Weekly Wrap Up

November 15, 2023

The House passed a short-term funding bill Tuesday that would avert a government shutdown Saturday. The vote was 336-95, with 209 Democrats and 127 Republicans voting to support it. The continuing resolution, or CR, would would fund part of the government — including the Agriculture, Transportation, Housing and Urban Development and Veterans Affairs departments — through Jan. 19 and fund the Defense Department and other remaining parts of the government through Feb. 2.

The Consumer Financial Protection Bureau (CFPB) ordered online lender Enova International Inc. to pay a $15 million penalty for widespread illegal conduct including withdrawing funds from customers’ bank accounts without their permission, making deceptive statements about loans, and cancelling loan extensions. Enova paid a $3.2 million penalty to the CFPB in 2019, and was ordered to cease its illegal conduct. For violating that order and continuing to break the law, Enova is now banned from offering certain consumer loans, must provide redress to the consumers it harmed, and is required to tie executive compensation to the company’s compliance with federal consumer financial protection laws.

The Organization for Economic Cooperation and Development (OECD) announced a collective pledge by 48 countries, including the United States, to implement the Crypto-asset Reporting Framework (CARF), a global tax transparency standard for crypto-assets, by 2027. It aims to establish a standardized method for reporting tax information on transactions involving crypto-assets. OECD Secretary-General Mathias Cormann welcomed the announcement, stating that it is “an important milestone towards the widespread and coordinated approach to combat tax evasion through greater transparency and exchange of information.”  

On the second anniversary of the signing of the Bipartisan Infrastructure Law (BIL), the U.S. Department of the Treasury (Treasury) published an analysis of how the BIL “has strengthened long-term productive capacity in the U.S. while creating a fairer future for Americans in economically disadvantaged communities.” The analysis by Assistant Secretary for Economic Policy (P.D.O.) Eric Van Nostrand describes how the $1.2 trillion of federal funds towards transportation, energy, and climate infrastructure projects has reversed historical trends by spurring a significant surge in infrastructure investments while channeling toward states with the lowest-rated infrastructure and lower household income.  

The Treasury also published an analysis of how the Inflation Reduction Act, Bipartisan Infrastructure Law, and other federal policies to address climate change can promote economic growth. The analysis by Assistant Secretary for Economic Policy Van Nostrand and Deputy Assistant Secretary for Climate & Energy Economics Arik Levinson states that the Inflation Reduction Act will promote growth by reducing greenhouse gas emissions, incentivizing climate adaptations, combatting pollution that often accompanies greenhouse emissions, increasing research and development, and reducing economic vulnerability to the international price volatility of fossil fuels. The analysis is available here.

Secretary of the Treasury Janet Yellen also delivered remarks on the analysis of the BIL.

Treasury Under Secretary for Terrorism and Financial Intelligence Brian E. Nelson held a roundtable with money services businesses (MSBs), including virtual asset service providers (VASPs); payment processors; and blockchain analytics companies to highlight recent Treasury actions to counter illicit finance, including in the virtual asset ecosystem and to hear the group’s perspectives on techniques used by terrorist groups to raise and move funds.

The Board of Governors of the Federal Reserve System (FRB or Fed), Office of the Comptroller of the Currency (OCC), and Consumer Financial Protection Bureau (CFPB) jointly announced that the 2024 threshold for whether higher-priced mortgage loans are subject to special appraisal requirements will increase from $31,000 to $32,400. The threshold amount will be effective January 1, 2024 and is based on the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers, known as CPI-W, as of June 1, 2023.

The CFPB and FRB also announced several other annual threshold adjustment final rules. The first and second rules are joint rulemakings between the CFPB and the Federal Reserve Board to adjust the thresholds in Regulation Z for determining the exempt consumer credit transactions under TILA and and Regulation M for the exempt consumer lease transactions under the Consumer Leasing Act, respectively. The third rule is a CFPB rulemaking to adjust the maximum amount consumer reporting agencies may charge consumers for making a file disclosure to a consumer under the FCRA. These adjustments are effective January 1, 2024.

The Fed published its November 2023 Supervision and Regulation Report. The report summarizes banking conditions and the Fed’s supervisory and regulatory activities, in conjunction with semiannual testimony before Congress by the Vice Chair for Supervision.

FRB Governor Lisa Cook delivered welcoming remarks at the 5th Annual Conference on “Nontraditional Data, Machine Learning, and Natural Language Processing in Macroeconomics” in Washington, D.C. Governor Cook discussed evolving data sources and advances in computing and how to improve the conceptual framework that macroeconomic policymakers use to inform their decisions.

FRB Governor Michelle Bowman delivered remarks on the economy and prioritization of bank supervision and regulation at the New York Bankers Association’s Financial Services Forum in Palm Beach, Florida. Governor Bowman discussed evolving bank regulations. Specifically, her speech focused on economic and monetary policy, capital requirements reform and its impact on the banking system, the Community Reinvestment Act and its impact on community banks, the interchange fee cap proposal, climate guidance, and regulation and supervision.

Jonathan McKernan, Director of the Federal Deposit Insurance Corporation (FDIC) Board of Directors, published a statement addressing recent reports regarding the FDIC’s workplace culture and widespread misconduct by FDIC employees.

Director McKernnon also published a joint statement with Vice Chairman Travis Hill stating that it is “vital that the independent review initiated by the Chairman be effectively overseen by the Board and have the latitude and time needed to conduct a thorough, holistic review.”

Earlier this week, the Chairman of the House Financial Services Committee, Patrick McHenry (R-NC), the Chairman of the Subcommittee on Oversight and Investigations, Bill Huizenga (R-MI), and the Chairman of the Subcommittee on Financial Institutions and Monetary Policy, Andy Barr (R-KY) sent a letter to the Office of the Inspector General (OIG) for the FDIC “demanding the OIG expeditiously provide a briefing on the FDIC’s workplace culture.”

FDIC Chairman Martin Gruenberg stated at a hearing on Tuesday that the matter was “deeply disturbing” and said the FDIC would employ all its resources to review internal practices “and how we can most effectively address it.”

The Securities and Exchange Commission (SEC) announced it filed 784 total enforcement actions in fiscal year 2023, a 3 percent increase over fiscal year 2022, including 501 original, or “stand-alone,” enforcement actions, an 8 percent increase over the prior fiscal year. The SEC also filed 162 “follow-on” administrative proceedings seeking to bar or suspend individuals from certain functions in the securities markets based on criminal convictions, civil injunctions, or other orders and 121 actions against issuers who were allegedly delinquent in making required filings with the SEC.

Rep. Andrew Garbarino (R-NY), Chairman of the Cybersecurity and Infrastructure Protection Subcommittee of the House Homeland Security Committee and a Member of the House Financial Services Committee, introduced a Congressional Review Act (CRA) resolution to overturn the SEC’s cyber disclosure rule. Senator Thom Tillis (R-NC), a Member of the Senate Committee on Banking, Housing, and Urban Affairs, introduced the companion CRA resolution in the Senate.

Senate Banking Committee Ranking Member Tim Scott (R-SC), along with 38 colleagues, led a letter to the Fed, FDIC, and OCC urging them to withdraw the Basel III Endgame proposal. The signers argue that the proposal lacks proper analysis or data to justify its merit, will result in costlier and more limited access to credit for Americans, and will negatively impact the U.S. economy.

Reps. McHenry and Barr sent letters to the OCC, Fed, and FDIC, demanding answers on the role of U.S. regulators in “unaccountable and opaque global governance bodies, where Biden-appointed officials are ceding authority over American financial regulation while putting our financial system at a competitive disadvantage.” Read the letter to the OCC here, the letter to the Fed here, and the letter to the FDIC here.

Rep. McHenry and Sen. Cynthia Lummis (R-WY) led a letter with a bipartisan group of colleagues to the OCC, the Fed, the FDIC, and the National Credit Union Administration (NCUA). The lawmakers are urging the regulators to clarify that the SEC’s Staff Accounting Bulletin 121, relating to financial institutions’ custody of digital assets, is not enforceable considering the Government Accountability Office’s (GAO) finding that it constitutes a “rule” for purposes of the CRA. The letter was also signed by Senator Kirsten Gillibrand (D-NY), Rep. French Hill (R-AR), Rep. Ritchie Torres (D-NY), Rep. Mike Flood (R-NE), and Rep. Wiley Nickel (D-NC).

Rep. Maxine Waters (D-CA), Ranking Member of the House Financial Services Committee, released a statement applauding the CFPB’s proposed larger participant rulemaking that would subject digital payments apps to the same supervisory examinations the Bureau conducts on banks and credit unions. 

The House Financial Services Subcommittee on Financial Institutions and Monetary Policy held a hearing discussing issues related to financial regulation. 

New York State Department of Financial Services (DFS) Superintendent Adrienne Harris issued guidance which adopts enhanced requirements for coin-listing and delisting policies of DFS-regulated virtual currency entities, updating the prior framework issued by the Department in 2020. 

The California Department of Financial Protection and Innovation released a second draft for pre-notice public comment of proposed regulations under the Debt Collection Licensing Act (PRO 05-21). Interested parties should submit comments, including comments describing the potential financial impact of the draft regulations, by January 15, 2024.

KC Mohseni was appointed Chief Deputy Commissioner of the California Department of Financial Protection and Innovation. Mohseni previously served as Chief Operating Officer in the State Controller’s Office from 2022 to 2023, and as Deputy Director of Administration at the California Department of Housing and Community Development from 2020 to 2022. 

The Consumer Financial Protection Bureau (CFPB) proposed supervising large nonbank companies that offer services like digital wallets and payment apps via notice of proposed rulemaking for consumer payments. The proposed rule would require nonbank financial companies – specifically those companies handling more than 5 million transactions per year – to adhere to the same rules as large banks, credit unions, and other financial institutions already supervised by the CFPB.

Rep. Patrick McHenry (R-NC), Chairman of the House Financial Services Committee,  issued a statement that the proposed rule is a “step in the wrong direction.”

Need to catch up on what happened last week? Check out our November 8th Midweek Update here