October 21, 2022

A three-judge panel of the U.S. Court of Appeals for the Fifth Circuit held the Consumer Financial Protection Bureau’s (CFPB) design, specifically its funding structure, is unconstitutional, finding that the way in which the CFPB is funded violates the Appropriations Clause of the U.S. Constitution. The decision vacates the CFPB’s Payday Lending Rule, from which the case arose, but has broader implications for the CFPB and its authority as the Court found that the CFPB’s promulgation of the Rule was unconstitutional because of the funding structure. This could lead to other challenges based on the Court’s reasoning. The CFPB may appeal the decision to the Fifth Circuit en banc (before the full bench) or petition the U.S. Supreme Court.

The Board of Governors of the Federal Reserve System (FRB) invited public comment on an advance notice of proposed rulemaking (ANPR) to enhance regulators’ ability to resolve large banks in an orderly way should they fail. The ANPR asks for comment on several potential new requirements and resources that could be used for an orderly resolution of these large banking organizations, including a long-term debt requirement. Amendments were also proposed to the Guidelines for Appeals of Material Supervisory Determinations.

The ANPR was jointly developed with the Federal Deposit Insurance Corporation (FDIC). Martin Gruenberg, Acting Chairman of the FDIC, stated that “certain of these banks have other significant complexities that add to the challenge of resolving the insured bank under the Federal Deposit Insurance Act (FDI Act), including material operations, assets, liabilities and services outside the bank chain.”

Acting Comptroller of the Currency Michael Hsu stated that he supports the ANPR. 

Deputy Secretary of the Treasury Wally Adeyemo delivered remarks at the National Bankers Association Annual Conference. Deputy Secretary Adeyemo discussed the Economic Opportunity Coalition and its work to help community development financial institutions (CDFIs) and minority depository institutions (MDIs).

The Office of the Comptroller of the Currency (OCC) published the semiannual Interest Rate Risk Statistics Report for Fall 2022, which presents interest rate risk data from examinations of midsize and community banks and federal savings associations.

The U.S. Department of the Treasury’s Federal Insurance Office (FIO) issued a proposed data collection from insurers to assess climate-related financial risk across the United States. FIO is seeking public input on a proposed collection of data from property and casualty insurers regarding current and historical underwriting data on homeowners’ insurance.

The CFPB published an issue brief examining how overdraft fees affect economically insecure older adults.

The Department of the Treasury, as Chair of the Committee on Foreign Investment in the United States (CFIUS), released the first-ever CFIUS Enforcement and Penalty Guidelines.

The CFPB issued an Advisory Opinion discussing Fair Credit Reporting Act (FCRA) requirements related to procedures for ensuring the prevention of facially false information in credit reports.

Last week, policymakers, regulators, and industry convened at DC Fintech Week, hosted by the Georgetown Institute of International Economic Law, led by Dr. Christopher Brummer. The following speeches and statements occurred during the conference. 

Acting Comptroller of the Currency Michael Hsu discussed crypto-asset regulation in two speeches. At DC Fintech Week, he compared crypto-asset-related activity with that of traditional finance, the integration of traditional finance and crypto finance, and risk management. He then gave remarks at a roundtable about institutional investors and crypto-assets, where he talked about the notion of integrating crypto-assets in the financial system to bring them within the regulatory perimeter and encouraged regulators to stick to their guns and not lower their standards when dealing with crypto-assets-related activities. Acting Comptroller Hsu stated that collaboration and coordination among regulators can mitigate the risk of over-accommodating the industry.

Vice Chair of the Federal Reserve for Supervision Michael Barr delivered a speech at D.C. Fintech Week discussing: the promise of fintech and payment innovation, striking the right balance in regulating crypto-asset-related activity, stablecoins and financial stability risk, risks involved in tokenizing bank deposits and whether this can be done in a safe and sound manner, how Section 1033 of the Dodd-Frank Act, concerning consumer access to personal financial data, can enable consumer autonomy, and working with the private sector on payment innovation. 

Congresswoman Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services, spoke at DC Fintech Week. Chair Waters discussed the need for Congressional action to regulate the financial technology industry, the need for robust consumer and investor protection, and the need to stay focused on financial inclusion.  

House Financial Services Committee Ranking Member Patrick McHenry (R-NC) participated in a panel on the second day of DC Fintech Week. The panel broadly discussed the development and potential of fintech, digital assets, and what regulation could look like within the industry. Rep. McHenry explained that there is no current regulation or law defining a stablecoin and added that a money transmission license is the closest standing framework, however, this existing framework is not thorough or innovative enough to handle the significant growth this industry will see. Rep. McHenry elaborated that what is needed from the next Congress is a definition on both a “means of exchange” and a “digital asset.” He said that defining these will be a priority of the House Financial Services Committee next year.