December 22, 2022

Following weeks of debate, the government funding Omnibus bill passed the Senate Thursday before moving to the House for consideration. Despite pressure on House Republicans to oppose the $1.7 trillion legislation, just days before the caucus takes control in the 118th Congress, it is expected that the House will take up and pass the measure before the weekend. 

On December 16, the Financial Stability Oversight Council (FSOC) held a Principals Meeting focusing on the transition from LIBOR, climate-related financial risks, and the Treasury’s 2022 Annual Report. 

The Senate Committee on Banking, Housing, and Urban Affairs and the House Financial Services Committee held hearings on the Consumer Financial Protection Bureau (CFPB)’s Semi-Annual Report to Congress.

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 for 71 domestic and foreign banking organizations. The agencies identified two deficiencies in the 2021 plan submissions of Credit Suisse AG and BNP Paribas.

Arizona Attorney General Mark Brnovich posted an Advisory Opinion on earned wage access products. Attorney General Brnovich stated that an earned wage access loan does not fall within the definition of a consumer loan.

The CFPB is ordering Wells Fargo Bank to pay more than $2 billion in redress to consumers and a $1.7 billion civil penalty for legal violations across several of its largest product lines. The CFPB stated that the bank’s illegal conduct led to billions of dollars in financial harm to its customers.

CFPB Director Rohit Chopra delivered remarks on the enforcement action, and stated that “Wells Fargo is a corporate recidivist that puts one third of American households at risk of harm.” 

The top Republican on the House Financial Services Committee, Patrick McHenry (R-NC) reintroduced H.R. 9556, the Financial Services Innovation Act, “to modernize and streamline how innovators interact with regulators to build a more inclusive financial system.” The bill would require federal regulators to create Financial Services Innovation Offices (FSIOs) within their agencies. He intends to reintroduce an updated version early next year.

The Securities and Exchange Commission charged Caroline Ellison, the former CEO of Alameda Research, and Zixiao (Gary) Wang, the former Chief Technology Officer of FTX Trading Ltd. (FTX), for their roles in a multiyear scheme to defraud equity investors in FTX, the crypto trading platform co-founded by Samuel Bankman-Fried and Wang. Investigations into other securities law violations and into other entities and persons relating to the alleged misconduct are ongoing.

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.