- Top Lines
The Consumer Financial Protection Bureau (CFPB) outlined options to strengthen consumers’ access to, and control over, their financial data as a first step before issuing a proposed data rights rule that would implement section 1033 of the Dodd-Frank Act. Under the options the CFPB is considering, consumers would be able to more easily and safely walk away from companies offering bad products and poor service and move towards companies competing for their business with alternate or innovative products and services.
The Department of Justice Antitrust Division Policy Director David Lawrence delivered a keynote at the Brigham Young University Law Conference entitled, “Tech Platforms in a New Age of Competition Law.” Lawrence expressed concerns with the “unique threats [the digital economy] poses to our liberty.”
Rep. Patrick McHenry (R-NC), Ranking Member of the House Committee on Financial Services, and Rep. Bill Huizenga (R-MI), Ranking Member of the Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets, sent a letter to Chairwoman Maxine Waters (D-CA) demanding that she convene a hearing with U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler “in light of the “technical glitch,” a damning Inspector General report, and an expansive regulatory agenda.”
- Weekly Wrap Up
U.S. Senators Elizabeth Warren (D-MA) and Sheldon Whitehouse (D-RI) and U.S. Representatives Alexandria Ocasio-Cortez (D-NY), Jesús García (D-IL), and Rashida Tlaib (D-MI) sent a letter to the SEC, the Commodity Futures Trading Commission (CFTC), the U.S. Department of Treasury (Treasury), the Federal Reserve (Fed), the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and the CFPB, seeking information “about the steps each regulator is taking to stop the revolving door between financial regulatory agencies and the cryptocurrency industry.” The letter is available here.
The OCC announced it will establish an Office of Financial Technology early next year to bolster the agency’s expertise and ability to adapt to a rapidly changing banking landscape. The Office of Financial Technology will build on and incorporate the Office of Innovation, which the OCC established in 2016 to coordinate agency efforts to support responsible financial innovation.
The CFPB released guidance aimed at unexpected overdrafts such as transactions initiated when the consumer had enough funds or for checks that a consumer deposits but bounce.
U.S. Senate Banking Committee Ranking Member Pat Toomey (R-PA) released a statement in response to the guidance, stating that “today’s guidance is yet another reminder that the CFPB has never defined UDAAP through a transparent rulemaking process. It’s no surprise that an out-of-control and unaccountable agency—which the Fifth Circuit recently ruled is unconstitutional—has chosen to sidestep the congressionally mandated rulemaking process to change the rules of the road.”
The SEC proposed a new rule and rule amendments under the Investment Advisers Act of 1940 to prohibit registered investment advisers from outsourcing certain services and functions without conducting due diligence and monitoring of the service providers.
Senator Elizabeth Warren sent a letter to the CFPB summarizing the findings of her investigation “revealing high rates of fraud and scams on the bank-owned peer-to-peer platform Zelle. The report found that not only is fraudulent activity growing on the platform, but the banks are not refunding the vast majority of defrauded consumers, breaking their promises to their customers and potentially violating federal law.” The letter is available here.
Senator Sherrod Brown (D-OH), Chair of the Senate Committee on Banking, Housing, and Urban Affairs, sent a letter to Jerome Powell, Chair of the Fed, “to remind the Federal Reserve of its responsibility to maintain full employment.”
The National Credit Union Administration (NCUA) Board released its monthly meeting schedule for 2023.
The OCC announced it will host a symposium on bank mergers at its headquarters in Washington, D.C., on February 10, 2023. The symposium will promote public input and discussion regarding the framework for analyzing bank mergers under federal law, including topics such as competition, financial stability, and convenience and needs. More information can be found here.
- ICYMI
A three-judge panel of the U.S. Court of Appeals for the Fifth Circuit held the CFPB’s 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 Fed 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 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.