May 27, 2022

Acting Comptroller of the Currency Michael Hsu discussed vulnerabilities in the cryptocurrency framework and recent volatility with stablecoins in remarks at the Chamber of Digital Commerce’s DC Blockchain Summit 2022. In his remarks, the Acting Comptroller discussed the fragmented ecosystem of cryptocurrency, risk of contagion, and underdeveloped custody and ownership rights. He also emphasized the Office of the Comptroller of the Currency’s careful and cautious approach to cryptocurrency to ensure the safety and soundness of the federal banking system.

The Consumer Financial Protection Bureau (CFPB) announced it is replacing the Office of Innovation and Project Catalyst with its new Office of Competition and Innovation, as part of a new approach to help spur innovation in financial services by promoting competition and identifying stumbling blocks for new market entrants. The new office will support a broader initiative by the CFPB to analyze obstacles to open markets, better understand how big players are squeezing out smaller players, host incubation events, and, in general, make it easier for people to switch financial providers. The CFPB is also ceasing its No Action Letter and Sandbox program.

New York Governor Kathy Hochul signaled she would weigh economic concerns raised by the cryptocurrency industry if a moratorium on fossil fuel-powered proof-of-work mining made it to her desk. Hochul, answering questions from reporters in Albany, declined to take a firm stance on the issue of cryptocurrency mining. “There is a balancing act involved here … and I understand the passion on both sides of the issue,” she said. “We have to balance protecting the environment but also need to protect the opportunity for jobs … and making sure that the energy consumed by these entities is managed properly.”

The Federal Deposit Insurance Corporation (FDIC) published its 2022 Risk Review, a comprehensive summary of emerging risks in the U.S. banking system as observed in 2021. The 2022 Risk Review expands coverage of risks from prior reports by examining operational risk to banks from cyber threats and illicit activity, and climate-related financial risks faced by banking organizations. Monitoring these risks is among the FDIC’s top priorities.

The CFPB said in a policy statement that federal anti-discrimination law requires companies to explain to applicants the specific reasons for denying an application for credit or taking other adverse actions, even if the creditor is relying on credit models using complex algorithms. The CFPB published the statement to remind the public, including those responsible for enforcing federal consumer financial protection law, of creditors’ adverse action notice requirements under the Equal Credit Opportunity Act (ECOA). 

The FDIC has adopted Guidelines for Appeals of Material Supervisory Determinations that restore the Supervision Appeals Review Committee (SARC) as the final level of review in the agency’s supervisory appeals process.  The revised Guidelines take effect May 17, 2022.  The FDIC is soliciting comment on the revised Guidelines with a comment period of 30 days.

The U.S. Department of Housing and Urban Development (HUD) announced $10.3 billion in Fiscal Year 2022 formula grants to communities across the United States for housing and community development activities ranging from affordable housing development to public housing modernization to economic opportunities for people with low and moderate incomes.

The Department of Commerce published a Request for Comment (RFC) on digital assets and U.S. competitiveness in the Federal Register on May 19, 2022, due 45 days after publication (note that this may need to be adjusted by a few days as the submission date falls on Sunday, July 3). The RFC follows from the Executive Order of March 9, 2022, “Ensuring Responsible Development of Digital Assets,” (the EO) which outlines U.S. policy objectives with respect to digital assets. The Executive Order directs the Secretary of Commerce, in consultation with the Secretary of State, the Secretary of the Treasury, and the heads of any other relevant agencies, to establish a framework for enhancing U.S. economic competitiveness in, and the leveraging of, digital asset technologies. Commerce is requesting input from the public that will inform its work in developing the scope of the economic competitiveness framework. Read our summary of the RFC here.

Last week, the CFPB issued an interpretive rule that describes states’ authorities to enforce federal consumer financial protection laws. 

The House Small Business Committee held a hearing discussing the Small Business Administration’s (SBA) Office of Capital Access (OCA). In particular, the hearing focused on the SBA’s COVID-19 recovery programs and existing agency loan programs.

The House Small Business Committee held a hearing discussing the Small Business Administration’s (SBA) Office of Capital Access (OCA). In particular, the hearing focused on the SBA’s COVID-19 recovery programs and existing agency loan programs.

The House Appropriations Subcommittee on Financial Services and General Government’s (FSGG) held a hearing with Securities and Exchange Commission (SEC) Chair Gary Gensler and Federal Trade Commission (FTC) Chair Lina Khan to discuss the Biden Administration’s FY 2023 budget requests.

The Senate Banking Committee held nomination hearings of the Honorable Michael S. Barr, of Michigan, to be a Member and Vice Chairman for Supervision of the Board of Governors of the Federal Reserve System; Mr. Jaime E. Lizárraga, of Virginia, to be a Member of the Securities and Exchange Commission; and Mr. Mark Toshiro Uyeda, of California, to be a Member of the Securities and Exchange Commission.