September 30, 2022

The top Republican on the House Financial Services Committee, Patrick McHenry (NC-10), released Committee Republicans’ capital formation agenda. “Committee Republicans have identified commonsense, pro-growth reforms that will strengthen public markets, help small businesses and entrepreneurs, and increase opportunities for all investors,” Rep. McHenry stated.

The Board of Governors of the Federal Reserve System (FRB) announced that six of the nation’s largest banks will participate in a pilot climate scenario analysis exercise designed to enhance the ability of supervisors and firms to measure and manage climate-related financial risks. Scenario analysis—in which the resilience of financial institutions is assessed under different hypothetical climate scenarios—is an emerging tool to assess climate-related financial risks, and there will be no capital or supervisory implications from the pilot.

Congresswoman Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services, announced passage of the following bills under suspension of the rules:

H.R. 6889, the “Credit Union Board Modernization Act” is a bill offered by Representative Juan Vargas (D-CA) that would reduce the minimum number of board of director meetings for Federal credit unions that are highly rated by their regulator.

H.R. 2710, the “Banking Transparency for Sanctioned Persons Act of 2021” is a bill offered by Representative Bryan Steil (R-WI) that would require the Department of the Treasury to report to Congress semiannually with a copy of any license issued by the Secretary of Treasury in the preceding 180 days that authorizes a U.S. financial institution to provide financial services benefitting a state sponsor of terrorism and certain other sanctioned entities such as human rights abusers and corrupt officials.

The U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) took a historic step in support of U.S. government efforts to crack down on illicit finance and enhance transparency by issuing a final rule establishing a beneficial ownership information reporting requirement, pursuant to the bipartisan Corporate Transparency Act (CTA). The rule will require most corporations, limited liability companies, and other entities created in or registered to do business in the United States to report information about their beneficial owners—the persons who ultimately own or control the company, to FinCEN. 

The Commodity Futures Trading Commission (CFTC) announced it issued an order filing and settling charges against bZeroX, LLC, and its founders Tom Bean and Kyle Kistner for illegally offering leveraged and margined retail commodity transactions in digital assets; engaging in activities that may only be performed by registered futures commission merchants (FCM); and failing to adopt a customer identification program (CIP) as part of a Bank Secrecy Act (BSA) compliance program, which is required of FCMs. BZeroX, Bean, and Kistner engaged in these activities in connection with a decentralized blockchain-based software protocol that functioned similarly to a trading platform. The order requires the respondents to pay $250,000 in civil monetary penalties and to cease and desist from further violations. The CFTC also filed an enforcement action against Ooki DAO, a decentralized autonomous organization (DAO) that included Bean and Kistner as members, which succeeded operating the same software protocol as bZeroX, with violating the same laws as the respondents. The CFTC seeks restitution, disgorgement, civil monetary penalties, trading and registration bans, and injunctions against further violations of the CEA and CFTC regulations, as charged.

The Securities and Exchange Commission announced charges against 15 broker-dealers and one affiliated investment adviser for widespread and longstanding failures by the firms and their employees to maintain and preserve electronic communications. The firms admitted the facts set forth in their respective SEC orders, acknowledged that their conduct violated recordkeeping provisions of the federal securities laws, agreed to pay combined penalties of more than $1.1 billion, and have begun implementing improvements to their compliance policies and procedures to settle these matters.

The FRB finalized a supervisory framework for insurance organizations that are overseen by the Board. The final framework is substantially similar to the proposal made earlier this year.

The Consumer Financial Protection Bureau (CFPB) released a special edition of Supervisory Highlights on recent examination findings covering the practices of student loan servicers, and schools that lend to students directly. The exams found that these schools had improper blanket policies of withholding transcripts to force students to make payments.

The CFPB is ordering Regions Bank to pay $50 million into the CFPB’s victims relief fund and to refund at least $141 million to customers harmed by its illegal surprise overdraft fees.

The CFPB sued MoneyLion Technologies, an online lender, and 38 of its subsidiaries, for allegedly imposing illegal and excessive charges on servicemembers and their dependents.

The U.S. Senate Committee on Foreign Relations held a hearing discussing the current United States regime for implementing sanctions on Russia and their international enablers. 

U.S. Secretary of the Treasury Janet L. Yellen will preside over a meeting of the Financial Stability Oversight Council (Council) at the Treasury Department. The meeting will consist of an executive session and a public session.  The preliminary agenda for the executive session includes an update from staff of the Federal Reserve and the Commodity Futures Trading Commission on financial stability and energy market developments. The preliminary agenda for the public session includes a vote on the Council’s report in response to the Executive Order on Ensuring Responsible Development of Digital Assets; votes on the establishment and initial membership of the Council’s Climate-related Financial Risk Advisory Committee; and an update on the upcoming Treasury report on cloud services adoption in the financial sector.

Business groups sued the CFPB to stop the agency’s policy to combat potential discrimination in banking services. The U.S. Chamber of Commerce, American Bankers Association and several other trade groups asked a federal court in Texas to stop the Bureau’s policy allowing the agency to bring discrimination claims against financial firms on products and services that aren’t protected by fair lending laws.

The Office of the Comptroller of the Currency (OCC) assessed a $6 million civil money penalty against Sterling Bank and Trust, FSB. The OCC’s penalty is based on violations of law and unsafe or unsound practices related to the bank’s Advantage Loan Program, a low-document mortgage loan program the bank offered between approximately 2011 and December 2019. The bank originated numerous Advantage Loan Program loans that were based on false or fraudulent loan information. The OCC also terminated the June 18, 2019, Formal Agreement between the bank and the OCC.

Kristen Clarke, Assistant Attorney General for the Civil Rights Division of the U.S. Department of Justice, announced actions regarding lending discrimination in the Newark Metropolitan area. Clarke announced that the Justice Department has secured a $13 million settlement with Lakeland Bank. The agreement resolves allegations that Lakeland redlined predominantly Black and Hispanic neighborhoods in the Newark, New Jersey, area.

The Clearing House has released a white paper that analyzes the application of the Electronic Fund Transfer Act and Regulation E error resolution requirements to financial institutions involved in certain person-to-person transactions. The white paper aims to provide additional information for the financial institutions involved in an Intermediated Transfer – the sender’s bank and the transfer provider – and to help supplement the Frequently Asked Questions issued by the Consumer Financial Protection Bureau in June and December 2021 regarding the EFTA and its implementing regulation, Reg E.

Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra delivered remarks in a fireside chat at the Exchequer Club of Washington, DC. Director Chopra discussed the CFPB’s mandate to ensure competitive markets. He stated that Buy Now, Pay Later products are “largely being used as a substitute for credit cards,” and that the CFPB “will be looking at ways to ensure appropriate parity.” He also discussed the supervision of nonbanks, stating that many “touch millions or tens of millions of consumers but are not subject to the same level of oversight as chartered banks and credit unions.” He said that the CFPB is already making use of a dormant authority to accomplish this.

House Agriculture Subcommittee on Commodity Exchanges, Energy, and Credit Chair Sean Patrick Maloney (D-NY) and Congresswoman Stacey Plaskett (D-Virgin Islands), a fellow subcommittee member, issued statements following the introduction of H.R. 8950, the Digital Commodities Consumer Protection Act of 2022, the House counterpart to the bipartisan S. 4760 introduced by Senate Agriculture Chair Debbie Stabenow (D-MI) and Ranking Member John Boozman (R-AR), to close regulatory gaps and provide regulatory authority over digital commodities to the Commodity Futures Trading Commission (CFTC).

The House Financial Services Committee and the Senate Banking Committee held hearings addressing the United States’ largest banks and pertinent issues within the banking and financial sector. These hearings addressed a wide range of topics, including inflation, the racial wealth gap, digital assets, and more. 

The Senate Banking Committee held a hearing discussing how sanctions and other economic statecraft could be adjusted to deprive Russia of funding to prosecute the  war against Ukraine. 

POLITICO held an event sponsored by Ripple featuring two panels related to crypto assets and public policy.

Brookings held a webinar with Nellie Liang, Under Secretary for Domestic Finance at the U.S. Department of the Treasury concerning the new Treasury report, “The Future of Money and Payments.”