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White House Releases Report on the Dodd-Frank Act and Community Banking; ABA Refutes Claims
Recently, the White House Council of Economic Advisers issued a report titled “The Performance of Community Banks Over Time.” Seeking to address industry concern that Dodd-Frank regulations have negatively impacted community banks, the report presents research related to bank branching patterns and macroeconomic conditions as “evidence” to the contrary, maintaining that “community banks have remained healthy as the Dodd-Frank financial reform has been implemented.” The report presents the following five key points as indication that community banks “remain strong” under the Dodd-Frank Act: (i) with the exception of smallest community banks, the lending growth rate has increased since the financial crisis in 2010; (ii) evidence fails to suggest that Dodd-Frank led to a decline in the number of community banks across counties; (iii) since 1994, for community banks with assets between $100 million and $10 billion, the average number of branch offices has increased; (iv) the decline in the number and market share of community banks with assets totaling less than $100 million is a result of growth; and (v) a combination of macroeconomic factors, such as low equilibrium interest rates, contribute to “a substantial portion of the drop in new bank entry in recent years.” In closing, the report reasons that the Obama Administration “has taken important steps to ensure that regulatory requirements are implemented in a fair and equitable manner for community banks.”
ABA president Rob Nichols released a statement challenging the report’s findings, claiming a “serious disconnect between [the] report and the daily reality for America’s hometown banks and the communities they serve.” Although Nichols acknowledges that the Dodd-Frank Act is not the only contributing factor causing community banks to close, he suggests that the “more than 24,000 pages of proposed and final rules belies the idea that Dodd-Frank had no impact” and emphasizes that “[c]omprehensive regulatory relief is long overdue for community banks.”
President Obama Signs into Law the Judicial Redress Act
On February 24, President Obama signed the Judicial Redress Act, legislation that, according to the President, ensures “data is protected in the strongest possible way with our privacy laws.” The legislation is considered critical to EU-U.S. data flows in that it paves the way for the extension of Privacy Act rights to EU citizens, which will give them rights to seek Privacy Act remedies via civil action in U.S. courts. Regarding the Act, Věra Jourová, the EU Commissioner for Justice, Consumers, and Gender Equality, commented, “[t]he entry into force of this Judicial Redress Act will pave the way for the signature of the EU-U.S. Data Protection Umbrella Agreement. This agreement will guarantee a high level of protection of all personal data, regardless of nationality, when transferred across the Atlantic for law enforcement purposes.”
The signing of the Judicial Redress Act comes after the European Commission’s approval of the EU-U.S. Privacy Shield, a new framework for transatlantic data flows.
Obama Administration's FY 2017 Budget Proposal Makes Room for Small Dollar Loan Program
This week, the Obama Administration released the Fiscal Year 2017 Budget Proposal. President Obama’s proposed budget for the Department of the Treasury would, through the Community Development Financial Institutions (CDFI) Fund, reserve at least $10 million until September 30, 2018 to provide grants for loan loss reserve funds and to provide technical assistance for small dollar loan programs under section 1206 of the Dodd-Frank Act. The Small Dollar Loan Program, according to the budget proposal, “will support broader access to safe and affordable financial products and provide an alternative to predatory lending by encouraging CDFIs to establish and maintain small dollar loan programs.” Earlier this year, Senator Sherrod Brown (D-OH), in a letter to the President, requested that the FY 2017 budget proposal prioritize funding for small dollar loan programs, as outlined in Title XII – Improving Access to Mainstream Financial Institutions – of the Dodd-Frank Act.
On a similar note, the House Financial Services Committee held a hearing titled, “Short-term, Small Dollar Lending: The CFPB’s Assault on Access to Credit and Trampling of State and Tribal Sovereignty,” on February 11, which examined the short-term, small dollar credit marketplace. During the hearing, House members expressed concern that the CFPB and other government agencies are “overextending their efforts” in regulating the industry, thus limiting consumers’ access to credit. Per the CFPB’s 2015 Regulatory Agenda, the agency is “in the process of developing a Notice of Proposed Rulemaking to address concerns in markets for payday, auto title, and similar lending products.” This stimulated conversations on how the potential rule would affect consumers and existing state and tribal law. CFPB Acting Deputy Director David Silberman was present at the hearing; Silberman maintained that the CFPB’s regulatory efforts are to ensure that small dollar loans are affordable and that consumers are not “spiraling into continual debt.”
FY 2017 Budget Proposal: Implications for FHA Down Payment Assistance Programs
As previously noted, the White House released the FY 2017 Budget Proposal this week. President Obama’s proposed HUD budget for FY 2017 would revise the FHA down payment assistance requirements found under Section 203(b)(9) of the National Housing Act (12 U.S.C. 1709) by (i) replacing subparagraph (C) (Prohibited sources), and adding a new subparagraph (D) (Government assistance). The proposed amendment to the National Housing Act “seeks to clarify that down payment assistance from state and local governments and their respective agencies and instrumentalities are not impermissible sources of down payment assistance.”
Obama Administration Announces Executive Orders: Commission on Enhancing National Cybersecurity; Establishment of the Federal Privacy Council
On February 9, President Obama issued two Executive Orders (EO) titled, Commission on Enhancing National Cybersecurity and Establishment of the Federal Privacy Council. The first EO creates a Commission on Enhancing National Cybersecurity (Commission), which will be comprised of top industry thinkers outside of the government. The President will appoint the Commission’s members, with the Speaker of the House of Representatives, the Minority Leader of the House of Representatives, the Majority Leader of the Senate, and the Minority Leader of the Senate each being invited to recommend one individual for membership. As outlined in the White House’s Fact Sheet on the EO, the Commission will, among other things, (i) assist in diagnosing and addressing the causes of cyber-vulnerabilities; (ii) “make detailed recommendations on actions that can be taken over the next decade to enhance cybersecurity awareness and protections throughout the private sector and at all levels of Government”; and (iii) report specific findings and recommendations to the President before the end of 2016.
With the creation of the Federal Privacy Council, senior privacy officials from various Government agencies will come together to (i) develop recommendations on government privacy policies and requirements; (ii) collaborate on ideas, best practices, and approaches for protecting privacy and implementing appropriate safeguards; (iii) evaluate how best to address the hiring, training, and professional development needs of the Federal Government with respect to privacy matters, making the appropriate recommendations; and (iv) perform other privacy-related functions, consistent with law, that the Chair designates. Ultimately, this “interagency support structure” will be the principal “forum to improve the Government privacy practices of agencies and entities acting on their behalf.”
White House Provides Update on 2015 Cybersecurity Initiatives
On July 9, the White House released a fact sheet regarding the Administration’s 2015 cybersecurity efforts “both domestic and international, to improve our cyber defenses, enhance our response capabilities, and upgrade our incident management tools.” More specifically, these include (i) supporting the private sector; (ii) enhancing federal cybersecurity; (iii) developing new policies and capabilities to identify, defend against, and counter malicious cyber actors; and (iv) engaging internationally. Among the private sector achievements is new legislative proposals; the Department of Defense and Department of Homeland (DHS) opening offices in Silicon Valley; and the increase in information sharing between the private sector and government, including DHS’s initiative to develop an automated system for sharing cyber threat indicators. The federal achievements include continual cross-agency efforts to improve how the government conducts background investigations. The new policy achievements includes imposing financial sanctions on those participating in malicious cyber-enabled activities threatening national security, strengthening national defense, and creating new cybersecurity laws. Finally, the international accomplishments include the President’s efforts to bolster international commitments and law enforcement, and to strengthen the country’s global leadership role in cybersecurity.
U.S. Announces Final Decision to Rescind Cuba's Designation as a State Sponsor of Terrorism
On May 29, the Secretary of State announced his final decision to rescind Cuba’s designation as a State Sponsor of Terrorism, effective immediately. The removal of Cuba’s designation followed the Department of State’s comprehensive review of Cuba’s record and the end of a 45-day Congressional pre-notification period after the President certified in an April 14 report to Congress that (i) Cuba has not provided any support for international terrorism during the preceding 6-month period; and (ii) the Cuban government has provided assurances that it will not support acts of international terrorism in the future.
White House Proposes To Rescind Cuba's Designation as a State Sponsor of Terrorism
On April 14, President Obama submitted to Congress a report and certifications signaling the Administration’s intent to rescind Cuba’s designation as a State Sponsor of Terrorism, according to a statement by the White House Press Secretary. The decision to rescind Cuba’s designation, which has been in effect since 1982, was based on a recommendation from the Secretary of State, resulting from the Department of State undertaking a comprehensive review of Cuba’s record. As statutorily required for a country’s designation to be rescinded, the President must submit a report to Congress at least 45 days before the proposed rescission would be effective and certifying that (i) Cuba has not provided any support for international terrorism during the preceding 6-month period; and (ii) the Cuban government has provided assurances that it will not support acts of international terrorism in the future. The White House’s announcement follows recent policy changes by the Administration aimed at normalizing U.S.-Cuba relations.
White House Issues Executive Order To Combat Against Cyber Attacks
On April 1, President Obama issued an executive order granting the Department of Treasury new authority to impose sanctions against individuals or entities that engage in activities which benefit from cyber attacks against U.S. including financial institutions. The executive order is a response to an increase of malicious cyber-enabled activities that continue to pose a threat to the United States’ national security, foreign policy, and economy. As noted in a statement released by Treasury Secretary Jack Lew, the executive order “allows [Treasury] to expose and financially isolate those who hide in the shadows of the Internet to conduct malicious cyber activities that threaten the national security, foreign policy, or economic health or financial stability of the United States.” The announcement follows earlier measures made by the White House to combat against cyber attacks, including the creation of a new federal agency to facilitate the sharing of information about potential threats.
White House Issues Executive Order Targeting Venezuela
On March 8, President Obama signed an executive order imposing sanctions on Venezuela in response to the country’s ongoing human rights violations and abuses in anti-governmental protests. Specifically, the Order (i) designates seven Venezuelan government officials as Specially Designated Nationals (SDNs), (ii) provides authorization for the designation of additional parties as SDNs who are determined to be engaged in specified activities, and (iii) suspends entry into the United States of persons designated under the Order. While the Order stems from defending human rights and democratic governance, according to Treasury Secretary Jack Lew, the Order “will be used to protect the U.S. financial system from the illicit financial flows from public corruption in Venezuela.”