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Friday, July 21, 2017

This Week Ahead: July 24-28

Monday
  • Comments Due FHFA: Proposed Collection; Comment Request (PRA)
    Read more.
Thursday
  • Effective Date CFPB: Policy Guidance on Supervisory and Enforcement Priorities Regarding Early Compliance With the 2016 Amendments to the 2013 Mortgage Rules Under the Real Estate Settlement Procedures Act and the Truth in Lending Act
    Read more.
  • Meeting OCC: Minority Depository Institutions Advisory Committee
    Read more.
All times in Eastern Standard Time. See future events on the Dodd-Frank Calendar.

Lawmakers Introduce ABA-Backed Legislation to Undo Arbitration Rule

Members of the House and Senate introduced legislation that would block the CFPB’s controversial arbitration final rule from taking effect. The action is permitted under the Congressional Review Act, which gives Congress the ability to reject new federal regulations within 60 legislative days of publication in the Federal Register.

Leading the effort were Senate Banking Committee Chairman Mike Crapo (R-Idaho), House Financial Services Committee Chairman Jeb Hensarling (R-Texas), Rep. Keith Rothfus (R-Pa.), and other members of the House Financial Services and Senate Banking Committees.

The CFPB’s final arbitration rule prohibits customers from waiving their ability to participate in class action suits and limits drastically the use of mandatory arbitration agreements for financial products and services. With such restrictions in place, arbitration is likely to disappear from financial services contracts, and could result in burdens on customers whose claims cannot be resolved through class actions, instead requiring them to go to court for minor, non-systemic disputes.

ABA and the state bankers associations have been vocal in their opposition to the rule, and ABA President and CEO Rob Nichols applauded lawmakers for taking the next step to block it from taking effect. He noted that in moving forward with the “misguided” rule, the CFPB undermined its own data, which showed that customers fare far better in arbitration than in class action lawsuits.

In reality, the vast majority of disputes get resolved quickly and amicably without the need for arbitration or legal action. If arbitration disappears, the bureau will force consumers to navigate an already overcrowded legal system where the only winners will be trial lawyers. We think our customers deserve better, and we urge lawmakers in both chambers of Congress to overturn this anti-consumer rule as soon as possible.
 Read ABA's statement.

Agencies Update Rulemaking Schedules for 2017

The federal banking agencies updated their rulemaking agendas for the remainder of 2017 and into 2018. The agendas are current as of this past spring and include certain information that is out of date.

According to the schedules, the CFPB expects to issue a final rule on reconciling race and ethnicity data collection under Regulations B and C in October and to issue a notice of proposed rulemaking on third-party debt collection around September and to complete its review of comments on its small-dollar lending proposal this summer. The agenda also indicates that the CFPB is in the "pre-rule activities" stage on overdrafts and business lending data.

The Financial Crimes Enforcement Network expects to issue an advanced notice of proposed rulemaking this month to collect information on businesses and professions involved in real estate closings to determine if they should be subject to requirements under the Bank Secrecy Act. The Federal Reserve, FDIC, and OCC are considering rulemaking to update Community Reinvestment Act regulations. The banking agencies expect to issue a final rule in December to implement the Biggert-Waters Act provisions on private flood insurance. 


View the agendas

Hester Peirce Renominated to Serve on SEC


The White House said that President Trump would renominate Hester Peirce to serve on the SEC. Currently a senior research fellow at the Mercatus Center and previously a senior staffer on the Senate Banking Committee, Peirce was named to the SEC by President Obama but her nomination was not advanced by the Senate. 

Read more.

Thursday, July 20, 2017

Regulators Issue Proposal to Increase Mandatory CRE Appraisal Thresholds

The federal regulatory agencies issued a proposal to increase the threshold for required appraisals for commercial real estate transactions from $250,000 to $400,000 following the FDIC’s board meeting. The proposal reflects feedback the agencies received through the Economic Growth and Regulatory Paperwork Reduction Act process. Comments on the proposal will be due 60 days after the notice is published in the Federal Register.

In response to growing concerns over a lack of certified appraisers, particularly in rural areas, the federal banking agencies earlier this year also issued a reminder of two existing approaches that institutions can use to address appraiser shortages, particularly in rural areas. The first approach, temporary practice permits, allows state-certified or licensed appraisers to provide services in other states. The second involves a temporary waiver request to use a state-certified or licensed appraiser in situations where a documented appraiser shortage has led to “significant delays” in appraisals on federal related transactions in a specific geographic area.

ABA has been working closely with regulatory agencies, Congress and the Appraisal Qualifications Board to obtain meaningful relief from stringent appraisal requirements. The association will comment on the proposal and will continue to seek further improvements.


Read the proposal.

Wednesday, July 19, 2017

Nichols: With Arbitration Rule, CFPB Chooses Trial Lawyers Over Consumers

In an op-ed for The Hill, ABA President and CEO Rob Nichols argued that the CFPB’s recently finalized arbitration rule was actually anti-consumer  “a regulatory windfall to trial lawyers at consumers’ expense.”

Nichols pointed out that the bureau’s final rule, which requires consumers to have the option of pursuing class action litigation to resolve financial disputes, ignores the CFPB’s own findings on arbitration’s benefits. “Consumers who prevail in arbitration win 166 times what those who prevail in class actions do,” he wrote. “And they get faster relief too 
 a matter of months, not years.”

Banks and credit unions have long opted for arbitration because it’s the most pragmatic path to the best outcome for all, Nichols added. “It’s faster, cheaper and avoids all the downsides of protracted litigation,” he said. “When customers are in the right, arbitration gets recompense into their pockets as quickly as possible.” Nichols called on Congress to use its powers under the Congressional Review Act to overturn the final rule as quickly as possible. 


Read the op-ed.