March 6, 2024

The Consumer Financial Protection Bureau (CFPB) finalized its rule affecting credit card late fees, primarily for larger card issuers. The rule sets an $8 late fee safe harbor threshold for card issuers with over one million open accounts and eliminates higher fees for subsequent violations within six billing cycles. The rule also amends various sections and comments in Regulation Z to align with this new late fee standard. The CFPB stated the adjustments aim to ensure fees are reasonable and proportional, as required by the Truth in Lending Act (TILA). The effective date is 60 days after publication in the Federal Register.

House Financial Services Committee Chairman Patrick McHenry (R-NC) issued a statement that the rule will raise the cost of borrowing for all consumers and criticized the Biden Administration for “weaponizing financial regulators to play politics in an election year.”

Senate Banking Committee Ranking Member Tim Scott (R-SC) issued a statement that the rule will negatively affect consumers’ access to credit and stated that he would use the Congressional Review Act process to fight the implementation of the rule.

Read CFPB Director Rohit Chopra’s statement on the final rule here.

The Securities and Exchange Commission (SEC) adopted the climate disclosure rule.  The rule will require registrants to disclose certain climate-related information in their registration statements and annual reports. The rule will be phased in over the next decade with certain parts set to take effect for large companies in 2025.

House Financial Services Committee Chairman McHenry issued a statement criticizing the rule and said the Committee would hold hearings on March 18th and April 10th to hear about its impact. 

Senate Banking Committee Ranking Member Tim Scott issued a statement criticizing the rule as “Federal overreach at its worst,” and stating he would use the Congressional Review Act to fight it.

The Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) released final rules on key provisions in the Inflation Reduction Act as part of the Biden-Harris Administration’s Investing in America agenda. The rules are intended to expand the reach of clean energy tax credits.

Treasury also issued a separate Notice of Proposed Rulemaking (NPRM) intended to provide further clarity and flexibility for applicable entities that co-own clean energy projects and would like to utilize elective pay.

The SEC charged ShapeShift AG, a Swiss company that previously operated out of Colorado, with acting as an unregistered dealer in connection with its operation of an online crypto asset trading platform. To settle the SEC’s charges, ShapeShift agreed to pay a $275,000 penalty.

SEC Commissioners Hester Peirce and Mark Uyeda issued a dissenting statement, arguing that the enforcement action is “the latest installment in the serial drama of the Commission’s poorly conceived crypto policy,” and that the action “underscores the adverse consequences of the Commission’s approach to regulation in the crypto space and adds to the ambiguity that hangs over the crypto world.” The Commissioners further stated that it is “entirely unclear” how ShapeShift was to discern that the SEC would consider crypto assets a security in the form of an investment contract, and said that the environment that the SEC has created for crypto asset markets “exposes well-meaning entrepreneurs to a regulatory sword of Damocles.”

SEC Commissioner Uyeda delivered remarks to the Council of Institutional Investors entitled “Dangers of the Unbounded Administrative State.” Commissioner Uyeda discussed private fund adviser rules, the definition of a dealer, and cryptocurrencies and the definition of a security. Commissioner Uyeda stated that market participants need to know when their conduct implicates the securities laws and when it does not, and said that the SEC’s broad jurisdictional claims on the definition of “dealer” and the definition of “security” without any practical limiting principle should be concerning for all. 

House Financial Services Committee Chairman McHenry and Financial Institutions and Monetary Policy Subcommittee Chairman Andy Barr (R-KY) led all Republicans on the House Financial Services Committee in a letter to Federal Reserve Board (FRB or Fed) Chair Jerome Powell, Acting Comptroller of the Currency Michael Hsu, and Federal Deposit Insurance Corporation (FDIC) Chair Martin Gruenberg. The Representatives are demanding that the regulators withdraw their Basel III Endgame proposal due to insufficient economic analysis, transparency, attention to stakeholder input, and bipartisan agreement. The lawmakers also urged banking regulators to ensure rigorous quantitative analysis and greater transparency accompany any future efforts to implement any elements of the proposed framework.

Rep. McHenry appeared before the House Committee on Rules to speak in support of H.R. 2799, the Expanding Access to Capital Act, which would loosen securities regulations in an effort to increase access to capital markets. The bill would create new SEC registration exemptions, preempt state laws related to securities regulation and independent contractor status, and change the accredited investor definition to enable more individuals to invest in private companies. Rep. McHenry stated that the bill would facilitate capital formation by strengthening public markets, helping small businesses and entrepreneurs, and creating new opportunities for all investors.

The House Financial Services Committee advanced five pieces of legislation out of Committee. The bills include:

  • H.J. Res. 109, which overturns the U.S. Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin (SAB) 121. SAB 121, introduced as staff-level guidance in March 2022 and implemented the following month, but later found to be a rule, states that digital asset custodians should report a liability and “corresponding assets” on their balance sheets for all digital assets held in custody;

  • H.R. 6864, the “HUD Accountability Act of 2023,” which requires the U.S. Department of Housing and Urban Development (HUD) Secretary to testify before the Committee annually;

  • H.R. 7280, the “HUD Transparency Act of 2024,” which requires the HUD Inspector General to testify before the Committee annually;

  • H.R. 7156, the “Combating Money Laundering in Cyber Crime Act of 2024,” which closes a gap limiting the U.S. Secret Service’s ability to  investigate various crimes related to digital asset transactions and to counter transnational cyber-criminal activity; and

  • H.R. 7462, the “Wildfire Insurance Coverage Study Act of 2023,” which  requires the U.S. Government Accountability Office to conduct a study on the damage of wildfires, including the risks they pose to property, the existing state of insurance coverage, potential government mitigation responses, and the challenges faced by private insurers underwriting wildfire risk.

Need to catch up on what happened last week? Check out our March 1st End of Week Wrap Up here