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Tuesday, January 17, 2017

DOL Publishes Second Round of Fiduciary Rule FAQs

The Labor Department has released a second set of frequently asked questions on its final rule redefining who counts as a fiduciary under the Employee Retirement Income Security Act and Internal Revenue Code. The FAQs address questions received by DOL from the industry since the rule was issued, and are intended to offer additional clarity about the rule and what institutions must do to comply. Specific areas of focus include exemptions regarding investment recommendations, investment education, general communications, independent fiduciaries and platform providers.

After sustained advocacy by ABA, DOL in questions 1 and 12 clarified that providing educational information to IRA and retirement customers about investment alternatives -- such as product features, returns and fees (for example, bank CD rate sheets) -- would not be considered “investment advice,” provided that the bank did not make a specific recommendation to the customer. In addition, DOL concluded in question 34 that it would also not trigger fiduciary status if a bank were to offer an automated daily cash sweep service to its clients (including IRA owners) that – at the customer’s direction – automatically sweeps uninvested cash from the customer’s account into a short-term investment vehicle on a daily basis.

Read the FAQs.

Reports: Trump May Remove Cordray

A spokesman for President-Elect Donald Trump has said that Trump has interviewed former Rep. Randy Neugebauer (R-Texas) for the post of CFPB director – indicating that Trump may be considering removing current director Richard Cordray from his post before his term expires in 2018. According to the Huffington Post, Trump met the day before with Neugebauer, and no other candidates are currently under consideration.

Neugebauer recently retired from Congress after seven terms. He served on the House Financial Services Committee and chaired the Subcommittee on Financial Institutions and Consumer Credit in the 114th Congress.

Trump would be able to take this action under the federal appellate ruling in PHH Mortgage v. CFPB, which invalidated the bureau’s leadership structure. Under the Dodd-Frank Act, the bureau director may be removed not at the president’s discretion but only “for cause,” a distinction that departs from historical practice and risks arbitrary decision-making and abuse of power, according to the court’s decision, making the director removable at the president’s discretion.

The possibility of Trump requesting Cordray’s early resignation has triggered volleys between Republicans and Democrats on Capitol Hill over the decision. Under the ruling, the president now has the power to remove the CFPB director, unless a higher court rules otherwise. ABA will continue to monitor the PHH case as the appeal proceeds.

GOP Senators Introduce CFPB Commission Bill

Sens. Deb Fischer (R-Neb.), Ron Johnson (R-Wis.) and John Barrasso (R-Wyo.) have introduced a bill (S. 105) that would replace the CFPB’s single director with a bipartisan, five-member board – similar to other financial regulators, including the Federal Reserve, the FDIC, the SEC and the CFTC.

CFPB Seeks Advisory Council Applications

The CFPB has requested applications for positions on three advisory panels, including two vacancies on its Community Bank Advisory Council. The council, which meets twice per year, is intended to provide the bureau feedback from banks with less than $10 billion in assets. Council members are named to two-year terms. Applications for the council are due March 1.

Read more.

Friday, January 13, 2017

The Week Ahead: Jan. 15 - 20

  • Effective Date CFPB: Civil Penalty Inflation Adjustments
    Read more.
  • Effective Date FDIC: Rules of Practice and Procedure
    Read more.
  • Effective Date FDIC: Expanded Examination Cycle for Certain Small Insured Depository Institutions and U.S. Branches and Agencies of Foreign Banks
    Read more.
  • Effective Date FRB: Regulatory Capital Rules: Implementation of Capital Requirements for Global Systemically Important Bank Holding Companies
    Read more.
  • Effective Date SEC: Investment Company Liquidity Risk Management Programs; Final Rule
    Read more.
  • Effective Date SEC: Investment Company Reporting Modernization; Final Rule
    Read more.
  • Comments Due FDIC: Enhanced Cyber Risk Management Standards
    Read more.
  • Comments Due OCC: Company-Run Annual Stress Test Reporting Template and Documentation for Covered Institutions With Total Consolidated Assets of $50 Billion or More Under the Dodd-Frank Wall Street Reform and Consumer Protection Act (PRA)
    Read more.
  • Comments Due OCC: Reporting, Recordkeeping, and Disclosure Requirements Associated With Proprietary Trading and Certain Interests in and Relationships With Covered Funds (PRA)
    Read more.
  • Effective Date FRB: Regulation D; Reserve Requirements of Depository Institutions
    Read more.
  • Effective Date OCC: Receiverships for Uninsured National Banks
    Read more.
  • Comments Due SEC: Exemptions To Facilitate Intrastate and Regional Securities Offerings; Final Rule
    Read more.
All times in Eastern Standard Time. See future events on the  Dodd-Frank Calendar.

CFPB Releases Debt Collection Survey

The CFPB has released a report on consumer experiences with debt collection, relying upon surveys of consumers regarding their experiences with both first-party and third-party debt collectors. The survey is part of the bureau’s ongoing efforts to regulate debt collection.

In previous comments to the bureau on the survey proposal, ABA urged the CFPB to explore whether consumers have had different experiences with creditors (first-party collectors) collecting debt and third-party debt collectors. The bureau conceded in the survey report that “[c]onsumers tend to take a more favorable view of creditors seeking to collect debt than of debt collectors.”

The bureau simultaneously released a study highlighting online debt sales practices and highlighting concerns over the consumer information contained in the debt sale files.

View the consumer experience survey.
View the debt sales practices survey.