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Financial Services Law Insights and Observations


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  • House Democrats urge agencies to finalize Basel III Endgame rule

    Federal Issues

    On February 16, the Ranking Member for the House Committee on Financial Services, Maxine Waters (D-CA), and 41 other House Democrats sent a letter to the FDIC, Fed, and OCC regarding the Basel III Endgame and the proposed rule which would impose higher capital requirements. The letter urged the agencies to finalize the rule, highlighting the purpose of capital requirements “to shield banks from unexpected losses, preventing their failure, while serving as a source of funding that banks use…” The letter commended the agencies for providing the public with almost six months to comment and argued the endgame rule’s impact on access to credit is low. The letter also noted that the expected funding impact on a large bank’s average lending portfolio is expected to increase by just 0.03 percent, which it describes as “insignificant” compared to Fed interest rate increases. The letter specifically urged the heads of the agencies to finalize the rules this year “to ensure we have a banking system that will promote stable economic growth.”

    Federal Issues U.S. House Basel Capital Requirements OCC FDIC Federal Reserve

  • Senators, Reps request record retention information from the FTC

    Federal Issues

    On August 18, members of the House and the Senate issued a letter to the FTC with various inquiries related to the FTC’s preservation of agency records. The letter notes that the FTC “has struggled to comply” with the Federal Records Act citing a February 2022 memo from the FTC Inspector General issuing two recommendations for improving records management. The letter further indicates that the FTC has not provided explanations for instances of document deletion and have asked for responses by the end of the month to identify (i) what records have been deleted and why; (ii) how the FTC is working to company with retention requirements; (iii) whether it has notified National Archives and Records Administration of any deleted records; and (iv) how it has addressed prior recommendations.

    Federal Issues U.S. Senate U.S. House FTC Recordkeeping

  • Waters asks Treasury, SEC to comment on crypto framework

    Federal Issues

    On June 23, Representative Maxine Waters solicited viewpoints, analysis, and recommendations in letters sent to the Department of Treasury and the SEC regarding a recently introduced discussion draft of cryptocurrency framework. In her letters, Waters requested insight on how the proposed legislation would impact the federal regulators’ ability to conduct oversight, among other things. Waters specifically asked the SEC for recommended amendments to existing law, outside of the bill, to further protect investors in the digital assets space. In her letter to the Treasury, she asked for insight on how the bill would address or conflict with its policy recommendations, and if the bill or specific provisions of it are needed. Waters requested that both regulators provide a written response by June 30 and be prepared to brief the House Financial Services Committee.

    Introduced on June 2, the discussion draft to which Waters referred would impact the jurisdiction of the CFTC over digital commodities and the SEC’s authority over digital assets. Committee Chairman Patrick McHenry is a co-author of the discussion draft and also the primary sponsor of newly proposed bills regarding financial statement requirements of emerging growth companies that if passed, will indirectly impact regulators’ oversight in the crypto space. HR 2608 would limit the financial information an emerging growth company would be required to submit to the SEC, among other things. Specifically, “an emerging growth company is not required to present a financial statement for any period prior to the earliest audited period of the emerging growth company in connection with its initial public offering, such as a statement for an acquired company.” Additionally, HR 2610 would amend the Securities Exchange Act of 1934, so emerging growth companies would only need to submit the last 2 years of their profit and loss statements (previously 3 years). Among other things, the bill allows an issuer of securities to submit a draft registration statement to the SEC for confidential review prior to a public filing. Both bills have passed the House. 

    Federal Issues Digital Assets Fintech Federal Legislation CFTC Cryptocurrency Department of Treasury SEC U.S. House

  • Republicans seek to overturn CFPB small-biz lending rule; Georgia AG says rule is unnecessary and burdensome

    Federal Issues

    Recently, several House Republicans introduced a joint resolution of disapproval (H.J. Res. 66) under the Congressional Review Act to overturn the CFPB’s small business lending rule. As previously covered by InfoBytes, last month the Bureau released its final rule implementing Section 1071 of the Dodd-Frank Act. Effective August 29, the final rule will require financial institutions to collect and provide to the Bureau data on lending to small businesses (defined as an entity with gross revenue under $5 million in its last fiscal year). Both traditional banks and credit unions, as well as non-banks, will be required to collect and disclose data about small business loan recipients’ race, ethnicity, and gender, as well as geographic information, lending decisions, and credit pricing. The final rule prescribes a tiered compliance date schedule, with the earliest compliance date being October 1, 2024, for financial institutions that originate at least 2,500 covered small business loans in both 2022 and 2023 (financial institutions with lower origination amounts have later compliance dates).

    Also opposing the final rule, Georgia Attorney General Christopher M. Carr sent a letter to CFPB Director Chopra requesting that the final rule be rescinded. Carr argued that the final rule places an unnecessary and expensive burden on financial institutions, and that “[w]ith the current uneasiness in the market and a plethora of other challenges facing community banks, now is not the time to require them to gather more information that has absolutely nothing to do with the process of evaluating which applicants are the strongest and most deserving of capital.” Carr further contended that if lending discrimination is a “rampant problem,” the Bureau should use channels already in place to address this issue. Pointing out that states already have their own consumer protection and anti-discrimination statutes in place, Carr argued that the final rule imposes redundant compliance requirements on financial institutions, particularly community banks. Carr asked the Bureau to “allow states to continue to address lending issues as they occur, rather than saddling small businesses with burdensome regulations.”

    Additionally, in April, a group of plaintiffs, including a Texas banking association, filed a lawsuit against the Bureau seeking to invalidate the final rule. (Covered by InfoBytes here.) Plaintiffs argued that the final rule will drive from the market smaller lenders who are not able to effectively comply with the final rule’s “burdensome and overreaching reporting requirements” and decrease the availability of products to customers, including minority and women-owned small businesses.

    Federal Issues State Issues CFPB Small Business Lending U.S. House Congressional Review Act State Attorney General Section 1071 Georgia

  • Luetkemeyer accuses DOJ of incomplete BSA/AML data

    Federal Issues

    On February 1, Representative Blaine Luetkemeyer (R-MO) sent a letter to Attorney General Merrick Garland asking for an explanation as to why the DOJ has not complied with a provision in the 2021 National Defense Authorization Act (2021 NDAA), which requires the Department to report metrics on its use of Bank Secrecy Act (BSA) data to the Treasury Department. According to Luetkemeyer, section 6201 of the 2021 NDAA requires the DOJ to also report “on the use of data derived from financial institutions reporting under the [BSA]” in order to increase transparency on the usefulness of BSA data filed with FinCEN from financial institutions and ensure bad actors are not using the U.S. financial system to fund illicit activities.

    Specifically, the DOJ is required by the 2021 NDAA to examine how often the reported data contains actionable information, the number of legal entities and individuals identified within the reported data, and information on investigations resulting from the reported data that are conducted by state and federal authorities, the letter said. Citing a Government Accountability Office report (which found that the DOJ’s report failed to “include new statistics on the use and impact of BSA reports, including the summary statistics required under the act”), Luetkemeyer claimed the lack of transparency “begs the question if the burdensome reporting is worthwhile” and prevents “FinCEN and Congress from determining the effectiveness of the U.S. anti-money laundering regime.” Luetkemeyer asked the DOJ for an explanation as to why it failed to provide the required information.

    Federal Issues Financial Crimes U.S. House DOJ Anti-Money Laundering Bank Secrecy Act FinCEN Illicit Finance

  • Republicans say social media company made misleading statements on China data-sharing practices

    Privacy, Cyber Risk & Data Security

    On November 22, Ranking Member James Comer (R-KY), Committee on Oversight and Reform, and Ranking Member Cathy McMorris Rodgers (R-WA), Committee on Energy and Commerce, sent a follow-up letter to a global social media company claiming it may have provided misleading or false information about its data sharing and privacy practices related to China. According to the lawmakers, the company claimed in a briefing to the committee that it does not track users’ internet data if they are not using the app, and that China-based employees cannot access U.S. users’ location-specific data—both of which appear to be “misleading at best, and at worst, false.” The lawmakers referenced reports alleging the company “clandestinely” gathers U.S. users’ sensitive internet history, and expressed concerns about statements made by employees responsible for company data that “‘it is impossible to keep data that should not be stored in [China] from being retained in [China]-based servers.’” Claiming the company has withheld information, the lawmakers are seeking additional information, including documents and communications related to the monitoring of U.S. users’ browsing data and location tracking.

    Privacy, Cyber Risk & Data Security China Consumer Protection U.S. House Of Interest to Non-US Persons

  • Dems ask regulators to address crypto’s “revolving door”

    Federal Issues

    On October 24, Democratic lawmakers sent letters to the leaders of the SEC, CFTC, Treasury Department, Federal Reserve, FDIC, OCC and CFPB regarding concerns about “the revolving door between [] financial regulatory agencies and the cryptocurrency (crypto) industry.” In the letters, the lawmakers argued “that the crypto revolving door risks corrupting the policymaking process and undermining the public’s trust in our financial regulators.” The letters also noted that Treasury saw the most movement from the Treasury Department, with 31 former employees joining the crypto industry. The SEC was second with 28 former employees, according to Tech Transparency Project. The lawmakers argued that “Americans should be able to trust that financial rules are crafted to reduce risk, improve security, and ensure the fair and efficient functioning of the market,” and that “Americans should be confident that regulators are working on behalf of the public, rather than auditioning for a high-paid lobbying job upon leaving government service.” The letters requested that the agencies provide information by November 7, including answers to inquiries about each agency’s ethics guidelines and polices in place to protect the agency from being influenced by current or former employees’ potential conflicts of interest.

    Federal Issues Digital Assets Fintech Cryptocurrency U.S. House U.S. Senate SEC CFPB CFTC Department of Treasury Federal Reserve FDIC OCC

  • House subcommittee asks CFPB for data on crypto-related fraud

    Federal Issues

    On October 14, the House Subcommittee on Economic and Consumer Policy sent a letter to CFPB Director Rohit Chopra requesting information and documents on the Bureau’s efforts to combat cryptocurrency-related fraud. In the letter, Representative Raja Krishnamoorthi (D-IL) expressed concerns that Congress “may need” to pass legislation to help “bring stability to the digital asset industry.” He also argued that “a lack of a central authority to flag suspicious transactions in many situations, the irreversibility of transactions," and the consumers and investors' limited understanding has made “cryptocurrency a preferred transaction method for scammers.” Among other things, the letter asked the Bureau to provide information by October 28 concerning (i) its efforts to combat crypto-related scams and fraud and inform consumers about the risks related to investments in cryptocurrencies; (ii) its authority to identify and investigate potentially fraudulent digital assets or accounts used on cryptocurrency exchanges associated with illicit activities; (iii) its regulatory authority concerning cryptocurrencies; and (vi) documents setting out the existing framework for interagency cooperation on the regulation of cryptocurrencies. Krishnamoorthi also requested that the Bureau provide answers by October 21 to several questions, such as “what tools, including but not limited to code audits, disclosure requirements, or consumer alerts, could provide consumers with additional information to better assess the risks associated with a digital asset?” and “should cryptocurrency holdings be treated as commodities, securities, or both?”

    Federal Issues Digital Assets CFPB Consumer Finance Cryptocurrency Fintech U.S. House

  • House subcommittee asks CFPB to review CRAs' handling of consumer disputes

    Federal Issues

    On October 13, Chairman of the Select Subcommittee on the Coronavirus Crisis James E. Clyburn sent a letter to CFPB Director Rohit Chopra addressing reports that nationwide consumer reporting agencies (CRAs) were less responsive to consumer complaints and disputes related to credit report errors during the Covid-19 pandemic. According to Clyburn, investigative reports allegedly revealed that the CRAs, which are legally obligated to address errors contained in consumer credit reports, did not always investigate these disputes and purportedly used “broad and speculative criteria” to determine whether a dispute was submitted by an unauthorized third party. The letter also expressed concerns that the CRAs’ alleged “overreliance on data furnishers” raises questions about the sufficiency of the CRAs’ dispute investigations, and that, moreover, using different levels of automation to resolve disputes and complaints is creating variability in the quality and thoroughness of their investigations. Clyburn expressed concerns that by failing to investigate certain legitimate disputes, identify and correct erroneous information, or provide the Bureau with information on the outcomes of the complaint investigations, the CRAs may be failing to meet their obligations under the FCRA. He asked Chopra to review the CRAs for possible statutory violations and to “consider investigating whether the CRAs have made sufficient revisions to their procedures for identifying and taking corrective action against unreliable furnishers.”

    Federal Issues U.S. House CFPB Consumer Reporting Agency Consumer Finance Dispute Resolution Credit Report Covid-19 FCRA

  • Ranking House members seek information from the CFPB

    Federal Issues

    On September 20, House Financial Services Committee Ranking Member Patrick McHenry (R-NC) and House Oversight and Reform Committee Ranking Member James Comer (R-KY) sent a letter to CFPB Director Rohit Chopra asking him to provide information to Congress regarding the authorities delegated to the Bureau that justify its current and upcoming regulatory actions. According to the letter, McHenry and Comer point to the U.S. Supreme Court’s decision in West Virginia vs. EPA, which “invoked the ‘major questions doctrine’ to reject an attempt by the EPA to exceed its statutory authority.” The letter further explained that “[u]nder this doctrine, an agency must point to ‘clear congressional authorization for the authority it claims.’” The EPA could not identify such an authorization, according to McHenry and Comer, and the court further rejected the EPA’s attempt to exceed its statutory authority. The letter stated that “clear delegation of authority contemplated by the Court is not limited to just rulemaking but extends to other agency actions.” McHenry and Comer proceeded to list director-driven “initiatives” that they claim, “circumvent not only Congressional intent, but the Administrative Procedure Act.” They further requested that the Bureau provide a list of all actions that CFPB intends to take during the remainder of 2022, and “[a] list of all expected actions, including but not limited to major rulemaking, staff guidance, advisory opinions, interpretive rules, and the specific Congressional authority for each rulemaking,” by September 30. McHenry and Comer concluded the letter by noting that both committees intend to exercise “robust investigative and legislative powers,” and seek to assert Congress’ Article I responsibilities to ensure that neither the director nor the Biden administration “continue to exceed Congressional authorizations.”

    Federal Issues CFPB U.S. House Administrative Procedure Act House Financial Services Committee


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