Trump Picks Banker Steven Mnuchin for Treasury Secretary December 1, 2016
President-Elect Donald Trump has announced that he will nominate banker Steven Mnuchin to serve as treasury secretary. Mnuchin served most recently as Trump’s campaign finance chairman.
Early in his career, Mnuchin was an investment banker at Goldman Sachs for 17 years. He was later a hedge fund investor and a leader of the team that purchased failed bank IndyMac in 2009. He was chairman and CEO at the new bank, which was renamed OneWest Bank, and later sold to CIT Group.
“Our most important priority is sustained economic growth,” he said in an appearance yesterday on CNBC’s “Squawk Box,” arguing that the economy can return to consistent 3-to-4 percent GDP growth and that the administration’s first effort to that end will be tax reform. Mnuchin added that “we want to strip back parts of Dodd-Frank that prevent banks from lending [as] the number one priority on the regulatory side.”
Appearing jointly with Wilbur Ross -- an investor and banker specializing in leveraged buyouts whom Trump today named secretary of commerce -- Mnuchin said that “we’ve been in the business of regional banking and we understand what it is to make loans. That’s the engine of growth to small- and medium-sized businesses.” Click here to read the announcement.
Fed: Debit Fraud Costs Jump 44 Percent in Two Years December 1, 2016
Debit card-related fraud losses to merchants, cardholders and issuers rose 44 percent from 2013, reaching $2.41 billion in 2015, according to the Federal Reserve’s biennial survey of debit card issuers’ costs released yesterday. The average loss as a share of transaction value rose 2.3 basis points to 10.3 points, with the median issuer covered by the interchange fee cap carrying 64 percent of the loss.
When this survey was last issued in 2014, the Fed said then it would not change its interchange fee cap and fraud-prevention adjustment. However, today’s release included no statement of the Fed's plans. The survey noted that the study was conducted in part before the EMV liability shift that saw more secure chip cards entering the market.
Excluding fraud losses, the survey showed that the median issuer’s cost of authorizing, clearing and settling debit card transactions was 12.3 cents, a dip from 2013. Issuers at the 75th percentile had costs of 30.5 cents per transaction. Two-thirds of issuers had average costs -- including fraud losses -- below the base interchange fee cap.
The survey also showed that 60.6 billion debit and prepaid card transactions amounting to $2.31 trillion were processed in the U.S. in 2015. Transactions grew 6.4 percent from 2014 to 2015 at banks not subject to the rule, compared to 7.1 percent for covered issuers -- the first time since the Durbin Amendment was implemented that covered issuers saw faster growth. Click here to read the survey.
Overtime Litigation Update November 28, 2016
As reported last week, a federal district court judge in Texas issued a temporary nationwide injunction halting the December 1 effective date of the Department of Labor's overtime rule. While welcome news, we must emphasize the temporary nature of this action. The injunction is immediately appealable and could be overturned by the Fifth Circuit Court of Appeals or, if upheld, could potentially go to the Supreme Court.
Click here for an article by Seyfarth Shaw's Wage & Hour Litigation Practice Group discussing the litigation possibilities as well as possible actions bank employers may wish to consider.
For questions on the overtime rule, contact AmBA's Cris Naser.
Overtime Rule Blocked November 23, 2016
Tuesday evening, a federal district court judge in Texas issued a nationwide junction blocking the Department of Labor’s overtime rule from taking effect on December 1. Judge Amos Mazzant ruled that 21 states and more than 50 business groups that sued to block the rule stood a significant chance of success and would suffer serious financial harm if the rule went into effect.
The court held that DOL exceeded its authority under the FLSA by doubling the salary level test, in effect eviscerating the duties test. By using the 40th percentile for the salary level and raising the level so high, Judge Mazzant said, “the Department exceeds it delegated authority and ignores Congress’s intent by raising the minimum salary level such that it supplants the duties test.” In the meantime, the current rule will stay in place until the injunction is lifted or the court rules on the merits of the case.
DOL disagrees with the ruling and will almost certainly appeal it. Click here to read the order.
DOE Releases Updated PACE Loan Guidelines November 21, 2016
The Department of Energy has released new best practices guidelines for residential Property-Assessed Clean Energy mortgages, which provide homeowners a way to have their homes undergo energy-efficient retrofitting financed through property tax assessments. The new guidelines are intended to help state and local governments as they expand their PACE programs, and address the various problems and abuses that have emerged in the market since the PACE framework was first established in 2009.
Among other things, the guidelines suggest that PACE programs confirm property owners’ ability to repay their assessments, and that state and local governments work with program administrators to establish underwriting guidelines and criteria for PACE programs.
AmBA and the Federal Housing Finance Agency have previously raised concerns about PACE programs -- which are currently authorized in more than 30 states -- where the PACE lien is allowed priority over the first mortgage lien. By taking first lien position, PACE loans could harm borrowers and lenders who rely on the certainty of the first lien position on mortgages for affordable financing. FHFA has prohibited Fannie Mae and Freddie Mac from purchasing loans with PACE liens, citing concerns about taxpayer risk.
AmBA remains concerned about the lack of required consumer protections surrounding PACE loans, which puts consumers -- especially older Americans -- at greater risk for deceptive or predatory lending tactics and foreclosure. Click here to view the guidelines.
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