September 13, 2023

Dr. Philip N. Jefferson, Dr. Lisa D. Cook, and Dr. Adriana D. Kugler were sworn in as Vice Chair, Governor, and Governor, respectively, of the Board of Governors of the Federal Reserve System (FRB). Vice Chair Jefferson’s term term as Vice Chair ends on September 7, 2027, and his term as a Board member ends on January 31, 2036; Governor Cook’s term as a member of the Board ends on January 31, 2038; and Governor Kugler’s term as a member of the Board ends on January 31, 2026.

The Bank Policy Institute, the American Bankers Association, the Financial Services Forum, the Institute of International Bankers, the Securities Industry and Financial Markets Association and the U.S. Chamber of Commerce wrote a letter to the Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency, and the Federal Reserve Board, calling on them to re-propose the Basel III capital rules, which would increase capital requirements for banks over $100 billion in assets. In the letter, the trade associations stated that the Basel proposal lacks publicly available data and analysis as required by law. 

The FDIC announced it will launch a new Banker Engagement Site (BES) through FDICconnect this month. The FDIC is introducing BES as the primary tool for exchanging examination planning and other information for Division of Depositor and Consumer Protection (DCP) consumer compliance and Community Reinvestment Act (CRA) activities.

The Federal Reserve Bank of Richmond announced the creation of the Center for Advancing Women in Economics. According to a press release from the Richmond Fed, the Center will work to champion diversity in the field of economics and enrich economic research and policymaking by mentoring, connecting, and promoting the high-quality research of women. 

The Consumer Financial Protection Bureau (CFPB) took action against Tempoe, LLC (Tempoe) for allegedly tricking consumers into expensive leasing agreements by concealing the contract terms and costs and failing to provide legally required disclosures. Forty-one states and the District of Columbia are entering into a parallel multi-state settlement addressing the same conduct. The CFPB is permanently banning Tempoe from offering consumer leases, requiring the company to close each of its outstanding consumer accounts, and ordering the company to let customers keep leased merchandise with no further payment, which represents approximately $33.6 million in released payments. Tempoe is also paying a $2 million penalty, with $1 million deposited into CFPB’s victims relief fund and $1 million paid to the states entered into the settlement.

CFPB Director Rohit Chopra delivered remarks at The Mortgage Collaborative National Conference, where he discussed the subprime mortgage crisis, post-crisis reforms, the establishment of the CFPB, and the mortgage rules required by Congress. He also discussed the mortgage industry’s concerns about the legal validity of mortgage rules.

Commodity Futures Trading Commission (CFTC) Commissioner Christy Goldsmith Romero delivered remarks at the North American Securities Administrators Association’s (NASAA) Fall Annual Meeting, “Modernizing Investor Protection for the Digital Age.” Commissioner Goldsmith Romero discussed modernizing investor protection by keeping pace with technology, ways that regulators can use technological advances to their advantage, and her proposal for a national financial fraud registry.

Securities and Exchange Commission (SEC) Commissioner Mark Uyeda also delivered remarks, where he spoke about the incorporation of technology into financial markets, regulators’ responsibility to understand new technologies and apply or modify existing laws and regulations, and the potential impact of AI and other innovations on financial markets and policymaking. 

The CFTC issued an order simultaneously filing and settling charges against Jacob Orvidas, finding that Orvidas fraudulently solicited at least four people (pool participants) to trade leveraged bitcoin in a commodity pool. Orvidas lost almost all funds trading and then lied to the pool participants about the losses and the availability of their money. The order also finds Orvidas failed to register as a commodity pool operator. The order requires Orvidas to pay over $2 million in restitution and a $500,000 civil monetary penalty and to cease and desist from further violating the Commodity Exchange Act, as charged. In addition, the order imposes 10-year registration and trading bans against Orvidas.

Commissioner Goldsmith Romero issued a statement addressed to investors, calling for them to check if an investment professional is registered, being skeptical of investment professionals’ claims, and notifying the CFTC and SEC if they suspect they’ve been scammed. 

The SEC brought its second action against a company issuing non-fungible tokens (NFTs), charging Stoner Cats 2 LLC (SC2) with conducting an unregistered offering of crypto asset securities after raising approximately $8 million from investors who purchased NFTs to finance an animated web series called Stoner Cats. According to the SEC order SC2 offered and sold to investors more than 10,000 NFTs for approximately $800 each, selling out in 35 minutes. The order finds that both before and after Stoner Cats NFTs were sold to the public, SC2’s marketing campaign highlighted specific benefits of owning them, including the option for owners to resell their NFTs on the secondary market. In addition, the order finds that, as part of the marketing campaign, the SC2 team emphasized its expertise as Hollywood producers, its knowledge of crypto projects, and the well-known actors involved in the web series, leading investors to expect profits because a successful web series could cause the resale value of the Stoner Cats NFTs in the secondary market to rise. Further, the order finds that SC2 configured the Stoner Cats NFTs to provide SC2 a 2.5 percent royalty for each secondary market transaction in the NFTs and it encouraged individuals to buy and sell the NFTs, leading purchasers to spend more than $20 million in at least 10,000 transactions. According to the SEC’s order, SC2 violated the Securities Act of 1933 by offering and selling these crypto asset securities to the public in an unregistered offering that was not exempt from registration.

Senator Josh Hawley (R-MO) introduced the Capping Credit Card Interest Rates Act, which would cap the annual percentage rate of credit cards at 18%. 

Majority Whip Tom Emmer (R-MN) reintroduced the CBDC Anti-Surveillance State Act, which would limit the Federal Reserve’s ability to issue a central bank-backed digital currency. 

The Connecticut Department of Banking Issues issued industry guidance regarding changes to the Small Loan Lending and Related Activities Act. The guidance includes an analysis of “Earned Wage Access” advances, which states earned wage access products are generally covered by the Small Loan Lending and Related Activities Act. 

The Consumer Financial Protection Bureau (CFPB) published an issue spotlight highlighting the impacts of so-called “Big Tech” companies’ policies and practices that govern tap-to-pay on mobile devices like smartphones and watches. The issue spotlight explains how regulations imposed by mobile operating systems can have a significant impact on innovation, consumer choice, and the growth of open and decentralized banking and payments in the U.S. 

CFPB Director Rohit Chopra also delivered remarks at the Federal Reserve Bank of Philadelphia’s Annual Fintech Conference, discussing “Big Tech” companies’ influence in the payments space. Additionally, in his remarks, Director Chopra announced that the CFPB’s key priorities include open banking, increasing payment speed and security, and confirmed that the Bureau aims to issue proposed rules to grant consumers more personal financial data rights next month.

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