February 28, 2024

Senate Minority Leader Mitch McConnell (R-KY) announced that he will step down from his position in November. Senator McConnell has been the leader of the Senate Republican Conference since 2007 and is the longest serving Senate party leader in U.S. history.

The U.S. Department of the Treasury (Treasury) hosted a roundtable discussion with experts and representatives from climate and consumer groups to discuss how the increased risks from climate change are affecting U.S. insurance markets. Under Secretary for Domestic Finance Nellie Liang, Climate Counselor Ethan Zindler, and other senior Treasury officials, led discussions on climate change and its effects on insurance access and availability for single- and multi-family residences; mitigation and resilience efforts; and potential solutions to challenges in U.S. insurance markets, particularly efforts undertaken by states and localities. Treasury also intends to convene industry stakeholders for a discussion on the impacts of climate change on insurance markets.

The U.S. District Court for the Western District of Texas granted a temporary restraining order to the Texas Blockchain Council and Riot Platforms Inc. in their lawsuit against the Department of Energy (DOE), Energy Information Administration (EIA), and Office of Management and Budget. The plaintiffs, which include a cryptocurrency trade association and bitcoin mining company, had filed suit for a 4-week stay on the EIA’s emergency declaration to collect certain information regarding digital asset miners’ energy use. The survey is aimed at collecting certain operational data and information from digital currency mining operations across the US.

The Internal Revenue Service announced the addition of two private-sector experts to help the agency’s efforts in the cryptocurrency and other digital assets arena. Sulolit “Raj” Mukherjee and Seth Wilks have been hired as executive advisors. Mukherjee is the former Global Head of Tax at ConsenSys, and has held senior roles at Binance.US. Wilks is joining after serving as TaxBit’s Vice President of Government Relations.

Federal Reserve Board (FRB) Vice Chair for Supervision Michael S. Barr gave a speech on the importance of counterparty credit risk management. Vice Chair Barr discussed the importance of risk management and thorough due diligence in understanding counterparties, setting prudent risk limits, and the necessity of international cooperation. Vice Chair Barr emphasized the need for robust risk management practices to ensure stability and strength in the financial system, especially in light of the significant growth and interconnectedness of the hedge fund industry.

FRB Governor Michelle Bowman delivered remarks on the economy and bank regulation. Governor Bowman discussed monetary policy, notable developments in bank regulation, capital reform, the Community Reinvestment Act (CRA), Regulation II and debit card interchange fees, mergers and acquisitions, climate change, and liquidity. Governor Bowman stated that for policymakers to appropriately develop regulations, the industry must provide engagement and feedback about what is working, what is not, and what the consequences are of regulations that do not support safety and soundness in an efficient and fair way.

The CFPB published an order establishing supervisory authority over installment lender World Acceptance. In 2022, after conducting an assessment of its supervision program, the CFPB alleged that the agency was failing to conduct oversight using a legal authority to supervise entities posing risks to consumers. The CFPB began to utilize this dormant authority and issued procedures to promote transparency about this tool.

The CFPB published a blog on unlawful fees in the mortgage market. The blog discusses the proliferation of junk fees in consumer financial markets and the work that the CFPB is doing to ensure that mortgage companies don’t tack on unlawful fees. The blog also discusses the CFPB and the Federal Trade Commission’s (FTC) work to enforce the Fair Debt Collection Practices Act (FDCPA), and the CFPB and FTC’s recent amicus brief regarding Ocwen Loan Servicing’s unlawful fees.

The Securities and Exchange Commission (SEC) charged Paul A. Pereira, the former CEO and co-founder of Alfi, Inc., with making materially false and misleading statements on social media about the company’s financial and performance metrics in an attempt to boost the now-defunct company’s stock price.

The National Institute of Standards and Technology (NIST) updated the widely used Cybersecurity Framework (CSF), its landmark guidance document for reducing cybersecurity risk. The new 2.0 edition is designed for all audiences, sectors, and organization types, regardless of their degree of cybersecurity sophistication.

House Financial Services Committee Chair Patrick McHenry (R-NC) reintroduced the Financial Services Innovation Act. This legislation establishes federal regulatory sandboxes through Financial Services Innovation Offices (FSIOs) at federal financial regulators. The bill would require federal regulators to create FSIOs within their agencies to foster innovation. Once established, companies could apply for an “enforceable compliance agreement” with the respective FSIOs that, if accepted, would allow them to provide an innovative product or service under an alternative compliance plan.

Following Capital One’s recent announcement to acquire Discover, House Financial Services Committee Ranking Member Maxine Waters (D-CA) led 15 Committee Democrats in a letter urging the U.S. Department of Justice and the FRB, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) to move quickly to update their bank merger review procedures in order to protect consumers from the continued trend of mega bank mergers.

A bipartisan group of 22 members of Congress, — led by Representatives Josh Gottheimer (D-NJ), Henry Cuellar (D-TX), and Jerry Carl (R-AL) — wrote to congressional leadership and called for the inclusion of the “financial fraud” language included within the Senate Appropriations Committee’s FY24 Financial Services and General Government bill report.

Congresswoman Erin Houchin (R-IN), alongside Congressman Bill Foster (D-IL), and Congressman French Hill (R-AR), announced the introduction of the Fostering the Use of Technology to Uphold Regulatory Effectiveness in Supervision (FUTURES) Act. This bipartisan legislation aims to modernize technology systems within federal agencies responsible for regulating banks and credit unions, enhancing their capacity for effective supervision and oversight. 

The North American Securities Administrators Association (NASAA) released its 2023 Enforcement Report, which shows state securities regulators were responsible for nearly $1 billion in monetary relief ordered as a result of state enforcement actions in 2022. In 2022, state securities regulators investigated 8,538 cases and initiated 1,163 enforcement actions, including 136 criminal actions, 59 civil actions, and 825 administrative actions. State regulators also secured $702 million in restitution and more than $223 million in fines, as well as approximately 5,337 months in prison sentences and 9,520 months of supervised release. The 8,538 cases represent a sharp increase from the 7,029 cases reported in 2021.

New York State Department of Financial Services Superintendent Adrienne A. Harris announced that Gemini Trust Company, LLC (“Gemini”) has committed to return at least $1.1 billion to Gemini Earn Program (“Earn”) customers through the Genesis Global Capital, LLC (“GGC”) bankruptcy proceeding. In furtherance of that commitment, Gemini will contribute $40 million to the GGC bankruptcy for the benefit of Earn customers in coordination with the Bankruptcy Court. Gemini will also pay a $37 million fine to DFS for significant failures that threatened the safety and soundness of the company. 

The California Department of Financial Protection and Innovation (DFPI) announced that it has entered into a consent order with San Francisco-based Chime Financial, Inc. (Chime).  The order, which includes a $2.5 million penalty, resolves DFPI’s investigation regarding the accuracy and responsiveness of Chime’s handling of customer service transactions.

Need to catch up on what happened last week? Check out our February 23rd End of Week Wrap Up here