December 16, 2022

The Financial Stability Oversight Council (FSOC) released its 2022 Annual Report. The report reviews financial market developments, describes potential emerging threats to U.S. financial stability, identifies vulnerabilities in the financial system, and makes recommendations to mitigate those threats and vulnerabilities.

The House Financial Services and Senate Banking Committees held hearings following the FTX collapse. 

  • The House Financial Services Committee held a hearing entitled “Investigating the Collapse of FTX, Part I.” Current FTX CEO John Ray III was the sole witness. The hearing focused on the platform’s collapse and the efforts underway to help those who have been harmed. 

  • The Senate Banking Committee held a hearing entitled “Crypto Crash: Why the FTX Bubble Burst and the Harm to Consumers.” Featuring testimony from proponents and skeptics of crypto assets, the hearing focused on FTX’s collapse, oversight of the crypto assets industry, and potential paths to address gaps in regulation. 

The House Financial Services and Senate Banking Committees held hearings to discuss the CFPB’s Semiannual Report.

  • The House Financial Services Committee held a hearing entitled “Consumers First: Semi-Annual Report of the Consumer Financial Protection Bureau.” At the hearing, legislators raised concerns regarding fraud facilitated by fintech companies and the CFPB’s “regulation through guidance.” 

  • The Senate Banking Committee held a hearing entitled “The Consumer Financial Protection Bureau’s Semi-Annual Report to Congress.” At the hearing, Director Chopra underscored the CFPB’s focus on monitoring markets in order to prevent the type of widespread harm seen during the 2008 financial crisis. He also focused on consumer financial data and the CFPB’s rulemaking process under Section 1033 of the Dodd-Frank Act.

State bank supervisors appointed New York State Department of Financial Services Superintendent Adrienne A. Harris to serve as the state banking representative on the Financial Stability Oversight Council, succeeding Texas Banking Commissioner Charles G. Cooper who will conclude his service on Dec. 31, 2022.  

The CFPB announced a proposed rule requiring certain nonbank financial firms to register with the CFPB when they become subject to certain local, state, or federal consumer financial protection agency or court orders. The CFPB has further proposed to publish the orders and company information via an online registry.

Republican Members of the HFSC sent a letter to Director Chopra urging the CFPB to rescind recent actions with respect to nonbank entities arguing that the actions exceed the CFPB’s statutory authority and “harm the very consumers the CFPB was established to protect.” The letter focuses on nonbank supervision, Buy Now, Pay Later (BNPL) products, structural changes to the Office of Competition and Innovation, and peer-to-peer (P2P) payments, specifically concerning the CFPB’s inquiry into large technology platforms.  

Senators Elizabeth Warren (D-MA) and Roger Marshall (R-KS) introduced the Digital Asset Anti-Money Laundering Act of 2022. The bill would expand the definition of money services businesses (MSBs) to include custodial and unhosted wallet providers, miners, and validators. Among other things, the bill also directs FinCEN with finalizing its rulemaking relating to certain transactions involving convertible virtual currency or digital assets (this is the “unhosted wallet rule first introduced in December 2020). 

The Financial Crimes Enforcement Network (FinCEN) issued a Notice of Proposed Rulemaking (NPRM) that would implement provisions of the Corporate Transparency Act (CTA) that govern the access to and protection of beneficial ownership information. This NPRM proposes regulations that would govern the circumstances under which such information may be disclosed to Federal agencies; state, local, tribal, and foreign governments; and financial institutions, and how it must be protected. Written comments on this proposed rule may be submitted on or before February 14, 2023.

The National Credit Union Administration (NCUA) Board unanimously approved a financial innovation proposed rule that would amend the NCUA’s regulations on loan participations, eligible obligations, and notes of liquidating credit unions. The changes would primarily affect federal credit unions by removing current limits on purchases of eligible obligations and by removing qualifying criteria for federal credit unions to purchase non-member loans from federally insured credit unions.

The New York State Department of Financial Services (DFS) released guidance addressed to banking organizations that wish to engage in virtual currency-related activities. The guidance is applicable to all New York regulated banking organizations, as well as branches and agencies of foreign banking organizations licensed by the DFS. The guidance outlines six broad categories of information that DFS will consider in assessing a covered institution’s proposal: business plan; risk management; corporate governance and oversight; consumer protection; financials; and legal and regulatory analysis. The guidance also includes a supplemental checklist of initial documents and information that a covered institution should provide for DFS to consider in its assessment.

The Securities and Exchange Commission (SEC)’s Office of the Advocate for Small Business Capital Formation issued its 2022 Annual Report to Congress and the Commission. The report details how entrepreneurs and investors are building companies together, from startups to small public companies.

The Federal Deposit Insurance Corporation (FDIC)’s Board of Directors met to discuss the 2023 Proposed Operating Budget, a notice of proposed rulemaking relating to false advertising, misrepresentations, and misuse of the FDIC’s name and logo, and amendments to the FDIC’s Guidelines for Appeals of Material Supervisory Determinations.

Public Company Accounting Oversight Board (PCAOB) Chair Erica Y. Williams released a statement after the Board determined the PCAOB was able to secure complete access to inspect and investigate audit firms in the People’s Republic of China (PRC) for the first time in history, in 2022.

The federal bank regulatory agencies, as members of the Federal Financial Institutions Examination Council (FFIEC), released data on small business, small farm, and community development lending during 2021.

The Congressional Hispanic Caucus (CHC) announced its leadership for the 118th Congress. Representative Nanette Diaz Barragán (D-CA) will serve as CHC Chair.

U.S. Department of the Treasury (Treasury) Assistant Secretary for Economic Policy Ben Harris delivered remarks at the Brookings Institution’s Retirement Security Project Event. Assistant Secretary Harris discussed the wellbeing of older Americans and policy changes that would help older Americans achieve a more secure retirement.

The Senate Committee on Banking, Housing, and Urban Affairs held a hearing to discuss new consumer financial products and their impacts on workers. The hearing discussed fintech product regulation and popular consumer financial products, including BNPL, EWA, and TRAPs.

Congressman Jim Himes (D-CT), a proponent of a potential U.S. central bank digital currency (CBDC) and Chair of the House Financial Service Subcommittee on Subcommittee on National Security, International Development, and Monetary Policy, and Congressman Tom Emmer (R-MN), an proponent of private sector solutions over a potential CBDC and co-Chair of the Congressional Blockchain Caucus, each published op-eds in the American Banker on CBDC. Congressman Himes argues that CBDC could support financial inclusion, U.S. competitiveness and the global role of the U.S. dollar, national security, and payments innovation. Congressman Emmer, on the other hand, focuses on the privacy concerns regarding CBDC issuance and developing digital cash as opposed to CBDC.     

The Securities and Exchange Commission (SEC) released new guidance requiring companies that issue securities to disclose to investors their exposure and risk to the cryptocurrency market. Following the demise of crypto exchange FTX, staff within the SEC’s Division of Corporation Finance called on issuers to evaluate their disclosures and consider whether there is any material information that investors need to know about their ties to the asset class.