Newsletter

October 25, 2023

Rep. Mike Johnson (R-LA) was elected Speaker of the House of Representatives on Wednesday, garnering unanimous support from Republicans. Rep. Johnson received 220 votes, and Democratic Leader Hakeem Jeffries (D-NY) received 209 votes.

The White House on Monday, October 30, will host an event on “safe, secure, and trustworthy artificial intelligence,” and officials are expected to announce the Artificial Intelligence Executive Order during the event, scheduled for 2:30 pm ET.

The Board of Governors of the Federal Reserve System (FRB), Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC) released a final rule revising the Community Reinvestment Act (CRA) regulations to strengthen and modernize the rule and adapt to changes in the banking industry. The final rule takes effect on April 1, 2024, with staggered compliance dates of January 1, 2026, and January 1, 2027.

The agencies also issued joint finalized principles for climate-related financial risk management for large financial institutions. The principles are intended for the largest financial institutions, with $100 billion or more in total assets, and address physical and transition risks associated with climate change. Acting Comptroller Hsu, FDIC Chair Martin Gruenberg, and Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra, among others, issued statements in support of the finalized principles.

Representative Maxine Waters (D-CA), Ranking Member of the House Financial Services Committee released a statement applauding the CRA final rule. 

Senate Banking Chair Sherrod Brown also released a statement supporting the CRA final rule.

The FRB proposed slashing the cap on the interchange fees banks are allowed to charge merchants for debit card transactions from 21 cents per transaction to 14.4 cents, while the so-called ad valorem element would be multiplied by 4 basis points instead of 5 basis points. The fraud-prevention adjustment, meanwhile, would increase slightly.

Overall, under the proposed framework, the interchange fee a debit card issuer could charge on a $50 transaction would be capped at 17.7 cents, down from 24.5 cents under the current rule, a decrease of nearly 28%. 

The proposal also calls for the Fed to re-evaluate its cap on swipe fees every two years, using data that it has been collecting for more than a decade. Data would continue to be gathered in odd-numbered years, but the board would have to announce changes by March 31 of those years and implement them by July 1. These biannual changes would not be subject to public comment. 

The Fed’s proposal drew a strong rebuke from Fed Governor Michelle Bowman, the board member designated to represent community banking interests. 

The U.S. Department of the Treasury released a report card detailing how the Department’s implementation of federal investments in entrepreneurs and small businesses – including those in President Biden’s American Rescue Plan – are sustaining growth in small business creation. 

Assistant Secretary for Financial Institutions Graham Steele discussed at the Amazon Web Services (AWS) Gov2Gov Summit on Responsible Artificial Intelligence Innovation for the Public Sector Treasury’s work with AWS on cloud computing, potential benefits and risks of AI, including in the consumer finance and insurance industries, and how federal and some state policymakers are looking at these issues.  

The FRB published its October 2023 Financial Stability Report. The report summarizes the Federal Reserve Board’s framework for assessing the U.S. financial system’s resilience and presents the Board’s current assessment.

The FDIC Advisory Committee of State Regulators held a panel discussion on current and emerging issues that have potential implications regarding the regulation and supervision of state-chartered financial institutions. Read our summary here.

The CFPB released its biennial report to Congress on the consumer credit card market. The report found that in 2022 credit card companies charged consumers more than $105 billion in interest and more than $25 billion in fees. Total outstanding credit card debt eclipsed $1 trillion for the first time since the CFPB began collecting this data. The report highlights areas of concern, including more consumers carrying balances month to month, with many falling deeper into debt over time, while credit card company profits remained significantly above pre-pandemic levels.

The CFPB Education Loan Ombudsman published a report to Congress analyzing the 9,284 student loan complaints submitted by consumers from September 1, 2022, through August 31, 2023. The report states that complaints submitted to the CFPB suggest that across the federal and private student loan markets, failures on the part of industry participants are excluding some borrowers from protections and benefits intended for them under law. 

CFPB Deputy Director Zixta Martinez delivered remarks at The Greenlining Institute’s 2023 Just Future Summit. Deputy Director Martinez discussed the mortgage market, redlining, appraisal bias, and small business lending.

Securities and Exchange Commission (SEC) Chair Gary Gensler discussed in a speech the SEC’s enforcement program through five themes: economic realities, accountability, high-impact cases, process, and positions of trust and how the SEC is pursuing enforcement in areas such as digital asset markets and against entities such as the Options Clearing Corporation. 

Rep. Patrick McHenry (R-NC), Chairman of the House Financial Services Committee; Oversight and Investigations Subcommittee Chairman Bill Huizenga (R-MI); and National Security, Illicit Finance, and International Financial Institutions Subcommittee Chairman Blaine Luetkemeyer (R-MO) sent a letter to Treasury Secretary Janet Yellen demanding information and records regarding the actions taken by the Biden Administration to allow the Iranian regime easier access to its $6 billion of restricted funds in exchange for the release of American prisoners and $10 billion paid by Iraq in exchange for Iranian electricity.

House Financial Services Committee Republicans, led by Rep. Blaine Luetkemeyer, stated that they are preparing a “comprehensive response” to Hamas attacks, including legislation to penalize Hamas and Iran and oversight to  examine the current state of sanctions against the Iranian regime.

Rep. McHenry and House Financial Institutions and Monetary Policy Subcommittee Chairman Andy Barr (R-KY) sent a letter to the Government Accountability Office (GAO). The letter asks the GAO to examine the role U.S. federal banking agencies played in work at the Basel Committee on Banking Supervision to develop the recent Basel III Endgame proposal.

Rep. Maxine Waters released a statement following the Senate’s vote to block the CFPB’s small business lending data collection rule, stating that she is “deeply disappointed” in the Senate’s vote.

Senator Tim Scott (R-SC), Ranking Member of the Senate Committee on Banking, Housing, and Urban Affairs, along with Senators Mike Crapo (R-ID), Steve Daines (R-MT), Mike Rounds (R-SD), Bill Hagerty (R-TN), and Katie Britt (R-AL) introduced the Protect Our Bases Act to ensure the Committee on Foreign Investment in the United States (CFIUS) can review foreign land purchases near sensitive military, intelligence, and national laboratory sites by requiring member agencies to annually update and review their lists of these sites..

In a new letter sent to the FRB, the American Bankers Association, American Association of Credit Union Leagues, Consumer Bankers Association, Credit Union National Association, Electronic Payments Coalition, Independent Community Bankers of America, Mid-Size Banks Coalition of America, National Association of Federally-Insured Credit Unions and National Bankers Association urged the Fed to reject merchant requests for further changes to Regulation II governing debit card interchange fees.

The CFPB proposed its much anticipated rulemaking regarding consumer financial data rights under Section 1033 of the Dodd-Frank Act. The rule would require companies to share data at consumers’ discretion with other companies. Notably, the Bureau intends to promulgate additional rulemakings to cover other products & services. Comments are due December 29. 

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