January 19, 2024

Today, the Department of the Treasury (Treasury), Department of Justice (DOJ), Department of Commerce (Commerce), and Office of Science and Technology Policy (OSTP) within The White House published reports that follow from the Biden Administration’s Executive Order on Ensuring Responsible Development of Digital Assets (the EO). 

The United States and the People’s Republic of China held the third meeting of the Financial Working Group (FWG) on January 18 and 19. This was the first meeting of the FWG in 2024, and its first meeting held in China. The group discussed financial stability and capital markets issues, international financial institutions, sustainable finance, cross-border payments and data, and anti-money laundering and countering the financing of terrorism (AML/CFT).

Treasury Assistant Secretary for Financial Institutions Graham Steele delivered remarks at the George Washington University Law School Business & Finance Law Program. He discussed the “seven Cs” of his policy portfolio: community, climate, cybersecurity, cryptocurrency, capital, competition, and consumers. Assistant Secretary Steele stated that “crypto-assets have occupied an outsized amount of policymakers’ bandwidth over the past three years relative to the value of their demonstrated use cases.”

The Federal Reserve Board (FRB) issued an enforcement action and fined the Industrial and Commercial Bank of China Ltd. (ICBC) and its New York branch approximately $2.4 million for their unauthorized use and disclosure of confidential supervisory information. New York Department of Financial Services (NYDFS) Superintendent Adrienne Harris also announced that ICBC and its New York branch have agreed to pay $30 million in penalties pursuant to a Consent Order.

Acting Comptroller of the Currency Michael J. Hsu issued remarks on bank liquidity risk at Columbia University Law School in New York. In his remarks, Mr. Hsu discussed the characteristics of recent bank runs and lessons learned from recent bank failures. He also discussed a targeted regulatory approach to better classify higher risk deposits, cover acute short-term outflows, and mitigate contagion risk. He further highlighted how the adoption of faster payments and tokenization may impact liquidity risk management in the future.

The Consumer Financial Protection Bureau (CFPB) and seven state attorneys general sued Strategic Financial Solutions (SFS) and its web of shell companies for running an illegal debt-relief enterprise. The CFPB and state attorneys general also sued the chief architects of the SFS, Ryan Sasson and Jason Blust. The CFPB and attorneys general allege the enterprise has collected hundreds of millions of dollars in illegal fees from vulnerable consumers.

House Financial Services Committee Ranking Member Maxine Waters (D-CA) released a statement in response to the CFPB’s 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. Rep. Waters applauded the CFPB’s work. 

Senator Raphael Warnock (D-GA), Chair of the Senate Banking Subcommittee on Financial Institutions and Consumer Protection, also released a statement on the CFPB’s Overdraft Notice of Proposed Rulemaking. “I’m glad the Biden Administration has acted on an issue that I’ve highlighted for years in the Senate. Wealthy bankers are using exorbitant overdraft fees to take hard-earned money out of Americans’ pockets and line their own,” said Senator Warnock. 

Nine Democratic senators, including Senate Finance Committee Chair Ron Wyden (D-OR), sent a letter to the Federal Trade Commission (FTC) asking the FTC to investigate whether people promoting the Employee Retention Credit violated advertising laws.

Representative Young Kim (R-CA), Capital Markets Subcommittee Chairwoman Ann Wagner (R-MO), Financial Services Oversight and Investigations Subcommittee Chairman Bill Huizenga (R-MI), Digital Assets, Financial Technology and Inclusion Subcommittee Chairman French Hill (R-AR), Financial Institutions and Monetary Policy Subcommittee Chairman Andy Barr (R-KY), and Capital Markets Subcommittee Vice Chairman Andrew Garbarino (R-NY) introduced the Review the Expansion of Government (REG) Act (H.R. 7030) intended to bolster Congressional oversight of the Securities and Exchange Commission (SEC). 

Senate Banking Committee Ranking Member Tim Scott (R-SC) and Joe Manchin (D-WV) introduced the Business of Insurance Regulatory Reform Act. The bill would bar the CFPB from regulating and bringing enforcement actions against insurance activities subject to oversight by state insurance commissioners.

Senator Tim Scott sent a letter to Treasury Secretary Janet Yellen and U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) Director Andrea Gacki requesting answers following recent reports that FinCEN instructed financial institutions to infringe on Americans’ privacy and surveil their customers’ transactions.

Senator Tim Scott introduced legislation intended to make  reforms to ease reporting requirements for small businesses and close loopholes for Chinese shell companies operating in the United States. The Protect Small Businesses and Prevent Illicit Financial Activity Act would extend the timeline for small businesses to comply with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) regulation on beneficial ownership reporting requirements and prohibit FinCEN from allowing companies to omit information to obfuscate their true owners.

Senator Sherrod Brown (D-OH), Chairman of the Senate Banking Committee, along with Senators Jack Reed (D-RI), Elizabeth Warren (D-MA), Chris Van Hollen (D-MD), Catherine Cortez Masto (D-NV), Tina Smith (D-MN), John Fetterman (D-PA), Richard Blumenthal (D-CT), Brian Schatz (D-HI), Mazie Hirono (D-HI), Angus King (I-ME), and Tammy Duckworth (D-IL) sent a letter to FRB Vice Chair for Supervision Michael Barr, Federal Deposit Insurance Corporation (FDIC) Chair Martin Gruenberg, and Office of the Comptroller of the Currency (OCC) Acting Comptroller Hsu voicing their support for the new capital rules proposed by the agencies.

Former President Donald Trump said that if elected he would not allow the Federal Reserve to create a digital dollar at a campaign event in New Hampshire, Politico reported

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

Need to catch up on what happened last week? Check out our January 17th Midweek Update here