- Top Lines
The U.S. Department of the Treasury published a report entitled “Assessing the Impact of New Entrant Non-bank Firms on Competition in Consumer Finance Markets.” This report specifically compares and contrasts new entrant non-bank firms with insured depository institutions and examines their effect on competition and services provided within the financial sector.
- Weekly Wrap Up
The Securities and Exchange Commission (SEC) released its Strategic Plan for fiscal years 2022 to 2026, outlining agency objectives to “fight against fraud, maintain a robust and relevant regulatory framework, and sustain a skilled and diverse workforce to serve America’s investors and capital-raising entrepreneurs alike.”
The report identifies the following action items regarding crypto assets:
Examining strategies to address systemic and infrastructure risks capital markets and market participants face, including the rapid growth of crypto assets. This includes pursuing new authorities from Congress where needed, continuing to collaborate with other regulators, and engaging proactively on digitization initiatives; and
Recognizing significant developments and trends in capital markets and adjusting SEC activities accordingly by increasing its expertise in product markets beyond equities, such as crypto assets.
SEC Chair Gary Gensler stated that “our capital markets touch all Americans’ lives, whether they’re saving for the future, borrowing for a mortgage, taking out an auto loan, or working for a company that raises money from the public. That’s why it is critical that the SEC continue to evolve and modernize our rulesets as technology, business models, and our markets change. Our Strategic Plan will help guide these efforts and advance our work to protect American families, keep pace with ever-changing times, and invest in our talented staff.”
The Office of the Comptroller of the Currency (OCC) announced revisions to its civil money penalty (CMP) manual which the agency will begin using on January 1, 2023. The OCC revised the CMP matrix applicable to its regulated institutions to allow for sufficient differentiation among varying levels of misconduct or by institution size, and updated the mitigating factors to provide a stronger incentive for banks to fully address underlying deficiencies.
The Board of Governors of the Federal Reserve System (FRB) and the Federal Deposit Insurance Corporation (FDIC) announced the results of their joint review of the resolution plans—also known as living wills—that the eight largest and most complex domestic banking organizations submitted in 2021. The agencies identified a shortcoming in Citigroup Inc.’s resolution plan and did not identify any other shortcomings or deficiencies in the plans from the other banking organizations.
Acting Comptroller of the Currency Michael J. Hsu, in his capacity as a Federal Deposit Insurance Corporation (FDIC) board member, released a statement that “the agencies’ shortcoming determination with regards to Citigroup is consistent with the OCC’s supervisory cease and desist order issued against Citibank, N.A., in October 2020 to require the bank to take broad and comprehensive corrective actions to improve risk management, data governance, and internal controls.”
U.S. Treasury Assistant Secretary for Terrorist Financing and Financial Crimes Elizabeth Rosenberg delivered remarks at the Crypto Council for Innovation. Rosenberg discussed Treasury’s Action Plan to Mitigate the Illicit Finance Risks of Digital Assets. The report identifies seven priority actions, including improving global anti-money laundering/countering the financing of terrorism (AML/CFT) regulation and enforcement, strengthening U.S. supervision of the virtual asset service providers sector, and engaging with the private sector.
The Consumer Financial Protection Bureau (CFPB) published a blog entitled “Using CFPB Complaint Data to Help Cities and Counties Protect the Public.” The blog discusses the CFPB’s Government Portal, which gives local, state, and federal government agencies access to granular information about consumers’ complaints and companies’ responses through a secure interface.
The SEC charged Goldman Sachs Asset Management (GSAM) for “policies and procedures failures involving two mutual funds and one separately managed account strategy marketed as Environmental, Social, and Governance (ESG) investments.” GSAM has agreed to pay a $4 million penalty.
Gurbir Grewal, Director of the Division of Enforcement at the SEC, delivered remarks at the Securities Enforcement Forum. Grewal discussed the public’s “declining trust” in institutions and financial markets and the steps that the SEC is taking to address it.
The CFPB published a blog entitled “Protecting the Right of Military Families to go to Court.” The blog states that “when American servicemembers seek to enforce their rights in court, the plain text of the law lets them do that.”
Senator Ron Wyden (D-OR) sent a letter to six large cryptocurrency exchanges asking for answers on the risks consumers face when investing on their platforms, including whether the exchanges provide any protections for customers if the company fails.
The CFPB published a blog entitled “Protecting Borrowers’ Control Over Their Money.” The blog discussed the CFPB’s amicus brief in the U.S. Court of Appeals for the Fourth Circuit to defend Truth in Lending Act (TILA) protections.
New York State Superintendent of Financial Services Adrienne Harris announced that the Department of Financial Services (DFS) has published for public comment a proposed regulation establishing how licensed virtual currency businesses would be assessed for costs of their supervision and examination. The proposed regulation effectuates a provision in the New York State FY23 Budget giving DFS new authority to collect supervisory costs from licensed virtual currency businesses, similar to other licensed financial institutions in the state.
- ICYMI
The Treasury, in consultation with the White House Competition Council, released a report entitled “Assessing Impacts of New Entrant Non-bank Firms on Competition in Consumer Finance Markets.” The report finds that, “while concentration among federally insured banks is growing, new entrant non-bank firms, in particular “fintech” firms, are adding significantly to the number of firms and business models competing in core consumer finance markets and appear to be contributing to competitive pressure. While these fintech firms are enabling new capabilities, they are also creating new risks to consumer protection and market integrity, such as risks related to data privacy and regulatory arbitrage. To protect consumers in these rapidly changing markets and enable sustainable competition, among other recommendations, the report calls for enhanced oversight of the consumer financial activities of non-bank firms.”