Posted May 22, 2018
Houses Passes Landmark Legislation to Roll Back Dodd-Frank Provisions
On the evening of May 22, 2018, the House of Representatives voted 258-159 to pass the Senate approved legislation (S. 2155) to roll back some provisions of Dodd-Frank. Lawmakers are set to give President Donald Trump a chance to make good on his vow to “do a big number” on the Dodd-Frank Act. NACHA expects the President to sign the bill into law within a few days.
The package might be Congress’s last shot at dialing back Wall Street oversight before midterm elections in November that could have a significant impact on the future of bank regulation. House leaders agreed to vote on the compromise bill that the Senate approved earlier this year. The NACHA GR web page has more detail on the text of S. 2155.
U Turn: OCC Encouraging Banks to Enter Small-Dollar Loans Business
On May 23, 2018, the Office of the Comptroller of the Currency (OCC) encouraged banks to offer responsible short-term, small-dollar installment loans, typically two to 12 months in duration with equal amortizing payments, to help meet the credit needs of consumers. The OCC is issuing this bulletin to remind banks of the core lending principles for prudently managing the risks associated with offering short-term, small-dollar installment lending programs. Banks should develop and implement these programs in a manner consistent with sound risk management practices and should align the programs with the banks’ overall business plans and strategies.
The Office of the Comptroller of the Currency clarified its position encouraging national banks and federal savings associations to offer responsible short-term, small-dollar installment lending to help meet the credit needs of their customers. Comptroller Otting clarified the sudden departure from existing policy by explaining that banks can provide affordable short-term, small-dollar installment lending options that help consumers, including consumers with weaker credit histories who have the ability to repay. Bank-offered products can help lead consumers to more mainstream financial services without trapping them in cycles of debt. When banks offer products with reasonable pricing and repayment terms, consumers also benefit from other services that banks regularly provide, such as financial education and credit reporting.
CFPB Moves Regulation E Changes & Overdraft Regulations Down on Their Priorities List
Last week, the new leadership at the CFPB announced their plans for fewer rulemaking, according to their spring 2018 regulatory agenda.This was the first regulatory agenda under the leadership of Acting Director Mick Mulvaney. Potential Regulation E Rulemaking was moved to a long-term status and moved to their long-term agenda.
In addition, several rulemakings were moved to inactive status, including Overdraft Services. A key footnote on the move to inactive was that the expectation is that "final decisions on whether and when to proceed with such projects will be made by the Bureau's next permanent director."
NACHA expects a permanent director to be nominated by the end of June but that person will not be vetted by the Senate for quite some time.
Federal Reserve Board of Governors Nominees Go Before Senate Banking Committee
On May 15, 2018, the Senate Banking Committee held a hearing to consider the nominations for the two remaining Board seats. Richard Clarida has been nominated to be Vice Chairman of the Board of Governors of the Federal Reserve System and Michelle Bowman as the community banker nominee to be a Member of the Board of Governors of the Federal Reserve System. Key Takeaways from the hearing include both nominees expressed support for the tailoring of financial regulation to the size and complexity of the institution, but highlighted the need to continue to ensure safety and soundness in the financial system and both nominees expressed support for the continued normalization of the Fed’s balance sheet.