- Top Lines
The Consumer Financial Protection Bureau (CFPB) issued the Overdraft Notice of Proposed Rulemaking (Overdraft NPRM), which proposes to update regulations that apply to overdraft credit offered by certain financial institutions with more than $10 billion in assets (referred to as “very large financial institutions”) by amending Regulation E and Regulation Z. As proposed, Regulation Z would generally apply to all overdraft credit provided by very large financial institutions unless (1) the overdraft fee charged to a consumer is at or below the institution’s costs and losses of providing the overdraft service, or (2) the overdraft fee charged to a consumer is set at or below a benchmark fee to be set by the CFPB. The proposal would also update several additional provisions of Regulation E and Regulation Z so that overdraft credit is no longer excepted from those provisions.
Read President Biden’s statement here.
Read CFPB Director Rohit Chopra’s remarks here.
Read a statement on the proposal from House Financial Services Committee Chairman Patrick McHenry (R-NC) and Subcommittee on Financial Institutions and Monetary Policy Chairman Andy Barr (R-KY) here.
Read a statement on the proposal from Senate Banking Committee Chairman Sherrod Brown (D-OH) here.
- Midweek Update
The Treasury Department and Internal Revenue Service (IRS) announced that businesses do not have to comply with the the rules promulgated in the Infrastructure Investment and Jobs Act requiring taxpayers engaged in a trade or business to report receiving digital assets valued at $10,000 or more until Treasury and IRS issue regulations. This is memorialized in Announcement 2024, which provides transitional guidance as Treasury and the IRS implement the new provisions.
Secretary of the Treasury Janet Yellen delivered remarks at the U.S. Conference of Mayors Winter Meeting. Secretary Yellen discussed the partnership that the Administration has with cities and states, avoiding a government shutdown, and the American Rescue Plan. Secretary Yellen also met with several mayors to discuss the recovery of the U.S. economy.
The Federal Reserve Board (FRB) and the Federal Deposit Insurance Corporation (FDIC) announced that they are extending the resolution plan submission deadline for certain large financial institutions. These companies will be required to submit their resolution plans by March 31, 2025, instead of July 1, 2024. FDIC Vice Chairman Travis Hill published a statement supporting the extension.
FRB Vice Chair for Supervision Michael Barr delivered opening remarks at the Conference on Measuring Cyber Risk in the Financial Services Sector. Vice Chair for Supervision Barr discussed cyber threats, cybersecurity preparedness, and operational resilience.
FRB Governor Michelle Bowman delivered a speech on the path forward for bank capital reform. Governor Bowman discussed proposed changes to bank capital rules in the United States.
The FDIC published the Consolidated Reports of Condition and Income (Call Report) for the December 31, 2023, report date along with guidance on certain reporting issues.
The Securities and Exchange Commission (SEC) announced it settled charges against J.P. Morgan Securities LLC (JPM Securities) for impeding hundreds of advisory clients and brokerage customers from reporting potential securities law violations to the SEC. JPM Securities agreed to pay an $18 million civil penalty to settle the charges. According to the SEC’s order, from March 2020 through July 2023, JPM Securities regularly asked retail clients to sign confidential release agreements if they had been issued a credit or settlement from the firm of more than $1,000. The agreements required the clients to keep confidential the settlement, all underlying facts relating to the settlement, and all information relating to the account at issue. In addition, even though the agreements permitted clients to respond to SEC inquiries, they did not permit clients to voluntarily contact the SEC.
The CFPB published a blog warning consumers about CFPB imposter scams in which scammers are using CFPB employees’ names to try to defraud members of the public.
The House Financial Services Committee will hear from Treasury Deputy Secretary Wally Adeyemo on Feb. 14, a House aide reported to Politico. Cryptocurrency enforcement is expected to be the main topic.
The House Committee on Financial Services Subcommittee on Digital Assets, Financial Technology, and Inclusion held a hearing to examine the impact of the Financial Stability Oversight Council’s (FSOC) new guidance on nonbank financial company designations. The hearing touched on FSOC’s approach to cryptocurrency, artificial intelligence (AI), and Systemically Important Financial Institutions (SIFI) designations. Read our summary here.
New York Department of Financial Services (NYDFS) Superintendent Adrienne Harris issued for public comment a proposed circular letter addressing the use of artificial intelligence by licensed insurers. The circular letter outlines DFS’s expectations for how insurers develop and manage the integration of external consumer data and information sources (“ECDIS”), artificial intelligence systems (“AIS”), and other predictive models to mitigate potential harm to consumers.
- ICYMI
The Consumer Financial Protection Bureau (CFPB) issued two Advisory Opinions related to requirements in the Fair Credit Reporting Act (FCRA). The first advisory opinion underscores that to trigger a consumer reporting agency’s file disclosure requirements, a consumer does not need to use specific language. The advisory opinion also highlights the requirements regarding the information that must be disclosed to a consumer when providing their file disclosure. The second advisory opinion relates to background screening practices. It affirms that a consumer reporting agency that reports public record information is not using reasonable procedures to assure maximum possible accuracy under the FCRA if it does not have procedures in place that: (1) prevent reporting information that is duplicative or that has been expunged, sealed, or otherwise legally restricted from public access; and (2) include any existing disposition information if it reports arrests, criminal charges, eviction proceedings, or other court filings.
Following President Biden’s veto of the Congressional Review Act resolution to overturn the CFPB’s rule on small business lending pursuant to Section 1071 of the Dodd-Frank Act, the Senate voted 54-45 to override the veto, falling short of the ⅔ vote required. Note that due to ongoing litigation, according to the CFPB, all deadlines for compliance with the small business lending rule are stayed for all covered financial institutions.
Senator Sherrod Brown (D-OH), Chairman of the Senate Committee on Banking, Housing, and Urban Affairs, released a statement that the outcome “is a win for the engines of our economy: small businesses and entrepreneurs.”
Need to catch up on what happened last week? Check out our January 12th End of Week Wrap Up here.