May 21, 2013

Hearings This Week on FSOC, Qualified Mortgage, Cybersecurity. Several congressional committees will hold hearings this week on banking-related matters. Today at 10 a.m., the Senate Banking Committee will receive Treasury Secretary Jacob Lew’s report on the Financial Stability Oversight Council. Lew will testify on FSOC tomorrow before the House Financial Services Committee. Also today at 10 a.m., the House Energy and Commerce Committee will hear from witnesses on cybersecurity, with testimony from Citigroup’s Charles Blauner on behalf of AmBA. The House Financial Services Subcommittee on Financial Institutions and Consumer Credit will examine effects of the Consumer Financial Protection Bureau’s ability-to-repay rule and “qualified mortgage” standards, and the House Agriculture Committee will hear industry perspectives on the future of the Commodity Futures Trading Commission. Tomorrow, the House Financial Services Subcommittee on Oversight and Investigations will examine how the Justice Department would handle large financial firms during criminal proceedings.

AmBA Calls for Revisions to Proposed CRA Guidance. Proposed updates by the OCC, the Federal Reserve, and the FDIC to Community Reinvestment Act Q&As might discourage community development, AmBA warned in a comment letter Friday. The agencies proposed revising the Q&As to provide clearer guidance to banks seeking CRA credit for their community development activities. Banks have long been granted CRA credit for activities outside their assessment areas when they have demonstrated that they have “adequately addressed” needs within these areas, a standard that conveyed regulators’ understanding that many banks have a broader view of the communities they serve. But the agencies proposed that CRA activities not be conducted “in lieu of” those directly benefiting their assessment areas. AmBA expressed concern that this language would discourage banks from regional or statewide activities beyond their narrow assessment areas. AmBA also objected to a proposal that would treat community development negatively under some performance contexts and imply a duty to include community development lending as a mandatory part of lending test performance. AmBA supported using a school’s Title I status and an individual’s Medicaid eligibility as criteria for community development eligibility. It also urged flexibility in permitting credit for investments in nationwide funds.

Treasury Seeks Comments on Rules for Tax Treatment of Bad Debts. The Treasury Department and Internal Revenue Service yesterday issued a notice requesting comments on Treasury’s “Conclusive Presumption Regulations," which allow banks under certain circumstances to conclusively presume a debt to be partially or wholly worthless, thereby triggering a tax deduction for such bad debt. Treasury specifically is seeking comment on whether and what modifications should be made to the rules in light of bank regulatory changes to loan charge-offs. The notice is separate from -- and will not affect -- AmBA’s March 29 application to the IRS to use its Industry Issue Resolution program to resolve serious disagreements that have arisen in recent years between banks and their IRS examiners over application of the conclusive presumption regulations and other issues.

May 20, 2013

CFPB Issues Final List of Rural, Underserved Counties. The Consumer Financial Protection Bureau on Friday issued a rule clarifying technical aspects of its escrow rule, and it released a final list of rural and underserved counties to use in conjunction with the regulation. The escrow rule, which goes into effect June 1, generally extends the required duration for escrow accounts on higher-priced mortgage loans from one year to a minimum of five years. But the rule exempts from its requirements such loans made by certain small creditors that operate predominately in rural or underserved counties included on the list. The bureau noted that since the methods for determining rural and underserved status were not changed from its proposed rule, the final list is identical to the preliminary list that the CFPB posted on March 12. Creditors may rely on the final list as a safe harbor to determine whether a county is rural or underserved for loans made from June 1, 2013, through December 31, 2013, the CFPB said. A 2014 list of qualifying counties will be posted later.

House Approves SEC Cost-Benefit Bill. The House on Friday approved by a 235-161 vote an AmBA-supported bill (H.R. 1062) that would require the Securities and Exchange Commission to do a thorough cost-benefit analysis before proposing a new regulation. The Financial Services Committee approved the bill by a 31-28 vote on May 13. AmBA expressed support for the bill in a letter to committee members prior to their vote. “Many banks and members of the public assume that new regulations will only apply to the largest banks that are the most active in the securities markets, but that is not true,” AmBA said. “H.R. 1062 would ensure that the best possible assessment is made of the costs and impacts of new regulations so that regulated entities are not subject to unnecessary costs that outweigh any potential regulatory benefit.”

AmBA Supports Reg Relief Bill. AmBA on Friday wrote to Rep. Blaine Luetkemeyer (R-Mo.) and other House Financial Services Committee members to express support for a regulatory relief bill (H.R. 1750) that Luetkemeyer recently introduced. “Regulatory burdens on the banking industry have grown dramatically in recent years, stretching the resources of banks across the country and hindering their ability to help local businesses grow and create jobs,” AmBA EVP James Ballentine wrote. “H.R. 1750 contains many helpful provisions that AmBA has long advocated to ease regulatory burdens.” Those provisions include measures that would streamline banks’ privacy notice requirements, exempt banks with $10 billion in assets or less from Sarbanes-Oxley management attestation requirements, and expand the “qualified mortgage” safe harbor.

AmBA Urges Regulators to Delay Call Report Changes. AmBA and two other trade groups in a letter Friday urged the federal banking regulators to announce a delay in the deadline for proposed Call Report revisions that originally were supposed to be implemented in June. The revisions, among other things, would require banks to break out data on consumer deposits, consumer account fees and remittances. “Given that the proposed changes in the data requested to be added to the Call Report are so significant, the proposed timeline for providing this new information is operationally unworkable,” the groups wrote.

BloombergBusinessweek Article Questions CU Growth. AmBA’s efforts to force a conversation on changes in the credit union industry were featured in a Bloomberg Businessweek article last week titled “Have Credit Unions Become Stealth Banks?” The article documents how credit unions have evolved from mom-and-pops and in some cases are competing with banks that are many times smaller. “The median credit union still runs out of a single branch and holds assets of about $20 million. But the largest in the U.S., the Navy Federal Credit Union, founded to serve sailors and Marines, now has $54 billion in assets,” the article says. By comparison, only 1.4 percent of all U.S. banks have assets of more than $10 billion. Credit unions such as Tinker in Oklahoma and OnPoint in Oregon have assets in the $3 billion-plus range, dwarfing most commercial banks in their states.” The article notes that credit union changes have prompted banks and AmBA to press Congress to rethink the industry’s special treatment.

May 17, 2013

AmBA TO TESTIFY AT CYBERSECURITY HEARING. The House Energy and Commerce Committee will hold a hearing next week on “cyber threats and security solutions.”  Charles Blauner, Global Head of Information Security for Citi, will testify on AmBA’s behalf. Blauner is expected to tell the Committee how the organization and regulation of the financial services sector bolsters cybersecurity and reduces the risks associated with cyber-attacks, as well as how timely information-sharing between the public and private sectors is key to cybersecurity protection. The hearing is scheduled for Tuesday, May 21, at 10:00 a.m.

HOUSE DEBATING BILL TO REQUIRE REGULATORY COST-BENEFIT ANALYSIS. The House this morning is considering AmBA-supported legislation (H.R. 1062) that would require the Securities and Exchange Commission (SEC) to do a thorough cost-benefit analysis before proposing a new regulation.  The Financial Services Committee approved the bill last week, by a vote of 31-28.

SENATE CREDIT UNION BILL RE-INTRODUCED. Sen. Mark Udall (D-CO) yesterday re-introduced AmBA-opposed legislation (S. 968) that would more than double the member business-lending cap for certain credit unions, from 12.25 percent to 27.5 percent of total assets. AmBA remains opposed to expanding the lending powers of a tax-exempt industry at the expense of tax-paying community banks.  We will continue to work against this legislation, as we have successfully done for the past several Congresses.

May 16, 2013

Holder: No Bank is Too Big to Jail. Attorney General Eric Holder said yesterday that his March 6 remarks suggesting that some banks may be too big to prosecute were misconstrued. “I said it was difficult at times to bring cases against large financial institutions because the potential consequences that they would have on the financial system,” Holder said in response to a question at a Senate Judiciary Committee oversight hearing. “But let me make it very clear that there is no bank, there’s no institution, there’s no individual, who cannot be investigated and prosecuted by the United States Department of Justice.” Holder noted that Justice has brought thousands of financially-based cases in recent years, and that the department considers many factors as it decides whom to prosecute. “But let me be, very, very, very clear: banks are not too big to jail. If we find a bank or financial institution that has done something wrong, if we can prove it beyond a reasonable doubt, those cases will be brought.”

Senate to Vote on Cordray Nomination Next Week. Senate Majority Leader Harry Reid (D-Nev.) said yesterday that he will hold a vote next week on the nomination of Richard Cordray to continue as director of the Consumer Financial Protection Bureau, according to press reports. The vote is not expected to succeed since 43 Republican senators have pledged to block the confirmation of any CFPB director nominee unless the bureau’s structure is reformed. The Senate Banking Committee approved the nomination March 19 by a 12-10 party-line vote.

Reps. Stivers, Perlmutter Seek Flexibility in Mortgage Disclosure Rule. AmBA and several other trade groups sent joint letters yesterday to Reps. Steve Stivers (R-Ohio) and Ed Perlmutter (D-Colo.) thanking them for their help in urging the Consumer Financial Protection Bureau to adjust a provision in its proposed mortgage disclosure rules that could cause costly delays in closings. The provision requires that borrowers receive their final closing disclosure three business days prior to closing, and that if a cost that the borrow must pay to close increases during that time, a new statement and waiting period must be initiated. Because changes frequently occur in the three days prior to a closing, the three-day-restart provisions can reduce consumers’ ability to make changes to their purchase, put their mortgage rate lock at risk and even cause their purchase contract to expire, the trade groups explained. Reps. Stivers and Perlmutter, both members of the House Financial Services Committee, have asked fellow Representatives to cosign a letter to the CFPB urging more flexibility in the rule.

May 15, 2013

TBTF HEARING UNDERWAY; NEW REPORT SUGGESTS ISSUE SOLVED. The House Financial Services Oversight and Investigations Subcommittee is holding a hearing this morning (currently underway) on whether the orderly liquidation authority under Title II of the Dodd-Frank Act “enshrines taxpayer-funded bailouts.”  The hearing also will examine whether large firms designated as systemically significant enjoy funding advantages. The Bipartisan Policy Center released a report yesterday finding that the FDIC’s proposed recapitalization strategy for systemically important firms should solve the “too-big-to-fail” (TBTF) problem.  The report examined the FDIC’s proposed “single point of entry” recapitalization plan, which imposes losses on a financial firm’s shareholders and unsecured debt holders but not on taxpayers.

AmBA COMMENTS ON FASB IMPAIRMENT STANDARD. AmBA urged the Financial Accounting Standards Board (FASB) in a comment letter yesterday to consider the “U.S. Banking Industry Model” for its impairment accounting standard, rather than FASB’s proposal requiring life-of-loan estimates on loan and debt security allowances for loan and lease losses. AmBA explained that the Banking Industry Model would address perceived weaknesses in current “allowance for loan and lease losses” rules, with significantly less operational change than the FASB proposal. In a second letter to both FASB and the International Accounting Standards Board (IASB), AmBA encouraged both boards to continue efforts to agree on one impairment model world-wide.

May 13, 2013

Bernanke Signals Toward Higher Capital Requirements. Significant steps are being taken to address “too big to fail,” and regulators have the authority to do more if needed, Federal Reserve Board Chairman Ben Bernanke said Friday. “Between Dodd-Frank and the Basel III rules, we are greatly strengthening the capital and liquidity requirements for large financial institutions,” he said in a question-and-answer session after a closely watched speech. Bernanke suggested that these measures -- which include counter-party credit limits, stress tests and the regulators’ orderly liquidation authority -- should be given time to be evaluated before imposing additional requirements. He added, however, that he and several Federal Reserve Board colleagues are leaning toward higher capital requirements. “Rather than arbitrarily saying the banks can be no larger than such and such a size, for example, I would argue that what we need to do is make sure that larger institutions have to have more and better quality capital,” he said.

He noted that the Fed will be supplementing the Basel III capital rules with large bank surcharges and that it also has discretion to set higher leverage ratios than Basel III. He also said the Fed is considering requiring bank holding companies to have a certain amount of senior debt.

AmBA SUPPORTS DELAY FOR NFIP RATE INCREASES. AmBA wrote to Sen. Mary Landrieu (D-LA) yesterday in support of her amendment to delay rate increases in the National Flood Insurance Program (NFIP) for 180 days.  Sen. Landrieu is expected to offer the amendment to a water resources bill (S. 601) that the Senate is considering this week. “It has become clear since the passage of the Biggert/Waters Flood Insurance Reform Act last year that additional actions are needed to ensure continued affordability and to help bring private market participants more fully into the flood insurance space, while still moving to full actuarial rates,” AmBA wrote. “While the AmBA remains committed to moving to actuarial rates for flood insurance coverage under the NFIP, we recognize that a longer transition period is necessary in order to ensure continued affordability for thousands of middle and low income homeowners and small businesses.”

AmBA CONTINUES EFFORTS AGAINST EMINENT DOMAIN PROPOSALS. AmBA joined with more than 20 other organizations yesterday to state serious concerns with eminent domain schemes in five more California jurisdictions that would allow the municipalities to acquire certain underwater mortgages held in securities. “Under the 5th Amendment of the U.S. Constitution and California law, eminent domain powers can  only be exercised when the proposed taking is for a public use or benefit and when just  compensation has been provided to the former owner of the property,” our joint letter to the city of El Monte, California, said.  “The…proposal does not satisfy either requirement. The coalition sent similar letters to the cities of La Puente, Orange Cove, Pomona, and San Joaquin, each of which has entered into an Advisory Services Agreement with Mortgage Resolution Partners that envisions using their eminent domain powers to acquire certain underwater mortgage  loans held by private-label mortgage-backed securities.

AmBA WORKS AGAINST FARM CREDIT SYSTEM EXPANSION. AmBA and the Independent Community Bankers of America yesterday asked Senators and House Members not to support any amendments that would expand lending authority for the Farm Credit System (FCS) during the upcoming consideration of the Farm Bill. “The FCS is a Government Sponsored Enterprise (GSE) that competes directly with banks and other non-government credit providers,” our joint letter explained.  “The FCS enjoys funding and tax advantages that place private capital at a disadvantage, and, as a GSE, places taxpayers at risk…. We would oppose, for example, any effort to allow FCS to extend credit not only to farmers, but also for the credit and related needs of “businesses they rely on” or similarly worded amendments.  Allowing FCS to extend credit to “businesses” opens up a vast, new and undefined lending category… “AmBA and ICBA believe Congress should establish measurable lending targets for all FCS lenders to meet in serving young, beginning and small farmers in order to ensure the benefits bestowed upon them by taxpayers are going to those who need assistance the most.”

AmBA URGES PASSAGE OF SEVERAL DERIVATIVES BILLS; MARKUP TODAY. AmBA wrote to the House Financial Services Committee yesterday to state our views on nine derivatives-related bills that the Committee is marking up this morning. We expressed strong support for bills to clarify that end users would not be subject to margin requirements for uncleared swaps (H.R. 634); to reform the swaps push-out requirement to allow banks to continue engaging in commodity, equity, and some structured finance products (H.R. 992); to provide for a full assessment of the costs and benefits of Securities and Exchange Commission (SEC) regulations (H.R. 1062); to extend to savings and loan holding companies the new SEC shareholder registration and deregistration thresholds enacted under the JOBS Act (H.R. 801); In addition, we stated support for provisions in a bill (H.R. 677) that would clarify that inter-affiliate swaps should be exempt from many of the anticipated swap regulations, but urged the Committee to remove the limitation on transactions involving swap dealers and major swap participants that are insured depository institutions and to address a reporting provision to ensure it increases transparency without causing confusion to the users of reported information.

May 7, 2013

AmBA URGES PASSAGE OF SEVERAL DERIVATIVES BILLS; MARKUP TODAY. AmBA wrote to the House Financial Services Committee yesterday to state our views on nine derivatives-related bills that the Committee is marking up this morning. We expressed strong support for bills to clarify that end users would not be subject to margin requirements for uncleared swaps (H.R. 634); to reform the swaps push-out requirement to allow banks to continue engaging in commodity, equity, and some structured finance products (H.R. 992); to provide for a full assessment of the costs and benefits of Securities and Exchange Commission (SEC) regulations (H.R. 1062); to extend to savings and loan holding companies the new SEC shareholder registration and deregistration thresholds enacted under the JOBS Act (H.R. 801); In addition, we stated support for provisions in a bill (H.R. 677) that would clarify that inter-affiliate swaps should be exempt from many of the anticipated swap regulations, but urged the Committee to remove the limitation on transactions involving swap dealers and major swap participants that are insured depository institutions and to address a reporting provision to ensure it increases transparency without causing confusion to the users of reported information.

TAX REFORM REPORT RELEASED. The Joint Committee on Taxation (JCT) yesterday released a report on the Ways and Means Committee Tax Reform Working Groups.  The report includes a summary of present law and suggestions for reform submitted to the 11 working groups. Ways and Means Chairman Dave Camp (R-MI) and Ranking Member Sander Levin (D-MI) said their panel “will dig into [the report’s] details over the coming weeks.”

FANNIE, FREDDIE PURCHASES TO APPLY QM STANDARDS. The Federal Housing Finance Agency (FHFA) announced yesterday that Fannie Mae and Freddie Mac will limit purchases of mortgages to “qualified mortgages” under the ability-to-repay rule from the Consumer Financial Protection Bureau (CFPB).  Fannie and Freddie will apply the QM standards to mortgages with applications dated from January 10, 2014. “Effectively, this means Fannie Mae and Freddie Mac will not purchase interest-only loans, loans with 40-year terms, or those with points and fees exceeding the thresholds established by the rule,” the FHFA said.  It is our understanding that Fannie and Freddie will stop purchases of loans with points and fees over 3 percent.

May3, 2013

CFPB Issues ‘Small Entity Compliance Guides’ to Mortgage Rules. The Consumer Financial Protection Bureau yesterday published Small Entity Compliance Guides to three of the bureau’s recently finalized mortgage rules related to expanded Home Ownership and Equity Protections Act coverage, appraisals and appraisals for higher-risk mortgages. The guides are intended to provide an overview of the rules in a plain language and FAQ format so that the content is more accessible for a range of industry constituents, especially smaller businesses with limited legal and compliance staff.

AmBA Asks Congress to Clarify Law on Non-Deliverable Forwards. AmBA, its AmBA Securities Association subsidiary and other trade groups asked Congress to clarify that non-deliverable forwards should be subject to the same regulation as other foreign exchange forwards. In a letter to the Senate Agriculture Committee, which oversees commodity trading regulation, the groups explained that an unintentional oversight in the language of the Dodd-Frank Act resulted in NDFs being regulated more heavily than similar forwards. An NDF is a type of foreign exchange forward contract that is settled in a single currency (usually U.S. dollars) due to difficulties in moving another currency outside the home country of one of the parties. Under Dodd-Frank, the Treasury Department exempted most foreign exchange forwards from regulation as swaps, but not NDFs; the groups said that “this result was unintended by Congress.” “There is not valid public policy reason for treating NDFs differently,” the groups wrote, adding that NDFs are “an important tool to facilitate trade and investment between the U.S. and developing market countries.”

House Financial Services Committee Schedules Derivatives Markup. The House Financial Services Committee has announced that it will hold a full-committee markup on Tuesday, May 7, for legislation to address the derivatives title of the Dodd-Frank Act and the Jumpstart Our Business Startups, or JOBS, Act. The bills to be marked up were the subject of a Capital Markets Subcommittee hearing last month.

May 2, 2013

CFPB Modifies Remittance Rule with ABA-Suggested Changes. The Consumer Financial Protection Bureau modified its final remittance rule yesterday, incorporating several changes that AmBA and other trade groups requested in a January comment letter.
The CFPB responded to AmBA concerns by, among other things, extending the rule's compliance deadline by 180 days to October 28 -- twice the length of the originally proposed deadline. It also reduced institutions’ liability for losses due to sender’s errors.
In addition, the CFPB made optional in certain circumstances a sending bank’s requirement to disclose fees that a recipient’s financial institution may charge. It also made it optional for the sending bank to disclose how much tax might be deducted before the funds reach the recipient. In place of these disclosures, the CFPB required a simple disclaimer that foreign taxes and recipient bank fees may apply.

HOUSE PANEL TO MARK UP DERIVATIVES LEGISLATION. The House Financial Services Committee announced yesterday that it will hold a full Committee markup next week of legislation to address the derivatives title of the Dodd-Frank Act and the JOBS Act.  The bills to be marked up were the subject of a Capital Markets Subcommittee hearing last month.  The markup is scheduled for Tuesday, May 7, at 10:00 a.m. Next Wednesday, the Monetary Policy and Trade Subcommittee will hold a hearing on the reauthorization of the Defense Production Act.

REP. WATT NOMINATED FOR FHFA. As expected, President Obama announced yesterday the nomination of Rep. Mel Watt (D-NC) to be Federal Housing Finance Agency (FHFA) Director.  Senate Banking Committee Chairman Tim Johnson (D-SD), whose panel has jurisdiction over the nomination, called Rep. Watt “a superb pick to lead the FHFA.” House Financial Services Committee Chairman Jeb Hensarling (R-TX) said Rep. Watt is a “well-respected” Member, but that “he is not the issue.” “FHFA Acting Director Ed DeMarco has emphasized protecting the interests of taxpayers and reforming Fannie and Freddie,” Chairman Hensarling said.  “Unsurprisingly, this has put him in conflict with the Administration.  Whoever sits in the FHFA Director’s chair needs to continue DeMarco’s policies.  If they simply do whatever the Administration wants, they will have failed.” Committee Ranking Member Maxine Waters (D-CA) offered her endorsement of the nomination, saying Rep. Watt’s previous “legislative work demonstrates unwavering commitment to protecting consumers, expanding affordable rental housing, and providing prudent oversight of financial institutions.” Rep. Watt, a Member of the Financial Services Committee, is in his 11th term representing the Charlotte-based 12th district.  The FHFA has been headed by an Acting Director since 2009. The President yesterday also nominated Tom Wheeler to head the Federal Communications Commission (FCC), and announced that FCC Commissioner Mignon Clyburn temporarily will serve in the role until Wheeler is confirmed.

May 1, 2013

CFPB Modifies Remittance Rule with AmBA-Suggested Changes. The Consumer Financial Protection Bureau modified its final remittance rule yesterday, incorporating several changes that AmBA and other trade groups requested in a January comment letter.

The CFPB responded to AmBA concerns by, among other things, extending the rule's compliance deadline by 180 days to October 28 -- twice the length of the originally proposed deadline. It also reduced institutions’ liability for losses due to sender’s errors.

In addition, the CFPB made optional in certain circumstances a sending bank’s requirement to disclose fees that a recipient’s financial institution may charge. It also made it optional for the sending bank to disclose how much tax might be deducted before the funds reach the recipient. In place of these disclosures, the CFPB required a simple disclaimer that foreign taxes and recipient bank fees may apply.

AmBA, Associations Urge Fed to Reconsider Foreign Bank Rules. AmBA and other trade groups urged the Federal Reserve to reconsider, or at a minimum delay, new rules on the supervision of foreign banking organizations. Under the Dodd-Frank Act, the Fed has proposed to require foreign banks with significant U.S. operations to create intermediate holding companies for their U.S. subsidiaries, meet higher capital requirements and maintain stronger liquidity positions. The groups argued that international bank regulation should be based on cooperation, and that the Fed’s “ring-fenced, balkanized approach . . . could both impair economic recovery and growth and increase, rather than decrease, systemic risk.” They added that such ring-fencing -- especially if mandated reciprocally by other countries’ regulators -- might limit swift movement of capital in crises and create crippling layers of capital and liquidity burdens. The Fed’s proposal also jeopardizes progress on the development of international regulatory standards, they said.

Obama Expected to Nominate Watt to FHFA Post. President Obama today is expected to nominate Rep. Mel Watt (D-N.C.) to be director of the Federal Housing Finance Agency, according to press reports. Watt, who currently serves on the House Financial Services Committee, would replace Edward DeMarco, who has served as the agency's acting director since 2009.

April 30, 2013

CFPB AMENDS ABILITY-TO-PAY CARD RULE. The Consumer Financial Protection Bureau (CFPB) yesterday issued a final rule that amends regulations issued under the 2009 Credit Card Act that required card issuers to evaluate credit card applicants’ ability to repay based on their independent income and assets.  The new rule eliminates that requirement for applicants who are 21 and older, permitting card issuers to consider income and assets to which such consumers have reasonable expectations of access. ABA had sought the change, explaining in a January comment letter that it would “ensure that stay-at-home spouses and partners have access to credit cards in their own names, as well as the ability to build their credit history, without having to rely on the approval or control of their spouse or partner.”

US Rep. Waters Wants ‘Living Wills’ Filed by October. House Financial Services Committee Ranking Member Maxine Waters (D-Calif.) said Friday that she is concerned about the pace of large banks preparing “living wills.” Mandated by the Dodd-Frank Act, living wills are the orderly resolution plans that systemically important financial firms are to file with regulators. In a letter Friday to Treasury Secretary Jacob Lew, Waters remarked that three years had elapsed since Dodd-Frank’s passage, and two years since banks had begun working on their living wills -- and “the Fed and FDIC have announced banks will have an additional three months to submit credible plans to regulators.” Waters urged Lew, as chairman of the Financial Stability Oversight Council, “to ensure credible ‘living wills’ are filed by October” and to “begin considering what other tools ... in Dodd-Frank may be brought to bear if any ‘living wills’ submitted by this deadline are not found to be credible.”

April 26, 2013

ADMINISTRATION SEEKS SUPREME COURT REVIEW OF NLRB APPOINTMENTS. The Obama administration filed a petition yesterday asking the Supreme Court to review a district court ruling that negated three of the President’s appointments to the National Labor Relations Board (NLRB).  The NLRB appointments were made on the same day as the President’s appointment of Richard Cordray to be Consumer Financial Protection Bureau (CFPB) Director. The district court had ruled that the NLRB appointments were unconstitutional because the Senate was not actually in recess at the time, and also that recess appointments could only be made between sessions of Congress. The Administration argued in its petition yesterday that, if left to stand, the lower court’s ruling “would dramatically curtail the scope of the President’s authority under the Recess Appointments Clause,” and “would deem invalid hundreds of recess appointments made by Presidents since early in the nation’s history.”

S&P SAYS BROWN-VITTER BILL COULD TAKE ECONOMY ‘OFF COURSE’. Standard & Poor’s said in a report yesterday that equity markets would not be able “to meet the massive level of common equity” that would be required under legislation (S. 798) by Sen. Sherrod Brown (D-OH) and Sen. David Vitter (R-LA) intended to address “too big to fail.” “If the requirements force banks to deleverage, a credit crunch could ensue, and the U.S. economy could be thrown off course,” the S&P report said.  The report concluded that a possible economic downturn would counteract any positive impact from higher capitalization.

April 25, 2013

Brown, Vitter Introduce ‘Too Big to Fail’ Bill. Sens. Sherrod Brown (D-Ohio) and David Vitter (R-La.) yesterday introduced legislation (S. 798) aimed at addressing the “too big to fail” issue by requiring large banks to hold significantly higher capital. The legislation would take the U.S. out of the Basel III capital standards and instead require regional banks -- those between $50 billion and $500 billion in assets -- to hold 8 percent capital, and the largest banks to hold 15 percent capital. Regulators would determine capital levels for banks with less than $50 billion in assets. AmBA estimates that the proposal would require 34 of the 37 largest U.S. bank holding companies to raise a combined $1.6 trillion in new capital or reduce lending by $2.8 trillion. The bill adds other restrictions on the activities of very large banks and provides some regulatory relief to community banks, especially those with less than $10 billion in assets. For example, it expands the definition of rural lenders eligible to provide balloon mortgages, reduces some financial institutions’ obstacles to raising capital or distributing dividends and creates an ombudsman for bank examination fairness. “The banking industry strongly supports adequate, high-quality capital,” said AmBA EVP James Ballentine. “However, the proposal, as introduced, would impose arbitrarily high levels that would harm banks and their customers, local communities and the broader economy.” Ballentine noted that bank capital is at “near-record levels” and growing. “Raising capital-to-asset ratios would require many banks to shrink their businesses, resulting in substantially decreased lending, tighter credit availability and higher costs to borrow,” he added.

Banks Report OCC Exams Improving. Bankers find the quality of their Office of the Comptroller of the Currency examinations improving, according to a report filed last week on the AmBA-state bankers associations’ Regulatory Feedback Initiative. Compiled using two years of data, the report found that the proportion of respondents “very satisfied” with their safety-and-soundness and compliance exams rose from 17 percent to 22 percent from 2012 to 2013. The report highlighted several areas for OCC improvement, particularly in applying guidance as if it were regulation, knowing about the banks and having helpful interactions with bank staff. The RFI enables bankers to share anonymous feedback on their recent exams. AmBA has used the feedback to demonstrate the need for legislation to improve bank exams and provide more examiner accountability.

New $100 Bill to Circulate in October. The redesigned $100 note will begin circulating on October 8, the Federal Reserve Board announced yesterday. The new note includes new security features, such as a blue 3-D ribbon across the center of the bill, improving the note’s resistance to counterfeiting. The new design was unveiled in 2010, but its introduction has been delayed by production problems.

Senate Confirms Burwell as OMB Director. The Senate yesterday confirmed by a 96-4 vote the nomination of Sylvia Mathews Burwell to be director of the Office of Management and Budget. Burwell replaces acting Director Jeff Zients. She currently serves as president of the Walmart Foundation, the retail chain's charitable organization. She previously was president of the Gates Foundation's Global Development Program and served as deputy director of OMB during the Clinton administration, working with recently confirmed Treasury Secretary Jack Lew.

April 24, 2013

AmBA URGES GRASSROOTS ACTION ON FOUR ISSUES. Building on the efforts of bankers and state executives during last week’s Government Relations Summit, AmBA is urging bankers to write to lawmakers on four priority issues:  the Basel III capital proposals, bank examination reform, the municipal advisors proposals, and credit unions.  Bankers can click on the links to use AmBA’s automated system to send customized letters on each issue.

REP. WATERS RESPONDS TO CHAIRMAN’S MOVE ON CORDRAY. House Financial Services Committee Ranking Member Maxine Waters (D-CA) yesterday urged Committee Chairman Jeb Hensarling (R-TX) “to reconsider” his position on the status of Consumer Financial Protection Bureau (CFPB) Director Richard Cordray, arguing that no court has ruled on the issue. Chairman Hensarling said in a letter to Cordray this week that Cordray does not hold his position Constitutionally and, therefore, would not be invited to testify before the Committee. “I respectfully urge you to reconsider your position on this important matter, and request that you schedule a hearing in the coming weeks to allow Director Cordray to deliver the CFPB’s semi-annual testimony…” Rep. Waters wrote.  “If you choose to continue to ignore the law, then I am prepared to use the rules of the Committee to provide the Director the opportunity to give testimony before the Committee.”

FINANCIAL SERVICES DEMS SEEK FULL FUNDING FOR SEC. Rep. Waters, Rep. Carolyn Maloney (D-NY), and 51 other House Democrats wrote to the House Appropriations Committee yesterday to urge that the Securities and Exchange Commission (SEC) be funded at the Administration’s requested level. “Given the critical functions delegated to the SEC and the importance of functioning capital markets to the U.S. economy, we believe it is essential to fully fund the agency at its requested level of $1.674 billion,” they wrote. Rep. Waters and other Democrats also asked the Appropriations Committee to “restore” the Community Development Block Grants program to its fiscal year 2011 funding level of $3.3 billion.

SEN. BAUCUS TO RETIRE. Senate Finance Committee Chairman Max Baucus (D-MT) announced yesterday that he will not seek reelection next year.  The six-term Senator also serves on the Agriculture, Nutrition and Forestry, Environment and Public Works, and Joint Taxation committees. Sen. Ron Wyden (D-OR) and Sen. Charles Schumer (D-NY) are the next two most senior Democrats on the Finance panel.

April 23, 2013

REP. HENSARLING UPS THE ANTE IN CORDRAY TUSSLE. House Financial Services Committee Jeb Hensarling (R-TX) said in a letter yesterday to Consumer Financial Protection Bureau (CFPB) Director Richard Cordray that the Committee “stands ready to accept the testimony of the Director of the CFPB on the semi-annual report as soon as an individual validly holds this position.” Chairman Hensarling noted that “[a]bsent contrary guidance” from the Supreme Court, Cordray does not “meet the statutory requirements of a validly serving Director of the CFPB, and cannot be recognized as such.” Cordray is testifying before the Senate Banking Committee this morning.

AmBA URGES SUPPORT FOR BASEL STUDY BILL. The federal banking regulators’ proposed rules to implement the Basel III capital agreements “go far beyond the Basel III framework,” AmBA said yesterday in a letter supporting legislation (S. 731) that would require regulators to conduct a comprehensive study of the proposals’ effects on community and regional banks before issuing any final rules.“[T]here was no empirical study of the impact of the proposals on all segments of the U.S. banking sector, customers, and the broader U.S. economy,” AmBA wrote.  S. 731, introduced by Sen. Joe Manchin (D-WV) and Sen. Dean Heller (R-NV), would correct “this flaw by requiring the federal banking agencies to perform an empirical impact study of the proposed rules on the entire financial services sector before any final rules are issued, and this is specifically to include community, mid-size, and regional financial institutions.”

April 19, 2013

HOUSE PASSES AmBA-SUPPORTED CYBER BILL. The House yesterday passed, by a vote of 288-127, AmBA-supported cybersecurity legislation (H.R. 624) that would improve cyber intelligence information-sharing between the private and public sectors. “AmBA applauds the House for passing the Cyber Intelligence Sharing and Protection Act,” AmBA President and CEO Frank Keating said.  “There is no more important issue for the financial services industry and our country than cybersecurity.  This legislation provides important clarifications that will help facilitate increased cyber intelligence information sharing between the private and public sectors.  It strikes the appropriate balance between protecting consumer privacy and allowing information sharing on serious threats to our nation’s critical infrastructures.”

EMINENT DOMAIN PROPOSALS ARISE AGAIN. AmBA joined with more than 20 other organizations yesterday to state serious concerns with proposals in the cities of Richmond, California, and North Las Vegas, Nevada, that would use the cities’ eminent domain powers to acquire certain underwater mortgages held in securities. Our joint letters explained that the proposals raise “very serious legal and constitutional issues,” and that they also would be “immensely destructive to U.S. mortgage markets in general and to specific communities using eminent domain, in particular.” Like we did with similar efforts in other California jurisdictions, AmBA will continue to work against these proposals.

April 15, 2013

Sens. Warner, Toomey Introduce Municipal Advisers Exemption Bill. Sens. Mark Warner (D-Va.) and Patrick Toomey (R-Pa.) last week introduced an AmBA-advocated bill (S. 710) that would provide commercial banks and savings and loan associations with an exemption from the Dodd-Frank Act’s provisions requiring the regulation of municipal advisers. “AmBA believes that Congress did not intend for banks and savings institutions that are already supervised and examined to be regulated as municipal advisers. Both the exemptions in [Dodd-Frank’s] Section 975 and the fact that examination authority was provided solely to the [Securities and Exchange Commission] support this view,” AmBA President and CEO Frank Keating said Friday in a letter to all senators. “AmBA strongly believes a complete exemption is required because these institutions provide such a broad array of traditional banking products and services to municipalities that any limited exemption will necessarily cover activities that should not be captured,” he said.

April 12, 2013

MUNICIPAL ADVISORS BILL INTRODUCED. Sen. Mark Warner (D-VA) and Sen. Patrick Toomey (R-PA) yesterday introduced AmBA-advocated legislation (S. 710) that would provide for an exemption for commercial banks and savings and loan associations from the Dodd-Frank Act provisions requiring regulation of municipal advisors. “AmBA believes that Congress did not intend for banks and savings institutions that are already supervised and examined to be regulated as municipal advisors,” AmBA said in a letter to Senators this morning.  “Both the exemptions in Section 975 and the fact that examination authority was provided solely to the SEC support this view.  AmBA strongly believes a complete exemption is required because these institutions provide such a broad array of traditional banking products and services to municipalities that any limited exemption will necessarily cover activities that should not be captured.” AmBA thanks Sen. Warner and Sen. Toomey for their efforts on this issue.

HOUSE PANEL APPROVES CYBER INTELLIGENCE BILL. The House Intelligence Committee this week approved an AmBA-supported bill (H.R. 624) that would provide updates and clarifications to the National Security Act to facilitate and increase cyber intelligence information-sharing between the private and public sectors.  The full House is expected to vote on the legislation sometime next week. “We believe the timely sharing of threat information is critical to the government and the private sector in developing and deploying protective measures against malicious cyber activity,” AmBA and six other trade groups said in a joint letter to the Committee.  “As drafted, H.R. 624 would enhance the ongoing efforts in this area by modifying outdated rules that currently constrain the private sector and government from sharing real-time information on threats and solutions.”

AmBA PAPER SHOWS CONSEQUENCES OF HIGHER CAPITAL REQUIREMENTS. A new AmBA research piece “shows how bank capital has dramatically increased since the crisis and that the capital-to-asset leverage ratio did little to distinguish banks that would go on to fail from those that remained healthy,” ABA said yesterday in a memo to Senators and House Members.  The research piece is intended to contribute to the debate on the consequences of capital changes. “It also shows that arbitrarily high capital levels will come with too great a cost, both for banks and the economies they support,” AmBA wrote.  “This includes a reduction in loans – as many banks would have to shed assets to meet the requirements – which creates more stress for local communities, slower growth, and fewer jobs.”

FDIC TO REFUND $5.7 BILLION IN PREPAID ASSESSMENTS. The FDIC announced yesterday that it will return $5.7 billion in prepaid assessments to banks by June 30 because of the rapid improvement of the Deposit Insurance Fund (DIF). “The $45.7 billion in assessments prepaid on December 30, 2009, resolved the FDIC's immediate liquidity needs,” the FDIC said.  “As required by the rule, any institution’s remaining prepaid assessment will be returned to the institution by June 30, 2013.” The DIF reserve ratio is on track to reach the statutory minimum target of 1.35 percent by the September 30, 2020, deadline, the FDIC said. The DIF’s rapid recapitalization “reflects an industry that is stronger today than at any point in the last four years,” AmBA Chief Economist Jim Chessen said.

April 11, 2013

WHITE HOUSE RELEASES BUDGET PROPOSAL. The Obama Administration yesterday released its fiscal year 2014 budget proposal, two months after the statutory deadline to do so.  Among the tax changes proposed are a reprise of the AmBA-opposed bank tax provision.  AmBA will continue to work against the provision, as we have successfully done since it was originally proposed in 2010. The budget proposal also states that the Federal Housing Administration will need about $943 million from the Treasury Department later this year to cover losses on home loans it insured during the financial crisis.

SEN. DURBIN INTRODUCES RATE CAP BILL. Sen. Richard Durbin (D-IL) this week introduced AmBA-opposed legislation (S. 673) that would set an interest rate and fee cap of 36 percent “for all consumer credit transactions,” according to his press release.  The bill also would “ensure that this federal law does not preempt stricter state laws,” create penalties for violations, and support “enforcement in civil courts and by state Attorneys General.”
Sens. Richard Blumenthal (D-CT), Barbara Boxer (D-CA), Jeff Merkley (D-OR), and Sheldon Whitehouse (D-RI) are cosponsors of the legislation.  Sen. Durbin introduced a similar bill (S. 3452) in the previous Congress, but it did not move forward.

BANKING PANEL TO HOLD FORECLOSURES HEARING. The Senate Banking Committee announced yesterday that its Housing Subcommittee will hold a hearing next week on “helping homeowners harmed by foreclosures.”  Government Accountability Office Financial Markets and Community Investment Director Lawrance Evans and National Mortgage Settlement Monitor Joseph Smith are the announced witnesses for the hearing.

AmBA SEEKS CLARIFICATIONS ON CFPB MORTGAGE RULES. AmBA and three other trade groups yesterday urged the Consumer Financial Protection Bureau (CFPB) to quickly publish clarifications on its new mortgage-related rules and to extend the rules’ compliance deadlines from the current 12 months to 18 to 24 months. “[T]he CFPB plans to issue additional revisions to the mortgage rules and accompanying staff commentary,” our joint letter said.  “The Associations anticipate these clarifications will provide important information to help our members make strategic decisions regarding their business models and with regulatory implementation.  Our members are very concerned about the prospect of making such decisions while the mortgage rules and commentary are in the process of being revised.” Our letter also explained that without more time to comply, “we are concerned certain lenders may choose to mitigate the resulting operational risks by reducing, or even eliminating, their mortgage lending activities.”

April 10, 2013

SENATE CONFIRMS WHITE FOR SEC. The Senate yesterday confirmed, by voice vote, the nomination of Mary Jo White to be Securities and Exchange Commission (SEC) Chairman.  White succeeds Elisse Walter, an SEC Commissioner who temporarily served as Chairman since December after Mary Schapiro stepped down.  White is a Partner at the New York-based Debevoise & Plimpton law firm and served from 1993 to 2002 as U.S. Attorney for the Southern District of New York.

REP. MALONEY URGES COMPENSATION FOR WRONGFUL FORECLOSURES. Rep. Carolyn Maloney (D-NY) yesterday urged Comptroller of the Currency Thomas Curry and Federal Reserve Chairman Ben Bernanke to devote more resources to providing compensation to homeowners who were victims of abusive foreclosure practices. “When your agencies entered into the settlement that was announced in January, you reported that payments ranging from a few hundred dollars to $125,000 would be sent by the end of March,” Rep. Maloney wrote.  “However, your communication of March 18 indicated that it would be another four to eight weeks until these borrowers receive payments.  Given all the delays and dysfunction surrounding this effort, I urge you to devote additional resources to this effort so that desperately needed assistance to injured homeowners can finally begin.”
Rep. Maloney also asked the regulators to provide monthly status updates to the House Financial Services and Senate Banking committees. The Government Accountability Office (GAO) released a report last week that criticized the OCC and Fed for failing to adequately monitor third-party consultants' review of loan files to identify borrowers that were hurt by wrongful foreclosures.

CFPB Accepting Money Transfer Complaints. The Consumer Financial Protection Bureau last Thursday began accepting consumer complaints on money transfers, Scott Pluta, the CFPB assistant director for consumer response, said on the bureau’s blog. He said such complaints can include not receiving funds on time or receiving the wrong amount; servicing or transaction issues; incorrect or missing documentation; and suspected fraud or scams. “Reading your complaints about money transfers will complement work we have already started in this area, including issuing a rule on international money transfers, which will include a new set of protections for consumers who send money internationally,” Pluta said. The CFPB temporarily delayed its final remittance rule’s Feb. 7 effective date and proposed changing certain provisions in the rule that AmBA had identified as serious barriers to banks’ compliance and their ability to continue offering international money transfers to customers. The proposed changes address concerns AmBA had raised constantly in numerous letters to and meetings with bureau senior officials, including Director Richard Cordray.

April 4, 2013

AmBA COMMENTS ON FINANCIAL PRODUCTS TAX-REFORM DRAFT. AmBA yesterday submitted a statement for the record to the House Ways and Means Select Revenue Measures Subcommittee regarding a discussion draft of legislation to reform the tax treatment of certain financial products.  The Subcommittee held a hearing on the discussion draft March 20. AmBA noted that there are problems with the proposed provision on the mark-to-market treatment of financial derivatives, explaining that the discussion draft does not address the issues of valuation and liquidity “in a way that would help in making further determinations on how well mark-to-market would work under the proposal. Our statement also addressed the definition of derivative, the creation of a new bifurcation treatment for “embedded derivatives” for tax purposes, and the requirement that taxpayers use the average cost basis method for securities sales.

FED ISSUES FINAL RULE FOR NON-BANK SUPERVISION. The Federal Reserve yesterday issued a final rule under the Dodd-Frank Act that establishes the requirements for determining when a company is “predominantly engaged in financial activities.”  The Financial Stability Oversight Council (FSOC) will use those requirements when it considers designating non-bank financial companies for Fed supervision. The rule establishes that a company will be considered to be predominantly engaged in financial activities if 85 percent or more of its revenues or assets are related to activities that are defined as financial in nature under the Bank Holding Company Act.  The rule stipulates that engaging in physically settled derivatives transactions generally will not be considered a financial activity, which is a change from the original proposal. The final rule also defines the terms “significant non-bank financial company” and “significant bank holding company.”  A firm will be considered “significant” if it has $50 billion or more in total consolidated assets and the FSOC has designated it systemically important.  The final rule is effective May 6.

April 1, 2013

AmBA URGES UPDATES TO FLOOD INSURANCE GUIDELINES. AmBA urged federal regulators last week to update the flood insurance guidelines that banks use for their flood insurance compliance efforts.  The letter was prompted by a recent decision by the Federal Emergency Management Agency to rescind the guidelines, which the agency said had been made obsolete by the Biggert-Waters Flood Insurance Reform Act. “While it is true that the Biggert-Waters Act will require significant changes to the National Flood Insurance Program (NFIP) and to bank compliance with the mandatory purchase requirement,” AmBA wrote, “those changes call for an update of the Guidelines, not a unilateral decision to rescind an indispensable compliance resource.” In related news, regulators on Friday issued interagency guidance stating which aspects of the Biggert-Waters Act became effective upon enactment – including force-placed flood insurance – and which provisions are pending regulatory action.

March 21, 2013

OVERDRAFT RESTRICTION BILL INTRODUCED. Rep. Carolyn Maloney (D-NY) yesterday introduced legislation (H.R. 1261) that would further regulate banks’ overdraft protection plans by requiring banks to obtain consumers' opt-in for overdraft protection and capping the number of overdraft fees institutions could charge individuals at one per month and six per year.  The bill also would require fees to be “reasonable and proportional” to overdraft amounts and ban “manipulating” the posting of transactions to increase fees. “My bill expands the opt-in requirement to paper checks, ATMs, and recurring monthly payments – and also increases disclosure to consumers when an overdraft occurs, limits the fees’ price and frequency, and bans the manipulation of transactions,” Rep. Maloney said. “These are common-sense fixes to a banking marketplace.” Financial Services Committee Ranking Member Maxine Waters (D-CA) and 43 other House Democrats are original cosponsors of the legislation.  Similar legislation was introduced in the last Congress but did not move forward.

House Ag Committee Approves Seven Swaps Bills. The House Agriculture Committee yesterday approved seven bills that would amend the Dodd-Frank Act’s swaps provisions. AmBA in a memo Tuesday outlined its positions on five of the measures.The association said it supports bills that would reform the swaps “pushout” requirement (H.R. 992); clarify that end-users would not be subject to margin requirements for un-cleared swaps (H.R. 634); and require the Commodity Futures Trading Commission to fully assess the costs and benefits of its regulations (H.R. 1003). H.R. 677 would exempt inter-affiliate swaps from certain Dodd-Frank regulatory requirements. AmBA explained that it backs provisions clarifying that inter-affiliate swaps should be exempt from many of the anticipated swap regulations. But the association urged the committee to remove the bill’s limitation on transactions involving swap dealers and major swap participants that are insured depository institutions. H.R. 1256 would direct the CFTC and the Securities and Exchange Commission to adopt a joint rule on how they will regulate cross-border swaps transactions as part of the new Dodd-Frank requirements. AmBA said that it supports the bill’s goals -- as outlined in a March 12 discussion draft -- of promoting consistency among the cross-border applications of all Dodd-Frank swaps rules.

March 20, 2013

AmBA COMMENTS ON SWAPS BILLS; MARKUP TODAY. The House Agriculture Committee this morning marked up several bills related to swaps and reform of Title VII of the Dodd-Frank Act, approving each of them. AmBA wrote to the Committee yesterday to outline our positions on the bills, including ABA-supported legislation to clarify that end users would not be subject to margin requirements for un-cleared swaps (H.R. 634), to reform the swaps “push-out”  requirement (H.R. 992), and to provide for a full assessment of the costs and benefits of Commodity Futures Trading Commission (CFTC) regulations (H.R. 1003). Regarding a bill (H.R. 677) that would exempt inter-affiliate swaps from certain regulatory requirements that DFA put in place, AmBA stated our support for provisions to clarify that inter-affiliate swaps should be exempt from many of the anticipated swap regulations, but we urged the Committee “to remove the limitation on transactions involving swap dealers and major swap participants that are insured depository institutions.” In addition, we provided comments on a discussion draft of legislation to require the CFTC and the Securities and Exchange Commission (SEC) to jointly adopt rules setting forth the application of Title VII to cross-border transactions.

REFORM LEGISLATION NEEDED FOR FANNIE & FREDDIE, DEMARCO SAYS. Federal Housing Finance Agency (FHFA) Acting Director Edward DeMarco told the House Financial Services Committee yesterday that Congress must provide legislation to determine the future of Fannie Mae and Freddie Mac. “The U.S. housing finance system cannot really get going again until we remove this cloud of uncertainty and it will take legislation to do it,” DeMarco said.  “Fannie Mae and Freddie Mac were chartered by Congress and by law, only Congress can abolish or modify those charters and set forth a vision for a new secondary market structure.” He explained that the FHFA is doing what it can to encourage private capital to come back into the marketplace, but as long “as there are two government-supported firms occupying this space, full private sector competition will be difficult, if not impossible, to achieve.”

March 15, 2013

COMMITTEE SCHEDULES VOTES ON CFPB, SEC NOMINATIONS. The Senate Banking Committee announced yesterday that it will vote the morning of Tuesday, March 19, on the nominations of Richard Cordray to be Consumer Financial Protection Bureau (CFPB) Director and Mary Jo White to be Securities and Exchange Commission (SEC) Chairman. Following the vote, the Committee will hold a hearing on housing finance reform.  That afternoon, the Securities, Insurance, and Investment Subcommittee will hold a hearing on “improving customer protection and increasing competition in insurance markets.”

BANKING PANEL MEMBERS TO INTRODUCE GSE REFORM BILL. Sens. Bob Corker (R-TN), Mark Warner (D-VA), David Vitter (R-LA), and Elizabeth Warren (D-MA) – all Members of the Banking Committee – announced yesterday that they will introduce legislation to prohibit the federal government from using any increase in Fannie Mae and Freddie Mac’s guarantee fees to offset other government spending.  The bill also would prevent the Treasury Department from selling its preferred shares in Fannie and Freddie without Congressional approval and structural housing-finance reform. “The reality is that if Congress were to spend ‘g-fee’ revenue from the GSEs on other programs, reforming these mortgage behemoths would become nearly impossible,” Sen. Corker said.  “At the same time, if Treasury were to decide to sell its preferred share investment without Congress having first reformed our housing sector, we would just be returning to a time where gains are for private shareholders and losses are for taxpayers.”

REP. WATERS TO INTRODUCE FHA BILL. House Financial Services Committee Ranking Member Maxine Waters (D-CA) and Housing Subcommittee Ranking Member Michael Capuano (D-MA) yesterday announced that they will introduce legislation intended to strengthen the Federal Housing Administration (FHA) Mutual Mortgage Insurance Fund. The bill would establish minimum annual premiums for mortgage insurance, require lenders who committed fraud to repay the FHA, and improve the Agency’s internal financial controls, transparency, and disclosure requirements. The House passed legislation (H.R. 4264), sponsored by former Rep. Judy Biggert (R-IL), to address these issues last year by a 402-7 vote.

March 14, 2013

HOUSE PASSES AmBA-SUPPORTED PRIVACY BILL. The House passed, by voice vote, an AmBA-supported bill (H.R. 749) by Rep. Blaine Luetkemeyer (R-MO) that would eliminate the Gramm-Leach-Bliley Act requirement to provide an annual privacy notice for federal financial institutions that have not made changes to their privacy practices.  Institutions that changed their privacy policies during the preceding year still would be required to provide a notice. AmBA thanks Rep. Luetkemeyer for his efforts in passing this bill, which now must go to the Senate for consideration.

HOUSE GOP RELEASES BUDGET PLAN. The House Budget Committee has released a fiscal year 2014 budget resolution.  Tax provisions include reducing the top corporate tax rate to 25 percent, “transition[ing] the tax code to a more competitive system of international taxation,” simplifying the tax code, consolidating the seven individual income-tax rates into two brackets of 10 percent and 25 percent, and repealing the alternative minimum tax.

Keating Fires Back at 'Too-Big-to-Fail' Op-Ed. It's disappointing that Dallas Fed President Richard Fisher would call Dodd-Frank's too-big-to-fail solution a failure when regulators haven't even finished implementing it, AmBA President and CEO Frank Keating said in a letter to the editor published in this morning's Wall Street Journal. Keating was responding to a March 11 Journal op-ed piece by Fisher and Dallas Fed EVP Harvey Rosenblum in which they advocated restructuring large banks. "Before we add another layer of new restrictions and corporate restructurings, it's important to consider what Dodd-Frank actually instructs regulators -- including the Fed -- to do," Keating said. He listed several changes mandated by the reform law that target too-big-to-fail, including more stringent capital and liquidity rules, annual stress tests, living wills and creation of the Financial Stability Oversight Council. Keating emphasized that deceptively simple solutions aren't the answer, and artificial government-mandated restructuring never works in a free-market, democratic society. "[W]e have the strongest banking sector in the world with all-size banks connected in ways that are essential to our economy," he said. "Breaking up large institutions would destroy these synergies and drive business to foreign competitors and shadow banks, ending our country's status as a premier financial center," Keating said. "Let's implement the mandates Congress enacted to end too-big-to-fail and enhance our financial system -- not destroy it."

CFPB Issues Preliminary List of Rural, Underserved Counties. The Consumer Financial Protection Bureau late Tuesday posted on its blog a preliminary list of rural and underserved counties to use in conjunction with the CFPB's escrow final rule that goes into effect June 1. The final rule generally extends the required duration for escrow accounts on higher-priced mortgage loans from one year to a minimum of five years. But the rule exempts from its requirements such loans made by certain small creditors that operate predominately in rural or underserved counties included on the list. The CFPB said, however, that Tuesday's preliminary list will be revised for 2013 before June 1. The list will be adjusted again for 2014 when the USDA Economic Research Service completes its analysis and classification of rural and non-rural counties based on 2010 Census data, the agency said.

AmBA Develops FAQs on FASB’s Classification and Measurement Proposal. AmBA staff experts have developed frequently asked questions to explain the Financial Accounting Standards Board’s exposure draft on the classification and measurement of financial assets and liabilities that was issued on Feb. 14. While the exposure draft scales back the original 2010 proposal to mark all loans and deposits to market, its proposed changes nevertheless could impact regulatory capital significantly because all but “vanilla” debt instruments would be marked to market, with changes recorded through earnings. FASB’s recent proposal also presents significant operational challenges in determining whether certain bank assets qualify as “vanilla” and also in dealing with certain newly required disclosures. The proposal’s comment deadline is May15, and the AmBA Accounting Committee is evaluating its various provisions to develop comments.

Rep. Garrett Introduces SEC Cost-Benefit Analysis Bill. Rep. Scott Garrett (R-N.J.), chairman of the House Financial Services’ Capital Markets Subcommittee, this week re-introduced a bill (H.R. 1062) that would require the Securities and Exchange Commission to do a thorough cost-benefit analysis before proposing new regulations. He introduced the same bill in June 2011, but the measure never reached the House floor for a vote. The legislation “would improve the SEC’s existing economic analysis requirements by requiring the commission to clearly identify the nature of the problem that would be addressed before issuing a new regulation, and after that require economic analysis be performed by the SEC’s chief economist,” according to Garrett’s press release. The bill would ensure that “the benefits of any rulemaking outweigh the costs, and that both new and existing regulations are accessible, consistent, written in plain language, and easy to understand,” Garrett said.

CFPB Posts Biographies of Regional Directors. The Consumer Financial Protection Bureau this week posted on its blog biographies of the regional directors at the agency’s Office of Supervision Examinations. Edwin Chow, the West region’s director, is a former acting regional director at the now-defunct Office of Thrift Supervisions. Anthony Gibbs, the Midwest region’s director, is an accountant by trade and a 19-year veteran of HSBC Bank. Steve Kaplan, the Northeast region’s director, served as the Pennsylvania secretary of banking from 2007 to 2011. Jim Carley, the Southeast region’s director, is a former senior associate director at the Federal Housing Finance Agency’s Division of Banking Regulation. “Each of our regional directors is responsible for leading a staff that consists of three assistant regional directors, a team of field managers and a staff of over 100 examiners,” the CFPB said.

March 12, 2013

POLICY BRIEF DISPUTES LARGE-BANK SUBSIDY CLAIMS. AmBA and four other trade groups released a policy brief yesterday stating that a recent estimation that large banks enjoy a taxpayer subsidy worth $83 billion is based on flawed methodology and unreliable financial market data collected before Congress passed the Dodd-Frank Act.  The brief cites a 2010 International Monetary Fund analysis estimating that large banks’ cost-of-funding advantage was only “about 20 basis points on average.” “Several more recent studies indicate that, since the passage of Dodd-Frank, any cost-of-funding advantage has been dramatically reduced or even eliminated,” the brief said.  “In fact, two recent studies conclude that markets are now imposing a cost-of-funding premium on large banks of up to 35 basis points.” The policy brief also cites a study of yield spreads showing that the “advantage enjoyed by large banking companies has been reduced by 76 percent since the passage of Dodd-Frank.

REP. HENSARLING QUESTIONS VALIDITY OF CFPB FUNDING. House Financial Services Committee Chairman Jeb Hensarling (R-TX) wrote to the Federal Reserve Board last week regarding the transfer of funds to the Consumer Financial Protection Bureau (CFPB) in light of the federal appeals court ruling on the validity of the President’s appointments to the National Labor Relations Board, which came at the same time as Richard Cordray’s appointment as CFPB Director. The Dodd-Frank Act “authorizes the Board to transfer funds to carry out the authorities of the CFPB only at the request of its director,” Chairman Hensarling wrote.  “Because it appears there is not presently a validly-appointed director of the CFPB, I question the circumstances under which the Board may lawfully fund the CFPB’s operations.”

March 8, 2013

STRESS TESTS SHOW IMPROVED STRENGHT FOR BANKS. The Federal Reserve released a stress-test report yesterday showing that the 18 largest U.S. banks have continued to improve their ability to withstand a severe economic downturn and that they are in a much stronger capital position than before the financial crisis. “Significant increases in both the quality and quantity of bank capital during the past four years help ensure that banks can continue to lend to consumers and businesses, even in times of economic difficulty,” Fed Governor Daniel Tarullo said. Aggregate Tier 1 capital ratios at the 18 firms subjected to the Fed’s stress-test program would fall from an actual 11.1 percent in the third quarter of 2012 to 7.7 percent in the fourth quarter of 2014 under the test’s severely adverse scenario, which includes a peak unemployment rate of 12.1 percent and a more than 20 percent drop in housing prices. AmBA President and CEO Frank Keating said the Association is pleased that an overwhelming majority of institutions once again passed the stress-tests “with flying colors.” “These results, achieved in the face of extreme assumptions and highly pessimistic scenarios, are further proof that the banking industry has rapidly regained its health and is strong enough to withstand even the most challenging economic circumstances,” he said.

March 7, 2013

BILLS INTRODUCED TO FIX DODD-FRANK’S SWAPS ‘PUSHOUT’ PROVISION. Sen. Kay Hagan (D-NC) and Rep. Randy Hultgren (R-IL) yesterday introduced ABA-supported companion bills (S.474, H.R. 992) that would reform the Dodd-Frank Act’s “pushout” provision, which requires banks to move some swaps into separate affiliates. The legislation would keep banks from having to form separate affiliates to conduct some swaps, allowing them to continue to offer “one-stop shopping” for customers who want it.  It also would prevent the creation of competitive imbalances between U.S. banks and foreign banks.  The House Financial Services Committee approved similar legislation last year. Original cosponsors of the legislation are Sens. Patrick Toomey (R-PA), Mike Johanns (R-NE), and Mark Warner (D-VA) in the Senate, and Reps. Jim Himes (D-CT), Richard Hudson (R-NC), and Sean Patrick Maloney (D-NY) in the House.

BILL WOULD REQUIRE REGULATORY COST-BENEFIT ANALYSIS. Sen. Richard Shelby (R-AL) introduced a bill (S. 450) this week that would require financial regulators to justify proposed rules.  The bill would mandate that regulators do detailed analyses of their proposals’ benefits and costs, including the effects on economic growth and net job creation.  Regulators would be barred from promulgating rules with costs that outweighed benefits. “Businesses across the country are dealing with an avalanche of regulations from Dodd-Frank,” Sen. Shelby said in a press release.  “The bottom-line principle of the Financial Regulatory Responsibility Act is unambiguous: If a regulation’s costs outweigh its benefits, it should be thrown out.” Sen. Shelby also introduced legislation (S. 451) that would correct “numerous drafting errors” in the Dodd-Frank Act.

March 6, 2103

IRS: Expenses for Maintaining OREO Property Are Deductible. The Internal Revenue Service chief counsel last Friday issued a legal memorandum that concludes that certain expenses a bank incurs to maintain foreclosed property before its disposition are deductible for tax purposes. The chief counsel’s conclusion supports the position that AmBA has argued for more than a year, and it ends the fight between banks and the IRS over whether such costs should be currently deductible or capitalized. The memo agrees with AmBA’s longstanding argument that a bank does not acquire other real estate owned -- or OREO -- property for the purpose of reselling it at a profit. Instead, the product is the loan. When a secured loan goes bad, the bank must acquire the property securing the loan, and it must resell that property within a specified time frame. While the bank holds the OREO property, it incurs certain maintenance expenses. AmBA argued -- and the IRS has conceded -- that those expenses should be deductible. That’s because a bank isn’t like a developer or other retailer who acquires property with the intent of increasing or enhancing its value and then reselling it for a profit. A bank doesn’t acquire OREO property for that purpose. The chief counsel’s legal memo agreed with all the points that the AmBA made on the issue, and it reached a conclusion that is most favorable to association members. The memo represents an important change in the IRS’s view, and it ends many months of meetings and other interactions AmBA had with the agency on behalf of its members.

Fed: No Plans to Revise Interchange Fee Standard. The Federal Reserve doesn’t plan to revisit its final rule capping debit card interchange fees at 21 cents per transaction, the agency said yesterday as part of a report it released on 2011 transactions. The report found that for 67 percent of issuers covered by the rule, the average cost of authorizing, clearing and settling debit card transactions in 2011 was less than 21 cents. “Covered issuers that had average ACS [authorizing, clearing and settling] costs below 21 cents in 2011 processed well over 99 percent of all reported covered transactions, the same proportion as in 2009,” the last year the survey was conducted, the Fed said. The Fed estimated that debit-card fraud losses for all parties -- merchants, cardholders, and issuers -- was $1.38 billion in 2011, with an average loss of about 8 basis points per debit card transaction, down slightly from 2009. “The median covered issuer's average fraud loss per transaction was nearly 5 basis points, the same as in 2009,” the agency said “The median covered issuer had average fraud prevention and data security costs of slightly less than 1.5 cents per transaction.”

TOO-BIG-TO-FAIL EFFORTS ARE ‘PROMISING,’ FED GOVERNOR SAYS. Federal Reserve Governor Jerome Powell said at a conference of international bankers yesterday that reforms to end “too big to fail” are promising and need time to work.“[Efforts by U.S. and global regulators to fight too big to fail are generally on the right track,” Gov. Powell said.  “The Basel III and Dodd-Frank reforms designed to reduce the probability of failure of large banking firms are sensible and, for the most part, targeted at the causes of the crisis.”  He added that the reforms “are being implemented thoughtfully and effectively,” and rejected proposals to reinstate the Glass-Steagall Act.

HOUSING COALITION URGES ALIGNMENT OF QM, QRM. The Coalition for Sensible Housing Policy, of which ABA is a member, yesterday urged federal regulators to align the pending risk retention rule’s “qualified residential mortgage” (QRM) standard with the “qualified mortgage” (QM) standard under the ability-to-repay final rule that the Consumer Financial Protection Bureau (CFPB) issued in January. “Aligning the QRM and QM standards will encourage safe and financially prudent mortgage lending, while also creating more opportunities for private capital to reestablish itself as part of a robust and competitive mortgage market,” the Coalition said. The Coalition emphasized that it strongly opposes adding stringent down payment and other restrictive requirements to the QRM definition that would limit the ability of private capital to reach lower-income households and first-time buyers. The Coalition for Sensible Housing Policy is a coalition of 50 consumer organizations, civil rights groups, lenders, housing and real estate professionals that share the goal of attracting private capital back to the mortgage market for all American households.

March 4, 2013

PRESIDENT ANNOUNCES NEW OMB DIRECTOR. The President announced this morning that he will nominate Walmart Foundation President Sylvia Mathews Burwell to be the next Director of the Office of Management and Budget (OMB).  Burwell previously served as OMB Deputy Director, White House Deputy Chief of Staff, and Treasury Chief of Staff during the Clinton Administration.

March 1, 2013

BSA/AML HEARING SCHEDULED. Senate Banking Committee Chairman Tim Johnson (D-SD) announced yesterday that the panel will hold a hearing next week on “assessing Bank Secrecy Act compliance and enforcement.” 
“The hearing is intended to continue the Committee’s oversight of the administration of the Bank Secrecy Act and its anti-money laundering rules (‘BSA/AML’),” the announcement said.  “The hearing comes at a time when serious questions have been raised about compliance with BSA/AML rules by major financial institutions, including a number supervised by the Federal Reserve Board and the OCC.” The hearing is scheduled for 10:00 a.m. on Thursday, March 7.  Witnesses will be Treasury Under Secretary for Terrorism and Financial Intelligence David Cohen, Comptroller of the Currency Thomas Curry, and Federal Reserve Board Governor Jerome Powell.

HOUSE PANEL TO BEGIN GSE HEARINGS. The House Financial Services Capital Markets Subcommittee will begin a series of hearings next on the government-sponsored enterprises (GSEs), beginning Wednesday, March 6 with a hearing titled “Fannie Mae and Freddie Mac: How Government Housing Policy Failed Homeowners and Taxpayers and Led to the Financial Crisis.” This hearing will examine the role that Fannie and Freddie played in precipitating the financial crisis and will include witnesses from academia, a Washington think tank, and an investment research firm.

SENATE REJECTS ‘SEQUESTER’ ALTERNATIVES. The Senate yesterday rejected both Democratic and Republican proposals to replace the “sequester” from the August 2011 debt agreement, so the $85 billion in automatic spending cuts prescribed for this fiscal year will begin to go into effect today. The Senate voted 38-62 on a procedural motion to take up the Republican alternative (S. 16), and 51-49 to proceed to the Democratic bill (S. 388).  Sixty votes were needed. Congressional leaders are scheduled to meet with the President today, but an agreement is not expected to be reached.

FINANCIAL TRANSACTION TAX BILL INTRODUCED. Sen. Tom Harkin (D-IA) and Rep. Peter DeFazio (D-OR) yesterday introduced companion bills (S. 410, H.R. 880) that would impose a 0.03 percent (3 basis points) tax on certain financial trading transactions.  They introduced similar legislation in the previous Congress, though neither serves on the tax panels that have jurisdiction over the bills. The tax, which would take effect on Dec. 31, 2013, would apply to most non-consumer financial trading, including stocks, bonds, and all derivatives contracts.  The bills would exempt initial issuance and debt with an original term of less than 100 days. “We need the new revenue that would be generated by this tax in order to reduce deficits and maintain critical investments in education, infrastructure, and job creation,” Sen. Harkin said.  “And there is no question that Wall Street can easily bear this modest tax.

LEW TAKES HELM AT TREASURY. Jacob Lew was sworn-in to be Treasury Secretary in an Oval Office ceremony yesterday, following his Senate confirmation for the position on Wednesday.

February 28, 2013

SENATE CONFIRMS LEW FOR TREASURY. The Senate yesterday confirmed Jacob Lew to be Treasury Secretary, by a vote of 71-26.  Lew most recently served as White House Chief of Staff, and also served as Director of the Office of Management and Budget in both the Clinton and Obama administrations.  Lew may be sworn-in as early as today.

BANKING PANEL LEADERS CITE POSSIBLE BIPARTISAN ACTIONS ON FHA. The Federal Housing Administration (FHA) “serves a critical role in our housing market,” without which “the housing crisis would have been much deeper with an estimated additional 25 percent decline in home prices…” Senate Banking Committee Chairman Tim Johnson (D-SD) said this morning at the panel’s oversight hearing on the FHA. “The decision regarding whether the FHA will need funds will be made by the Office of Management and Budget in September,” Chairman Johnson said.  “That means the Administration and the Congress, if necessary, have a short window of time to develop strategies to manage the FHA’s old book of business and reduce losses… [I]f the Administration’s actions and proposals will not be sufficient to restore the FHA’s fiscal health, then I plan to work with my colleagues on both sides of the aisle on the Banking Committee to find a bipartisan way to make that happen.” Committee Ranking Member Mike Crapo (R-ID) opined that the “current situation surrounding the solvency of the FHA is concerning, to say the least, and at worst, it is unsustainable.” Citing an actuarial report that the FHA is operating with “a negative economic value of more than $16 billion [and] a capital reserve ratio of negative 1.44 percent,” Sen. Crapo said what “is most troubling is that these numbers are part of a continued negative trend we see in these reports, year after year…. As such, it is our duty to look at a broad range of reforms aimed at returning the FHA to a strong, self-sustaining insurance program… Instead, this Committee needs to come together to craft bipartisan legislation that will best equip the FHA to accurately assess its risks and build capital to insure against them.”

CREDIT UNION TAX EXEMPTION BENEFITS VERY LARGE INSTITUTIONS, AmBA SAYS. The credit union tax exemption – worth nearly $20.5 billion since 2001 – favors large credit unions with more than $500 million in assets, AmBA said yesterday in an email message to all House Members and Senators.  “These credit unions are at least three times larger than the median-sized bank, represent only 6 percent of all credit unions, and had more than three-fourths of credit union industry profits in 2011,” AmBA explained.

February 27, 2013

AmBA: Expand QM Safe Harbor for Balloon Loans. The Consumer Financial Protection Bureau’s proposal -- issued concurrently with its final ability-to-repay/qualified mortgage final rule -- that would expand certain exemptions and qualifications under the final rule doesn’t go far enough in certain areas, particularly balloon loans, AmBA said this week in a comment letter. The CFPB proposed expanding the final rule's regs to allow the QM safe harbor to cover balloon loans made by lenders with under $2 billion in assets operating in defined rural or underserved areas if the interest rate doesn't exceed the average prime offer rate by more than 3.5 percentage points. AmBA emphasized that the $2 billion asset threshold is too low, and should be increased to $10 billion. The association also urged the CFPB to further expand the QM safe harbor for balloon loans based not on lender size and operating area, but on certain loan and borrower characteristics. AmBA listed 15 specific property and borrower types that the CFPB should allow to benefit from QM-eligible balloon loans -- regardless of lender size or location.
The CFPB also proposed adding a fourth QM safe harbor category -- to the three in the final rule -- for certain loans made by lenders that have total assets of $2 billion or less, and have originated, with all affiliates, 500 or fewer first-lien covered transactions during the previous calendar year. AmBA said the proposed assets-loans parameters are much too low. "Lenders with up to $10 billion in assets and with loan limits of at least 2,000 loans should be used as the applicable benchmarks. Setting the asset size lower will have the impact of unnecessarily curtailing credit availability from many community banks," AmBA said.

Bernanke: Sequester Will Slow Economic Recovery. Allowing automatic budget cuts to go into effect this Friday could place a significant near-term burden on the economic recovery, Federal Reserve Chairman Ben Bernanke told the Senate Banking Committee yesterday while presenting the Fed’s semiannual monetary policy report. Bernanke noted that according to Congressional Budget Office estimates the sequester would slow economic growth by about 0.6 percent this year. “Given the still-moderate underlying pace of economic growth, this additional near-term burden on the recovery is significant,” he said. “Moreover, besides having adverse effects on jobs and incomes, a slower recovery would lead to less actual deficit reduction in the short run for any given set of fiscal actions.” “[T]he Congress and administration should consider replacing the sharp, frontloaded spending cuts required by the sequestration with policies that reduce the federal deficit more gradually in the near term but more substantially in the longer run,” Bernanke added. Such an approach could lessen the near-term fiscal headwinds facing the recovery while more effectively addressing the longer-term imbalances in the federal budget, he explained. “The size of deficits and debt matter, of course, but not all tax and spending programs are created equal with respect to their effects on the economy,” Bernanke said.

February 26, 2013

SENATE PANEL APPROVES LEW NOMINATION. The Senate Finance Committee this morning approved the nomination of Jacob Lew to be Treasury Secretary, by a vote of 19-5.  The nomination will now move to the full Senate for consideration. The Committee also approved the nomination of Christopher Meade to be Treasury General Counsel, by a vote of 23-1.  In addition, the Committee approved its rules, budget, and subcommittee assignments by voice vote.

AmBA COMMENTS ON QM, ATR STANDARDS. AmBA submitted two comment letters to the Consumer Financial Protection Bureau (CFPB) yesterday regarding proposals to expand certain definitions of qualified mortgages (QM) and certain exemptions from the ability to repay (ATR) standards. In the first letter, AmBA explained our general support for the CFPB’s proposals, writing that the final ability to repay rule “sets a reasonable framework for determining a borrower’s ability to repay, and establishes a QM safe harbor which will broadly serve borrowers and lenders well for most loans, ensuring that fair, reasonable and affordable credit remains available.” Our letter also applauded the CFPB for issuing a concurrent proposal “recognizing the need for exceptions to ATR and expansions of the QM safe harbor to fit the needs of…specialized communities and markets.”

HOUSING REFORM PLAN RELEASED. The Housing Commission of the Bipartisan Policy Center (BPC) yesterday released a plan to wind down Fannie Mae and Freddie Mac and significantly increase private lenders’ participation in mortgage-market financing. 
The report “proposes a new housing finance system that calls for a far greater role for the private sector, a continued but limited role for the federal government, the elimination of Fannie Mae and Freddie Mac, and reform of the Federal Housing Administration to improve efficiency and avoid crowd-out of private capital,” the BPC said. Under the commission’s plan, banks and other private companies would take the lead in originating mortgages and in issuing mortgage-backed securities, while bearing the risks of default.  In extreme cases in which private lenders are unable to absorb further losses, a “public guarantor” funded by premium payments would backstop financing for loans up to $275,000. AmBA President and CEO Frank Keating was a member of the Commission and gave the opening remarks at the briefing where the plan was unveiled. “The report is a strong one, which I believe charts a course for a much-needed return of the private market to housing finance,” Gov. Keating said.  “It also states where government involvement is needed it is explicit, paid for, and limited… In the coming months, the Commission will continue its important work on housing policy by reaching out to policymakers and key stakeholders and holding forums across the country.”

February 25, 2013

AmBA ADS CHALLENGE CREDIT UNION TAX EXEMPTION. AmBA is running print and radio ads this week calling out credit unions on their outdated tax exemption.  The ads are timed to correspond with a major credit union government affairs conference at which credit unions are expected to petition lawmakers for more lending powers.  The ads point out that credit unions comprise a $1 trillion industry yet pay no federal income taxes, an exemption worth $2 billion annually.

FED EXTENDS FOREIGN BANK PROPOSAL COMMENT PERIOD. The Federal Reserve on Friday extended the comment period on a proposed rule that would implement enhanced prudential standards and early remediation requirements for large foreign banks and foreign non-bank financial firms that the Fed supervises.  The Dodd-Frank Act proposal would subject the largest foreign firms to similar capital and liquidity requirements as large U.S. bank holding companies.

February 22, 2013

SENATORS TO OFFER ‘SEQUESTER’ ALTERNATIVES. The Senate is expected early next week to consider Democratic and Republican proposals to replace the upcoming budget “sequester” from the August 2011 debt agreement.  Press reports indicate, however, that neither party’s alternative is likely to move forward, as lawmakers largely consider the March 1 sequester date to be a “soft” deadline that need not be met.

BANKING PANEL SCHEDULES FHA HEARING. The Senate Banking Committee announced yesterday that it will hold a second hearing next week on the financial condition of the Federal Housing Administration (FHA).  The hearing is scheduled for Thursday, February 28, at 10:00 a.m.  Witnesses will include representatives of mortgage, real estate, and urban development groups, as well as an economic policy academic.

CFPB SEEKS INPUT ON STUDENT LOAN REPAYMENT. The Consumer Financial Protection Bureau (CFPB) yesterday asked for public input on ways to help borrowers repay private student loans, with the goal of “avoid[ing] a repeat of the mortgage meltdown for today’s student loan borrowers,” CFPB Director Richard Cordray said. The Bureau’s notice asks for comments on several issues, including how student loan debt may affect the economy and hinder access to mortgage and car loans, how distressed borrowers manage their student loan obligations, current lower monthly payment options for student loan borrowers, and successful alternative payment options in other markets that could be applied to student loans. The comment deadline is April 8.

February 20, 2013

Reps. Capito, Maloney Express Basel III Concerns. Shelley Moore Capito (R-W.Va.), chairman of Financial Services’ Financial Institutions Subcommittee, and panel member Carolyn Maloney (D-N.Y.) yesterday urged the federal banking regulators to tailor the final Basel III capital requirements so that they’re appropriate for the wide range of institutions that comprise the U.S. financial system. “We are concerned that the compliance costs of implementing the Basel III framework will force many [small] institutions that are not engaged in global banking to consolidate or go out of business altogether,” Capito and Maloney said in a letter. The lawmakers also said they’re concerned that consumers ultimately will bear Basel III’s cost in the form of higher down payments and higher interest rates on residential mortgages. “The Basel III standardized approach for risk-weighted assets could severely limit the types of mortgages smaller banking institutions can feasibly offer in their communities and hold in portfolio,” they said. AmBA in its fall comment letter recommended that the agencies withdraw the Basel III standardized approach that contains unnecessarily complex risk-weighting calculations and other excessive details that aren’t needed to establish adequate capital levels. The association also urged the regulators to revise the Basel III advanced approach -- which applies to large banks -- to make its details and application more workable, and it emphasized that the proposal to reflect unrealized gains and losses in bank capital is a bad idea for all banks and the economy in general.

AmBA: Credit Card Act Has Spurred Higher Costs, Less Credit Access. The Credit Card Act has provided significant consumer benefits, including greater interest-rate certainty and fewer fees, but it has also led to higher consumer costs and less access to credit, Ken Clayton, AmBA EVP of legislative affairs and chief counsel, said in a statement yesterday. “This is particularly true for those who are new to credit or have had difficulty managing it in the past and would like a second chance,” he said. Clayton was summarizing the key points AmBA made in a letter responding to the Consumer Financial Protection Bureau’s request for comments on the Card Act’s effect on both consumers and credit availability. “Our analysis shows that credit card interest rates have increased even in a diminishing interest-rate environment,” he said. Clayton noted that since 2008’s third quarter credit, card interest rates have increased by more than 72 basis points while other consumer credit rates -- including mortgage and auto loan rates -- have fallen significantly. “Comparing the costs, decreased availability and use of credit cards with those of other consumer credit products makes it clear that economic conditions alone can’t explain the changes we’ve seen in the credit card market,” Clayton said. “The Card Act has played a key role in the higher rates and reduced availability of credit cards.” Clayton commended the CFPB for trying to gauge the Card Act’s full effect on individuals and the broader economy. “As the CFPB reviews the data indicating less credit card availability, we encourage the bureau to further explore the real impact on consumers, including those who may have turned to higher-priced forms of credit that could raise other consumer protection concerns,” he said.

AmBA, ABIA Comment on Trial Consumer Disclosure Programs. The Consumer Financial Protection Bureau should provide more incentives for financial services companies to participate in trial consumer disclosure programs, AmBA, its American Bankers Insurance Association subsidiary and the Consumer Bankers Association said last week in a comment letter. The trade groups were commenting on the CFPB's proposed policy that would allow companies to test new consumer disclosures on a case-by-case basis. The CFPB would approve limited-time exemptions from federal disclosure laws to enable the companies to conduct the trials, and the bureau would use the resulting information to improve its disclosure rules and model forms. "Companies and trade associations should be allowed to jointly develop test proposals, and be permitted to use approved trial disclosures for at least a one-year period, and for the period ... after the test during which the bureau is evaluating the results," the trade groups said. They added that the CFPB should broaden the safe harbor for the trial disclosures to include both federal and state disclosure rules. The bureau also should be responsible for informing the test population about its participation in a trial disclosure program and the results, the trade groups said.

February 19, 2013

SEN. JOHANNS WILL NOT SEEK REELECTION. Sen. Mike Johanns (R-NE) announced yesterday that he will not seek reelection next year.  The first-term Senator serves on the Banking, Agriculture, Appropriations, and Veterans’ Affairs committees.  Initial speculation on who might seek the Republican nomination for the seat has focused on Nebraska Governor Dave Heineman, though the state’s three Republican House Members, State Attorney General Jon Bruning, and State Treasurer Don Stenberg also are mentioned.

PRIVACY NOTICE BILL RE-INTRODUCED. Rep. Blaine Luetkemeyer (R-MO) on Friday re-introduced ABA-supported legislation (H.R. 749) that would amend the Gramm-Leach-Bliley Act by eliminating the requirement to provide annual privacy notices for federal financial institutions that have not made changes to their privacy practices.  Institutions that changed their privacy policies during the preceding year still would be required to provide a notice. The legislation also would eliminate the annual privacy disclosure requirement for state-licensed financial institutions that are subject to state privacy protection laws or regulations. The House passed the legislation by voice vote in December, but the Senate did not act on it.

BILL INTRODUCED TO FIX NEW SEC REGISTRATION THRESHOLDS. Reps. Steve Womack (R-AR), Jim Himes (D-CT), John Delaney (D-MD), and Ann Wagner (R-MO) on Friday introduced legislation (H.R. 801) that would extend to savings and loan holding companies the new Securities and Exchange Commission (SEC) shareholder registration and deregistration thresholds under the JOBS Act. The JOBS Act raised the shareholder threshold for SEC registration from 500 to 2,000 for banks and bank holding companies, and also raised the deregistration threshold from 300 to 1,200. Unfortunately, the act did not explicitly extend the thresholds to savings and loan holding companies, even though it was not Congress’ intent to treat those institutions differently from banks and bank holding companies.

February 14, 2013

CU Biz-Lending Bill Re-introduced. Reps. Ed Royce (R-Calif.) and Carolyn McCarthy (D-N.Y.) yesterday re-introduced an AmBA-opposed bill (H.R. 688) that would raise the member business-lending cap for certain credit unions from 12.25 percent to 27.5 percent of total assets. The legislation would raise the cap for well-capitalized credit unions that have member business loans outstanding at the end of each of the four consecutive quarters immediately preceding their application date; can demonstrate at least five years experience soundly underwriting and servicing such loans; and have the requisite policies and experience in managing them. Credit unions also would have to satisfy other standards that the National Credit Union Administration Board determines are needed to maintain their safety and soundness. AmBA President and CEO Frank Keating recently sent a letter to all House and Senate members expressing AmBA’s strong opposition to such counterproductive, controversial legislation. “We believe it is wrong to permit credit unions to use their tax subsidies to cherry-pick loans that tax-paying community banks would gladly make,” Keating said. “Credit unions have enormous opportunity and flexibility under current law to meet the needs of their small business customers without any changes in their congressionally mandated lending limit.” For more information, contact AmBA's.

CU Supplemental Capital Bill Also Re-introduced. In related news, Reps. Peter King (R-N.Y.) and Brad Sherman (D-Calif.) yesterday re-introduced a bill (H.R. 719) that would permit the National Credit Union Administration to allow qualified credit unions to accept supplemental capital. The legislation would require such capital to be uninsured and subordinate to other claims against a credit union. The measure also would authorize the NCUA to set maturity limits on it. ABA is adamantly opposed to granting credit unions access to secondary or supplemental capital.

Senate Democrats Oppose CFPB Structural Reforms. Fifty-two Democratic senators and two independents yesterday told president Obama that they strongly support Richard Cordray’s re-nomination as Consumer Financial Protection Bureau director, and they oppose the CFPB structural changes Republican are demanding as the price for his confirmation. “As supporters of strong and effective consumer protection, we oppose efforts to weaken the CFPB through structural changes, including as the price for Senate approval of Director Cordray’s nomination,” senators said in a letter. “Never before has a president’s nominee to lead an agency been blocked, because a minority of senators do not support the existence of the agency.” Obama made Cordray the CFPB director through a recess appointment in January 2012, after Republican senators had threatened for months to block his confirmation if structural reforms weren’t made to the agency. A federal appeals court, however, ruled last month that similar recess appointments the president made to the National Labor Relations Board were unconstitutional, casting doubt on the validity of Cordray’s appointment. GOP senators have since told Obama that they’ll continue to block Cordray’s confirmation absent CFPB structural changes.

Tarullo: Regulators Should Consider Making QM, QRM ‘Congruent’. Regulators should consider aligning the pending risk retention rule’s “qualified residential mortgage” standard with the “qualified mortgage” standard under the ability-to-repay rule the Consumer Financial Protection Bureau finalized on Jan. 10, Federal Reserve Governor Daniel Tarullo said yesterday at a Senate Banking Committee hearing on bank oversight and Dodd-Frank Act implementation. Regulators should be careful to ensure that different rules do not “constrict credit to middle and lower-middle class people, who might be priced out of the housing market,” Tarullo explained. “So I think it’s definitely the case that on the table should be consideration of making QRM more or less congruent with QM.” Tarullo also told senators that they should expect “a good bit of change” in the final regulations implementing the Volcker Rule and Basel III. Both proposals have been criticized for being too complex, and Tarullo said regulators are taking that into consideration.

BANKING PANEL LEADERS URGE REGULATORS TO ADDRESS BASEL CONCERNS. Senate Banking Committee Chairman Tim Johnson (D-SD) and Ranking Member Mike Crapo (R-ID) yesterday urged federal banking regulators to carefully consider how the Basel III capital proposals would affect all institutions and to ensure that here are no unintended consequences. “In setting the new capital rules for the United States institutions, your agencies face a formidable task to carefully tailor the new rules to the unique risks of institutions while neither hampering lending nor undermining the strength of our financial system,” the Senators wrote. The expressed concern with several issues, including increased volatility through the treatment of accumulated other comprehensive income, the proposed risk weights’ effect on the availability of mortgages, and the treatment of insurance. “We are following up to make sure those concerns are not only being taken seriously, but are being proactively addressed,” they wrote.  “While it is important to get the new capital standards in place, it is more important to get the rules right.”

LEW NOMINATION VOTE WILL COME AFTER SENATE RECESS. Senate Finance Committee Chairman Max Baucus (D-MT) said during yesterday’s nomination hearing that a Committee vote on the nomination of Jacob Lew to be Treasury Secretary will “probably” be held after next week’s Senate recess so that Senators would have time to submit written questions following the hearing.

CYBERSECURITY ORDER PROVIDES ‘IMPORTANT DIRECTION,’ AmBA SAYS. ​The executive order on cybersecurity that President Obama issued this week “provides important direction to the public sector on the need to share information associated with threats to our critical infrastructures,” AmBA President and CEO Frank Keating said yesterday.  “The order recognizes the role of primary federal regulatory agencies in determining the extent to which current cybersecurity regulatory requirements are sufficient.  It also recognizes the value of leveraging existing expertise within sector-specific agencies…“Banks and other financial services companies have made cybersecurity a top priority…. We look forward to continuing to work with the administration and Congress toward our mutual goal of protecting our nation’s critical assets.”

February 13, 2013

BANKING PANEL RELEASES AGENDA. Senate Banking Committee Chairman Tim Johnson (D-SD) yesterday released the panel’s agenda for the 113th Congress, which will include supporting the economic recovery, overseeing implementation of the Dodd-Frank Act, stabilizing the housing market, and building a consensus on housing finance’s future. The Committee also will focus on reauthorizing and improving expiring programs regarding the Terrorism Risk Insurance Act, Defense Production Act, Export-Import Bank, public transportation, and Native American housing, as well as promoting access to capital in rural areas and expeditious consideration of Presidential nominees.

PRESIDENT ISSUES EXECUTIVE ORDER ON CYBERSECURITY. President Obama issued an executive order on cybersecurity yesterday, announcing the plan during the State of the Union address and urging Congress to pass legislation that “gives our government a greater capacity to secure our networks and deter attacks.” The executive order gives the federal government responsibility for working with private companies to develop voluntary cybersecurity standards that the National Institute of Standards and Technology will develop.  The Institute must issue a preliminary version of the so-called Cybersecurity Framework within 240 days. The executive order also charges the Treasury Department with responsibility “for providing institutional knowledge and specialized expertise as well as leading, facilitating or supporting the [financial industry’s] security and resilience programs and associated activities.”

BANKING PANEL ANNOUNCES SUBCOMMITTEE ASSIGNMENTS. Senate Banking Committee Chairman Tim Johnson (D-SD) and Ranking Member Mike Crapo (R-ID) announced the panel’s subcommittee assignments for the 113th Congress.  The full Committee will vote on the assignments at the start of Thursday’s hearing on financial reform implementation.

BILL WOULD REQUIRE ADDITIONAL CAPITAL FOR LARGER BANKS. Rep. John Campbell (R-CA) announced yesterday that he will introduce a bill today that would require larger banks to hold additional capital, including long-term debt.  Rep. Campbell serves as Chairman of the House Financial Services Monetary Policy and Trade Subcommittee. The legislation, called the Systemic Risk Mitigation Act, would require banks with at least $50 billion in assets to hold an additional level of capital in subordinated long-term bonds equal to 15 percent of the institution’s consolidated assets, according to Rep. Campbell’s press release.  The extra capital would be in addition to higher levels required under the Basel III standards.  Long-term bondholders for a failed institution would be guaranteed at no more than 80 percent of the face value of the debt.

HUD ISSUES FAIR HOUSING FINAL RULE. The Housing and Urban Development Department (HUD) has issued a final rule that will formalize a “disparate impact” approach to fair lending enforcement in which statistical analysis alone will determine whether a housing practice violates the Fair Housing Act. HUD said 11 federal appellate courts have supported using data analysis alone to prove discrimination, without the need to prove intent. AmBA urged HUD, the Justice Department, and banking regulators in a July letter to stop using a “disparate impact” approach to fair lending supervision and enforcement.  The letter included an AmBA-commissioned legal analysis by the Buckley Sandler law firm that concluded such an approach lacks statutory authority. The final rule will go into effect 30 days after its publication in the Federal Register.

February 8, 2013

HEARING SCHEDULED ON WALL STREET REFORM. U.S. Senate Banking Committee Chairman Tim Johnson (D-SD) announced yesterday that the Committee will hold a hearing next week titled “Wall Street Reform:  Oversight of Financial Stability and Consumer and Investor Protections.”  The hearing will “discuss the state of Wall Street Reform implementation.” The hearing is scheduled for Thursday, February 14 at 10:30 a.m. Eastern.  Witnesses will be Treasury Under Secretary for Domestic Finance Mary Miller, Federal Reserve Board Governor Daniel Tarullo, FDIC Chairman Martin Gruenberg,  Comptroller of the Currency Tom Curry, Consumer Financial Protection Bureau Director Richard Cordray, Securities and Exchange Commission Chairman Elisse Walter, and Commodity Futures Trading Commission Chairman Gary Gensler.

BANKING SUBCOMMITTEE CHAIRMEN NAMED. Chairman Johnson also announced yesterday the panel’s subcommittee Chairmen for the new Congress.  They will be Sens. Robert Menendez (D-NJ) for Housing, Transportation, and Community Development; Sherrod Brown (D-OH) for Financial Institutions and Consumer Protection; Jon Tester (D-MT) for Securities, Insurance, and Investment; Mark Warner (D-VA) for National Security and International Trade and Finance; and Jeff Merkley (D-OR) for Economic Policy. The full Committee is expected to finalize the subcommittees with a vote next week. 

February 7, 2013

AmBA: It’s Time to End $2 Billion Annual CU Tax Subsidy. Now is the time to eliminate the $2 billion annual credit-union tax subsidy, AmBA said yesterday in a question-and-answer-formatted email message to all House and Senate members. AmBA questioned why tax-paying households are still subsidizing the $1 trillion credit union industry, given the current challenges in managing the federal debt. The credit-union tax exemption “costs the U.S. Treasury about $2 billion each year in forgone tax revenues, while hard working Americans foot the bill,” AmBA said. “This bill will continuously grow as credit unions become larger.” The association explained that there are 195 large credit unions with more than $1 billion in assets. “That’s larger than 90 percent of banks,” AmBA said. “Banks, like households, pay taxes. It’s time for credit unions to do so as well.”

HEARING SCHEDULED ON LEW NOMINATION. The Senate Finance Committee has scheduled a hearing on the nomination of Jacob Lew to be Treasury Secretary for Wednesday, February 13, at 10:00 a.m. Eastern.  “It is my hope that – after a thorough vetting process – Jack Lew will be quickly confirmed so he can help tackle our country’s pressing economic issues,” Committee Chairman Max Baucus (D-MT) said.

HEARING CONSIDERS FHA FINANCES. The House Financial Services Committee held a hearing yesterday on the finances of the Federal Housing Administration (FHA).  An actuarial report released in November showed the agency ended fiscal year 2012 with a projected $16.3 billion insurance-fund deficit. "[W]e cannot have a healthy economy until we have a housing finance system that is both sustainable and competitive,” Committee Chairman Jeb Hensarling (R-TX) said.  “In its current form, the FHA is clearly an impediment to such a system.” Ranking Member Maxine Waters (D-CA), however, said the FHA has mitigated the length and severity of the housing downturn, explaining that she would “like to explore more fully the recent actions taken by the FHA to address prior problems.”

BILL INTRODUCED TO EXTEND TERRORISM RISK INSURANCE. Reps. Michael Grimm (R-NY) and Carolyn Maloney (D-NY) introduced legislation (H.R. 508) this week that would extend the federal Terrorism Risk Insurance Program for five years, through December 31, 2019. The program, which was created in 2002 and extended in 2005 and 2007, requires private insurers to offer commercial customers terrorism insurance, and it gives such insurers a backstop of government funds for a certified terrorism event that incurs more than $100 million in losses.

SEN. REED TO RELINQUISH BANKING SUBCOMMITTEE CHAIRMANSHIP. Sen. Jack Reed (D-RI) said yesterday that he will give up his chairmanship of the Senate Banking Securities, Insurance, and Investment Subcommittee in order to retain subcommittee chairmanships on the Armed Services and Appropriations committees.  He will remain a Banking Committee Member.

February 6, 2013

PRESIDENT SEEKS CUTS TO TAX ‘LOOPHOLES’. If Congress cannot agree on a broad deficit reduction package ahead of the March 1 deadline when the automatic “sequester” cuts will take effect, “they should at least pass a smaller package of spending cuts and tax reforms that would delay the economically damaging effects of the sequester for a few more months,” President Obama said yesterday. “There is no reason that the jobs of thousands of Americans who work in national security or education or clean energy, not to mention the growth of the entire economy should be put in jeopardy just because folks in Washington couldn’t come together to eliminate a few special interest tax loopholes or government programs that we agree need some reform,” the President said. He did not specify which “loopholes” or programs he would like to see cut. Senate Finance Committee Chairman Max Baucus (D-MT) responded that he agrees we need to avoid the sequester, but that “we must avoid the urge for the quick fix” regarding tax reform. “We owe it to the American people to do a comprehensive review of the code to ensure it works for today’s economy and is flexible enough to adapt to the changing world.  Tax reform is about more than revenues… I want to ensure that when we do tax reform, we do it right.”

TAX PANEL TO EXAMINE CHARITABLE DEDUCTIONS. House Ways and Means Committee Chairman Dave Camp (R-MI) announced yesterday that the Committee will hold a hearing next week on tax breaks for charitable contributions. “Because of the critical role that charities play, the Committee must hear directly from the charitable community before considering any proposals as part of comprehensive tax reform that might impact their ability to obtain the resources they need to fulfill their missions,” Chairman Camp said. The hearing is scheduled for Thursday, February 14, at 9:30 a.m.

REP. WATERS SEEKS HEARING ON FORECLOSURES SETTLEMENT. House Financial Services Committee Ranking Member Maxine Waters (D-CA) wrote to Committee Chairman Jeb Hensarling (R-TX) yesterday to request that the panel hold a hearing on the foreclosure settlement between the OCC, the Federal Reserve, and 14 mortgage servicing companies.  The agreement effectively ended the Independent Foreclosure Review (IFR) process. “Given that 4.4 million borrowers may have been affected by improper servicing practices…and that Members of Congress urged their constituents to apply for the IFR process at the request of the OCC and the Board, it is essential that the Committee exercise its oversight responsibility and conduct a hearing on these proceedings,” Rep. Waters wrote.

JUSTICE FILES SUIT OVER S&P RATINGS. The Justice Department announced yesterday that it has filed a lawsuit in California against Standard & Poor’s Ratings Services, alleging that S&P “engaged in a scheme to defraud investors in structured financial products known as Residential Mortgage-Backed Securities (RMBS) and Collateralized Debt Obligations (CDOs).” Rep. Waters released a statement commending the Department for its actions.

February 5, 2013

Sens. Corker, Vitter Introduce Bill to End Fed’s Dual Mandate. Senate Banking Committee members Bob Corker (R-Tenn.) and David Vitter (R-La.) yesterday introduced a bill that would re-establish price stability as the Federal Reserve’s sole mandate. The Fed’s current dual mandate of addressing inflation and unemployment is “bipolar,” Corker said. “The dual mandate blurs the line between fiscal and monetary policy and allows Congress to shirk its responsibility to enact sound budgets and policies that produce economic growth.” “The best way to achieve full employment in the long-run is to provide markets certainty that long-term price stability will be maintained,” he said.

Fed Survey: Some Credit Easing, Stronger Loan Demand. Some banks eased credit standards during the last three months, and the demand for business and mortgage loans strengthened, according to the Federal Reserve’s January survey of senior loan officers released yesterday. “Generally modest fractions of domestic banks reported having eased their standards across major loan categories over the past three months … ,” the Fed said. “Domestic respondents indicated that demand for business loans, prime residential mortgages, and auto loans had strengthened, on balance, while demand for other types of loans was about unchanged.” A small percentage of banks also said lending standards on commercial and industrial loans had been eased and that many terms on such loans had been loosened. “In addition, moderate net fractions of domestic banks reported that demand for [commercial and industrial] loans from firms of all sizes had increased over the survey period,” the report said. It added that standards for both prime and nontraditional mortgages, however, had not changed. “Respondents indicated that demand for prime residential mortgages increased … while demand for nontraditional residential mortgages was unchanged,” the report said.

February 4, 2013

Sen. Moran Introduces CFPB Commission Bill. In related news, Senate Banking Committee member Jerry Moran (R-Kan.) on Friday introduced a bill (S. 205) that would replace the Consumer Financial Protection Bureau’s director with a five-member commission. The legislation also would subject the CFPB to the same congressional appropriations process that most federal agencies undergo. “Allowing a single unelected official to define their own jurisdiction and regulate vast segments of our economy without accountability or restraint is irresponsible regardless of political party,” he said. “This common-sense legislation brings a variety of perspectives to the bureau and gives Congress the oversight authority required for such a powerful agency.” Moran introduced an identical bill in the previous Congress. Meanwhile, House Financial Services Committee Chairman Jeb Hensarling (R-Texas) said on Jan. 25 that his panel also would advance legislation to reform the CFPB’s structure.

Sen. Portman Asks Cordray to Support CFPB Structural Changes. In more related news, Sen. Rob Portman (R-Ohio) on Friday asked Consumer Financial Protection Bureau Director Richard Cordray to support Republican demands for structural changes in the bureau. "I ... ask for your commitment to work toward some basic accountability reforms of the bureau, the merits of which you and I have discussed on several occasions," Portman said in a letter to Cordray, a fellow Ohioan and the state's former attorney general. He noted that the Obama administration’s refusal to consider CFPB structural changes has resulted in an impasse on Cordray's nomination, as evidenced in a letter 43 senators sent to Obama on Friday (see above). "As a nominee to lead an independent agency, you have an opportunity to stake out a reasonable position on these proposals independent of the White House," Portman said. "Now is the time to exercise that independence and lend your support to these common-sense reforms ... so that the Senate can find a path forward on your nomination," he said.

AmBA Fires Back Against Credit Union Group’s Claims. AmBA today fired back at the National Association of Federal Credit Unions, which last week tried to undermine bankers’ arguments against the credit union business lending bill by referencing “bank bailouts” in a letter to Congress. “I hope … readers don’t miss the wonderful irony of [NAFCU’s] Fred Becker’s ‘complaints’ in light of the billions of dollars the credit union industry owes to taxpayers -- despite not paying a dime in federal income taxes,” AmBA President and CEO Frank Keating said today in Politico’s Morning Money newsletter. “Becker fails to mention the $18 billion his industry borrowed from Treasury in 2009 to stabilize two failed corporate credit unions or the $11 billion it borrowed to resolve five failed corporate credit unions -- of which $5 billion remains outstanding,” Keating said. “It’s time Congress examined the nation’s only $1 trillion industry that’s not subject to federal income taxation. If they want to act like a bank, they should be taxed like one.”

February 1, 2013

WHITE HOUSE TO RELEASE CYBERSECURITY ORDER THIS MONTH, SEN. CARPER SAYS. Senate Homeland Security and Governmental Affairs Committee Chairman Thomas Carper (D-DE) has indicated that the President plans to issue an executive order on cybersecurity later this month, according to an article today in The Hill newspaper.  Chairman Carper then plans to hold a joint hearing on the order with the Senate Commerce and Intelligence committees. According to the article, the executive order would create a “voluntary program in which companies operating crucial infrastructure would agree to meet a set of cybersecurity standards developed, in part, by the government.”  It is reportedly modelled on legislation (S. 3414) that failed in the Senate last November. AmBA had several concerns with the Senate bill, explaining in a joint letter with other trade groups last summer that it “would likely create a mandatory regulatory regime that could displace robust efforts already being made in the financial sector to combat the risk of cyber-attacks.” Sen. Carper also says in the article that he does not plan to re-introduce last year’s legislation, but that he does plan to release another joint bill with the Commerce and Intelligence committees.

SENATE PASSES TEMPORARY DEBT CEILING SUSPENSION. The Senate yesterday passed, by a vote of 64-34, legislation (H.R. 325) that would suspend the statutory debt ceiling until May 19, 2013.  The legislation also includes a provision that would hold Members’ salaries in an escrow account if their respective chambers fail to pass a budget resolution.  The House passed the measure last month and it is now cleared for the President’s signature.

AmBA SEEKS CHANGES TO CFPB’S REMITTANCE RULE. AmBA and six other trade groups said in a comment letter this week that the Consumer Financial Protection Bureau (CFPB) proposal to change its final remittance rule is not sufficient to solve the issues that put the remittance transfer market at risk. “The associations are concerned that the requirement to include recipient institution fees and foreign taxes in remittance transfer disclosures will impair consumers’ ability to effectively comparison shop between providers, and cause consumers to unnecessarily overfund transfer amounts,” our joint letter said. The trade groups recommended that the Bureau remove the recipient bank-fee disclosure requirement, or replace it with a statement that says such fees may apply.  Such a statement also would serve consumers better than the required foreign tax disclosures, the letter explained.

CFPB NAMES ACTING DEPUTY DIRECTOR. The CFPB announced yesterday that Steve Antonakes, Associate Director for Supervision, Enforcement, and Fair Lending also will serve as the Acting Deputy Director until a permanent replacement for Raj Date is named.  Date’s last day at the Bureau was yesterday.