Subscribe to our InfoBytes Blog weekly newsletter and other publications for news affecting the financial services industry.
On February 4, the CFPB released a request for public comment on a new information collection titled, “Debt Collection Quantitative Disclosure Testing.” The proposed collection—which seeks Office of Management and Budget approval to conduct a web survey as part of the Bureau's debt collection disclosure research—“will explore consumer comprehension and decision making in response to debt collection disclosure forms.” Comments must be received by March 6.
On June 18, the White House announced President Trump’s selection of Kathleen Kraninger to be the director of the CFPB for a five-year term. Kraninger currently serves as the associate director for general government at the Office of Management and Budget (OMB). Prior to OMB, Kraninger worked at the Department of Homeland Security and in Congress on the House and Senate Committees on Appropriations. Mick Mulvaney, the acting director of the Bureau and director of OMB, supervises Kraninger in her current role. In a statement commending the selection, Mulvaney emphasized that Kraninger is likely to follow his example, “I have never worked with a more qualified individual than Kathy… I know that my efforts to rein in the bureaucracy at the [Bureau] to make it more accountable, effective, and efficient will be continued under her able stewardship.” While the Federal Vacancies Reform Act (FVRA) required the president to nominate a new director prior to June 22nd, Mulvaney is likely to remain the acting Bureau director for the foreseeable future, as FVRA allows Mulvaney to continue in the acting capacity until the Senate confirms or denies Kraninger’s nomination. If Kranginger’s nomination fails, FVRA would allow Mulvaney to restart a new 210-day period as acting director of the Bureau and to continue serving if the president makes another nomination before that period ends.
On April 11, the Federal Reserve Board, FDIC, and OCC—as members of the Federal Financial Institutions Examination Council (FFIEC)—published a joint notice and request for comment for OMB review and approval regarding revisions to the Consolidated Reports of Condition and Income (Call Reports) for financial institutions. The finalized changes modify Call Reports applicable to banks with (i) domestic offices only and less than $1 billion in total assets (FFIEC 051); (ii) domestic offices only (FFIEC 041); and (iii) domestic and foreign offices (FFIEC 031). The changes include removing or consolidating certain data items and adding a new or raising certain existing reporting thresholds in the three versions of the Call Report. Comments must be submitted by May 11. Subject to OMB approval, the revisions would take effect as of the June 30, 2018 report date. As previously covered by InfoBytes, the changes were originally proposed in November 2017.
OCC makes technical changes to stress testing rule; regulators submit unified stress test report for OMB approval
On February 23, the OCC finalized technical changes to its annual stress testing rule. Specifically, the final rule (i) changes the range of possible “as-of” dates used in the global market shock component to conform to changes already made by the Federal Reserve Board (Fed) to its annual stress testing regulations; (ii) extends the transition process for covered institutions with $50 billion or more in assets (“a national bank or federal savings association that becomes an over $50 billion covered institution in the fourth quarter of a calendar year will not be subject to the stress testing requirements applicable to over $50 billion covered institutions until the third year after it crosses the asset threshold”); and (iii) makes certain technical clarifications to the requirements of the OCC’s stress testing rule. The final rule takes effect March 26.
The same day, the Fed, the OCC, and the FDIC submitted a notice to the Office of Management and Budget (OMB) requesting approval of a new stress test report form (FFIEC 016) to be implemented for the stress test report due July 31. If approved, FFIEC 016 would replace the agencies’ three separate, yet identical, forms currently used to collect information from financial institutions and holding companies with total assets of more than $10 billion but less than $50 billion. Comments on the proposed change must be received on or before March 26.
On November 28, the CFPB published two notices of its intention to obtain OMB approval to continue its existing consumer complaint collection activities using its “Consumer Response Intake Form” and “Generic Information Collection Plan for Consumer Complaint and Information Collection System (Testing and Feedback).” According to the CFPB, use of the forms allows for electronic complaint submission on the Bureau’s website and streamlines the complaint process for consumers. Comments on the agency’s notices (CFPB-2017-0035 and CFPB-2017-0036) must be received by December 28, 2017.
On November 28, Judge Timothy Kelly denied a request by Leandra English, who was appointed Deputy Director of the CFPB by Richard Cordray on the same day as his resignation, for a temporary restraining order preventing the President from appointing anyone other than English as Acting Director and preventing Mick Mulvaney from serving as the Acting Director (see previous InfoBytes coverage for details).
English’s counsel, in remarks to reporters outside the courtroom, stated they may seek an appeal, may move for a preliminary injunction, or may move for an expedited final decision on the merits.
On November 26, the newly appointed Deputy Director of the CFPB, Leandra English, filed a lawsuit in U.S. District Court for the District of Columbia against President Trump and Mick Mulvaney, the Director of the Office of Management and Budget (OMB), seeking declaratory judgments that English is the Acting Director of the CFPB – and Mulvaney is not – as well as emergency temporary restraining orders preventing the President from appointing anyone other than English as Acting Director and preventing Mulvaney from acting as the Acting Director.
The legal action results from the November 24 resignation of Richard Cordray as the Director of the CFPB and his naming of English as the Bureau’s Deputy Director (previously covered by a Buckley Sandler Special Alert) citing to section 1011(b)(5) of the Dodd-Frank Act (DFA), which provides that the CFPB’s Director may appoint the Deputy Director who “shall…serve as acting Director in the absence or unavailability of the Director.” Following Cordray’s official resignation, the White House issued an announcement appointing Mulvaney as Acting Director under the Federal Vacancies Reform Act of 1998 (FVRA).
On November 25, the Department of Justice (DOJ) Office of Legal Counsel released a memorandum in support of the President’s authority to designate Mulvaney as the Acting Director of the Bureau under the FVRA. According to the DOJ, while Congress recognized there would be cases in which FVRA was not the “exclusive means” for succession, Congress did not intend for the FVRA to be “unavailable” when another statute provides an alternative for succession. Accordingly, the DOJ asserts that, notwithstanding the succession provision in the DFA, FVRA gives the President the authority to, “rely upon it in designating an acting official in a manner that differs from the order of succession otherwise provided by an office-specific statute.” In her complaint, English argues that the succession provision in the DFA controls over the FVRA and that the appointment of a White House official is inconsistent with the CFPB’s independent structure.
Similarly, on November 25, the General Counsel for the CFPB, Mary Mcleod, issued a statement to the senior leaders of the Bureau concurring with the DOJ’s conclusion that “the President may use the [FVRA] to designate an acting official, even when there is a succession statute under which another official may serve as acting.” Mcleod concluded that Mulvaney is the Acting Director of the CFPB and encouraged all Bureau staff to act consistently with that conclusion.
Oral arguments on English’s emergency motion were held on November 27 by Judge Timothy Kelly, a Trump appointee. Judge Kelly did not rule on the motion and granted the government’s request to file papers responding to English’s arguments.
According to media sources, President Trump is expected to select Mick Mulvaney, the current Director of the White House Office of Management and Budget (OMB), to serve as the interim Director of the CFPB upon Richard Cordray’s resignation at the end of this month. Mulvaney would keep his current position and serve as both the Director of OMB and Acting Director of the CFPB throughout the interim term.
On March 13, the Trump Administration issued an Executive Order calling for a reorganization of the executive branch to improve its efficiency, effectiveness, and accountability. Specifically, the order, entitled “Comprehensive Plan for Reorganizing the Executive Branch,” mandates that Office of Management and Budget (“OMB”) Director Mick Mulvaney “propose a plan to reorganize governmental functions and eliminate unnecessary agencies (as defined in section 551(1) of title 5, United States Code), components of agencies, and agency programs.” In order to assist Director Mulvaney in this task, the head of each agency is required to—within 180 days—submit to the OMB director a proposed plan “to reorganize the agency, if appropriate, in order to improve the efficiency, effectiveness, and accountability of that agency.”
Notably, the order requires that the OMB Director seek public comment as to potential improvements in “the organization and functioning of the executive branch,” and requires that the OMB Director consider the comments received when formulating a proposed plan that must be submitted to the President 180 days after the deadline for agency submissions. The order also asks agencies to (as consistent with applicable law) consult with persons or entities outside of government with relevant expertise in organizational structure and management.
White House Calls for “Regulatory Reform Task Forces”; OMB Sends Guidance Memorandum to Heads of Departments and Agencies
On February 24, President Trump signed an Executive Order directing the “head of each agency” to establish a “Regulatory Reform Task Force,” led by a designated “Regulatory Reform Officer,” who is responsible for reviewing existing regulations and making “recommendations to the agency head regarding their repeal, replacement, or modification.” Specifically, the Regulatory Reform Task Forces are charged with identifying regulations that: (i) “eliminate jobs, or inhibit job creation”; (ii) are outdated, unnecessary, or ineffective; (iii) “impose costs that exceed benefits”; (iv) create a “serious inconsistency or otherwise interfere with regulatory reform initiatives and policies”; (v) are inconsistent with OMB’s “Information Quality Guidelines”; or (vi) implement Executive Orders or Presidential directives that have been repealed or substantially modified.
Among other things, the Order instructs the OMB Director to issue guidance outlining requirements for the incorporation of regulatory reform “performance indicators” into agencies’ annual performance plans and potentially “address[ing] how agencies not otherwise covered under this subsection should be held accountable for compliance with this order. The Order requires that the task forces solicit input from “entities significantly affected by Federal regulations, including state, local, and tribal governments, small businesses, consumers, non-governmental organizations, and trade associations,” and submit a report to the agency head within 90 days.
Thereafter, on February 28, recently-confirmed Director of the Office of Management and Budget (OMB) Mick Mulvaney released a memorandum and attachment for the heads of all offices in the Executive Office of the President (EOP) and Executive agencies, which summarizes the major elements of the legislative clearance function that the OMB, working with other offices, carries out on behalf of the President. The memorandum (OMB Circular No. A-19) details the requirements and procedures for legislative coordination and clearance, while the attachment summarizes the major elements and the essential purposes of the clearance process.
Among other things, the memorandum recommends that, in supporting the “President’s Program,” agencies within the Administration should: (i) submit to Congress legislative proposals needed to carry out the President’s Program; (ii) convey the Administration’s views on legislation that Congress has under consideration; and (iii) recommend approval or disapproval of bills passed by Congress. According to the memorandum, the primary goals of the clearance process are twofold: (i) to ensure that an agencies’ legislative communications with Congress are consistent with the President’s policies and objectives; and (ii) to allow for the Administration to “speak with one voice” regarding legislation.
- Michelle L. Rogers to discuss "Preparing for servicing exams in the current regulatory environment" at the Mortgage Bankers Association National Mortgage Servicing Conference & Expo
- Jon David D. Langlois to discuss "Regulatory risks of convenience fees" at the Mortgage Bankers Association National Mortgage Servicing Conference & Expo
- APPROVED Webcast: NMLS Annual Conference & Ombudsman Meeting: Review and recap
- Brandy A. Hood to discuss "Keeping your head above water in flood insurance compliance" at the Mortgage Bankers Association National Mortgage Servicing Conference & Expo
- Melissa Klimkiewicz to discuss "Servicing super session" at the Mortgage Bankers Association National Mortgage Servicing Conference & Expo
- Jessica L. Pollet to discuss "Law & compliance speedsmarts" at the American Financial Services Association Law & Compliance Symposium
- Daniel P. Stipano to discuss "Lessons learned from recent high profile enforcement actions" at the Florida International Bankers Association AML Compliance Conference
- Moorari K. Shah to provide "Regulatory update – California and beyond" at the National Equipment Finance Association Summit
- Sasha Leonhardt and John B. Williams to discuss "Privacy" at the National Association of Federally-Insured Credit Unions Spring Regulatory Compliance School
- Aaron C. Mahler to discuss "Regulation B/fair lending" at the National Association of Federally-Insured Credit Unions Spring Regulatory Compliance School
- Heidi M. Bauer to discuss "'So you want to form a joint venture' — Licensing strategies for successful JVs" at RESPRO26
- Jonice Gray Tucker to discuss "Small business & regulation: How fair lending has evolved & where are we heading?" at CBA Live
- Jonice Gray Tucker to to discuss "DC policy: Everything but the kitchen sink" at CBA Live
- Daniel P. Stipano to discuss "Lessons learned from ABLV and other major cases involving inadequate compliance oversight" at the ACAMS International AML & Financial Crime Conference
- Daniel P. Stipano to discuss "A year in the life of the CDD final rule: A first anniversary assessment" at the ACAMS International AML & Financial Crime Conference
- Moorari K. Shah to discuss "State regulatory and disclosures" at the Equipment Leasing and Finance Association Legal Forum
- Hank Asbill to discuss "Creative character evidence in criminal and civil trials" at the Litigation Counsel of America Spring Conference & Celebration of Fellows
- Hank Asbill to discuss "Pay no attention to the man behind the curtain: Addressing prosecutions driven by hidden actors" at the National Association of Criminal Defense Lawyers West Coast White Collar Conference
- Daniel P. Stipano to discuss "Keep off the grass: Mitigating the risks of banking marijuana-related businesses" at the ACAMS AML Risk Management Conference
- Daniel P. Stipano to discuss "Mid-year policy update" at the ACAMS AML Risk Management Conference
- Benjamin W. Hutten to discuss "Requirements for banking inherently high-risk relationships" at the Georgia Bankers Association BSA Experience Program