement clarifying its use of  collateralized Mortgage Obligations (CMOs) structures in response to a ProPublica-NPR news story suggesting that one such structure may be preventing homeowners from refinancing. The CMO structure in question resulted in the creation of “inverse floaters,” which left Freddie Mac with a portion of the risk exposure it would have had otherwise. The FHFA stated that, for several reasons, Freddie Mac’s retention of inverse floaters ceased earlier in 2011. Also, it stated that Freddie Mac’s retained portfolio investment in inverse floaters did not have any impact on recent changes to the Home Affordable Refince Program. According to the FHFA, “Now that the HARP changes are in place, the refinance process is between borrowers and loan originators/servicers, not Freddie Mac.”

Proposed Rule Would Require Written Policies on Loan Workouts and Nonaccrual Policies

This story appeared in Bank Digest.

The National Credit Union Administration has issued a proposed rule to require federally insured credit unions (FICUs) to maintain written policies that address the management of loan workout arrangements and nonaccrual policies for loans, consistent with industry practice or Financial Institutions Examination Council requirements. The proposed rule includes guidelines set forth as an interpretive ruling and policy statement (IRPS) and incorporated as an appendix to the rule that will assist FICUs in complying with the rule, including the regulatory reporting of troubled debt restructured loans in FICU Call Reports. The NCUA Board believes this proposal and IRPS is timely considering the growth of these types of loans during the recent economic stresses experienced in the financial industry.

CFPB Shares Comments on Student Loan Feedback

This story appeared in Bank Digest.

The Consumer Financial Protection Bureau has issued a memorandum to consumers and industry participants who submitted comments on the agency’s Know Before You Owe: Student Loans project. The CFPB noted in a blog post that “We got feedback on almost every aspect of the ‘financial aid shopping sheet’ prototype, and a majority of those who commented said a standardized way of receiving financial aid information is needed. Participants ranked features they thought were most important.” The agency also forwarded comments it received with the Department of Education so that agency can use this feedback to develop a financial aid form for schools to use.

Senator Hagan Commends Creation of ROAM Database

This story appeared in Bank Digest.

Sen. Kay R. Hagan, D-N.C., a member of the Banking Committee, has “hailed” a new federal-state partnership and the development of a database to combat consumer financial fraud directed at military members, veterans, and their families. The Repeat Offenders Against Military (ROAM) Database was developed by the Department of Defense, the Federal Trade Commission, and the Consumer Financial Protection Bureau (CFPB). “The development of this database is a huge service to North Carolina, which has the third largest military footprint in the nation,” said Hagan. She added, “Too often, our Servicemembers and their families become victims of unlawful or predatory financial practices. Last May, I was proud to host a roundtable at Fort Bragg with Holly Petraeus, who heads the CFPB's Office of Servicemember Affairs, to hear from military leaders and families about the unique financial challenges facing our military communities. I will continue working to ensure that our servicemembers and their families, who sacrifice so much for our country, are protected from predatory financial practices.”