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On February 8, three organizations—Public Citizen, the Natural Resources Defense Council, and the Communications Workers of America—sued the Trump administration over the President’s recent Executive Order (as clarified by the OMB’s interim guidance issued on February 2), which directs agencies to identify two regulations for repeal for every rule written (covered in InfoBytes here). The action seeks to have the Executive Order declared unconstitutional and enforcement thereby stayed. Among other things, the complaint asserts that the President’s Executive Order unlawfully forces agencies to make decisions based on an “impermissible and arbitrary choice—whether to issue a new standard at the cost of the loss of benefits of two existing standards.” To repeal “two regulations for the purpose of adopting one new one, based solely on a directive to impose zero net costs and without any consideration of benefits,” Plaintiffs argue, “is arbitrary, capricious, an abuse of discretion, and not in accordance with law.” The case has been assigned to Judge Gladys Kessler of the U.S. District Court for D.C.
On February 3, President Trump issued an Executive Memorandum directing the Department of Labor (DOL) to examine the Fiduciary Rule—an April 2016 DOL rule that expands the circumstances in which a person will be treated as a fiduciary under both ERISA and Section 4975 of the Internal Revenue Code by reason of providing investment advice to retirement plans and IRAs. In the memorandum, President Trump calls for an examination of the Fiduciary Rule to determine whether it (i) has harmed or is likely to harm investors; (ii) has resulted in dislocations or disruptions within the retirement services industry; and (iii) is likely to cause an increase in litigation and an increase in the prices that investors and retirees must pay to gain access to retirement services. If the Secretary of Labor makes any of these findings, the memorandum directs the Secretary of Labor to publish a proposed rule rescinding or revising the Fiduciary Rule. Initial compliance with the Fiduciary Rule is currently required by April 10, but the DOL has announced that it “will now consider its legal options to delay the applicability date as we comply with the President’s memorandum.”
On February 3, President Trump signed an executive order (the Executive Order) directing the Treasury Secretary and the heads of the member agencies of the Financial Stability Oversight Council (FSOC) to review financial laws and regulations—including the Dodd-Frank Act and regulations implementing that law—thereby setting into motion a process by which the 2010 financial law could be significantly scaled back.
Under the Executive Order, the Secretary of the Treasury – who has yet to be confirmed – has 120 days to review and report to the President which existing laws, treaties, regulations, guidance, reporting and recordkeeping requirements promote the “core principles” listed below and those that do not. The core principles include:
- restoring public accountability within Federal financial regulatory agencies and rationalize the Federal financial regulatory framework
- fostering economic growth and vibrant financial markets through more rigorous regulatory impact analysis that addresses systemic risk and market failures, such as moral hazard and information asymmetry
- enabling American companies to be competitive with foreign firms in domestic and foreign markets
- advancing American interests in international financial regulatory negotiations and meetings
- preventing taxpayer-funded bailouts, and
- empowering Americans to make independent financial decisions and informed choices in the marketplace, save for retirement, and build individual wealth
* * *
If you have questions about the order or other related issues, visit our Consumer Financial Protection Bureau practice for more information, or contact a BuckleySandler attorney with whom you have worked in the past.
On January 30, President Trump signed an Executive Order aimed at reducing the “costs associated with the governmental imposition of private expenditures required to comply with Federal regulations” and ensuring that such costs are “prudently managed and controlled through a budgeting process.” The measure requires all executive departments and agencies to cut two existing regulations for every new regulation they implement. The Order also establishes a regulatory budget of $0 for FY 2017—meaning that the total incremental cost of all new regulations, when adding the cost burden of any new regulation and then subtracting the cost savings of repealed regulations, can be no greater than $0. Thereafter, beginning in FY 2018, each agency will be required to provide the Office of Management and Budget (OMB) with its best approximation of the total costs or savings to be expected from any new regulations. To the extent such estimates predict an increase in that Agency or department’s “incremental regulatory costs,” such increase will need to be authorized by the OMB (or by congress via a new law).
Details concerning how the new budgeting process and cost-offsetting policy will be implemented are left to the Office of Management and Budget, which is directed to provide agencies with guidance. House Financial Services Subcommittee Chairman Tom Graves sent a January 30 letter to CFPB Director Richard Cordray, seeking clarification as to the Bureau’s stance on whether the Trump Administration’s January 20 “Regulatory Freeze” Memorandum—which is similarly directed at “executive agencies”—applies to the CFPB.
On January 28, House Financial Services Committee Chairman Jeb Hensarling issued a statement in which he said, “Fulfilling the Trump Administration's pledge to dismantle Dodd-Frank this year is essential to leveling the playing field, building a healthy economy and offering every American greater opportunities to achieve financial independence.” The statement also references the Financial CHOICE Act—legislation presented by Republicans on the Financial Services Committee as a proposed Dodd-Frank Act replacement. The statement echoed comments earlier that day from President Trump that Congress should make financial regulatory reform a priority.
On January 20, the newly-installed Trump Administration issued Mortgagee Letter 2017-07, which indefinitely suspended the reduction in Federal Housing Administration (FHA) premiums that had been scheduled to go into effect January 27 under a policy approved by outgoing HUD Secretary Julian Castro. In suspending the rate change, FHA explained that it remains “committed to ensuring its mortgage insurance programs [remain] viable and effective in the long term for all parties involved, especially our taxpayers,” and that, “more analysis and research are deemed necessary to assess future adjustments while also considering potential market conditions in an ever-changing global economy that could impact our efforts.” FHA also confirmed that it “will issue a subsequent Mortgagee Letter at a later date should this policy change.”
On January 4, the U.S. House of Representatives approved the Midnight Rule Relief Act—legislation that would allow Congress to repeal in a single vote any rule finalized in the last 60 legislative days of the Obama administration. The GOP-backed measure, was approved largely along party lines by a vote of 238-184 on the second day of the new Congress. If passed by the Senate and signed into law by the new President, the legislation would amend the Congressional Review Act (CRA) to allow lawmakers to bundle together multiple rules and overturn them “en bloc” with a joint resolution of disapproval. While the CRA only requires a simple majority to pass, current law requires Congress to review regulatory resolutions of disapproval one at a time. The legislation is presently pending before the Senate Homeland Security and Governmental Affairs Committee.
On January 23, the White House issued a Presidential Memorandum implementing “a freeze on the hiring of Federal civilian employees to be applied across the board in the executive branch.” As explained in the memorandum, “no vacant positions existing at noon on January 22, 2017, may be filled and no new positions may be created, except in limited circumstances.” The freeze does not include or apply to military personnel. The memorandum also instructs, among other things, that “[w]ithin 90 days of the date of this memorandum, the Director of the Office of Management and Budget (OMB), in consultation with the Director of OPM, shall recommend a long-term plan to reduce the size of the Federal Government’s workforce through attrition. This order shall expire upon implementation of the OMB plan.” On January 24, the OMB issued guidance directed at agency heads on how to implement the new administration’s hiring freeze.
On January 25, the FTC announced that President Trump has appointed Maureen K. Ohlhausen to serve as Acting Chairman of the FTC by a White House order. Commissioner Ohlhausen became an FTC commissioner in April 2012 and her current term is set to expire in 2018. In addition to the Acting Chairman, the FTC is headed by Commissioner Terrell McSweeny and fellow-democrat Edith Ramirez who steps down early next month and previously served as Chairwoman. The FTC also has two commissioner vacancies. “I am deeply honored that President Trump has asked me to serve as acting chairman of the FTC and to preserve America’s true engine of prosperity: a free, honest, and competitive marketplace,” Ohlhausen said in a statement. She added further that “[i]n pursuit of that mission” she “will ensure the Commission minimizes the burdens on legitimate business as we carry out this vital work.”
On January 25, President Trump appointed J. Mark McWatters as the acting chairman of the National Credit Union Administration (NCUA). McWatters succeeds Rick Metsger, who will remain a NCUA Board Member. McWatters was nominated to the NCUA Board by then-President Barack Obama on January 7, 2014 and took office following Senate confirmation on August 26, 2014. Prior to joining NCUA’s Board, McWatters—a licensed attorney and CPA—worked in a variety of public and private sector roles, including serving on the Governing Board of the Texas Department of Housing and Community Affairs and as a member of the Troubled Asset Relief Program Congressional Oversight Panel. He also served as counsel to House Financial Services Committee Chairman Jeb Hensarling (R-Texas), who, following McWatters’ appointment, issued the following statement:
“I commend President Trump for appointing Mark McWatters to this key position. Mark is highly capable and extremely well qualified for this role. He brought a free market-oriented, transparent and accountable perspective to the NCUA Board. At a time when the regulatory burden of the Dodd-Frank Act has led to a drastic decline in the number of credit unions serving Americans, Mark’s leadership as Acting Chairman is greatly needed.”
- Jonice Gray Tucker to join CFPB panel at CBA’s Washington Forum
- Jonice Gray Tucker to moderate “Pandemic relief response and lasting impacts on access, credit, banking, and equality” at the American Bar Association Business Law Section Spring Meeting
- Jeffrey P. Naimon to discuss "Post-pandemic CFPB exam preparation" at the Mortgage Bankers Association Spring Conference & Expo
- Jonice Gray Tucker to discuss "Making fair lending work for you" at the Mortgage Bankers Association Spring Conference & Expo
- Jonice Gray Tucker to discuss "Reading the tea leaves of President Biden’s initial financial appointees" at LendIt Fintech
- Moorari K. Shah to discuss “CA, NY, federal licensing and disclosure” at the Equipment Leasing & Finance Association Legal Forum
- Jonice Gray Tucker to discuss "Compliance under Biden" at the WSJ Risk & Compliance Forum
- Jonice Gray Tucker to discuss “The future of fair lending” at the Mortgage Bankers Association Legal Issues and Regulatory Compliance Conference