Washington Report 360 | May 24, 2019

Key highlights

• The OCC released its Semiannual Risk Perspectives report highlighting increasing operational risk from cybersecurity threats, innovation in financial products and services, and use of third parties; continuing high compliance risks, including BSA/AML and fair lending challenges from new technologies; and strong competitive pressures from nonbank fintech and financial services companies.
• The Federal Reserve Chair addressed concerns about business debt, stating that the debt is near record levels and does not appear to present “notable risks to financial stability.”

Financial services legislative and regulatory news

The FTC:

• Extended the comment period for proposed changes to its Safeguards Rule under the GLBA.
• Rescinded certain model forms and disclosures under the Fair Credit Reporting Act.

FINRA:

• Proposed to extend an interim pilot program on margin requirements for credit default swaps.
• Issued, along with the SEC, a fact sheet on reporting suspected senior financial exploitation.
• Reminded Industry Members with Consolidated Audit Trail (CAT) reporting obligations to register for the CAT.

The House of Representatives passed two bills that will move to the Senate:

• H.R. 1500, the Consumer First Act, which would direct the CFPB to resume Military Lending Act examinations, restore supervisory and enforcement powers to the Office of Fair Lending and Equal Opportunity, and reestablish a dedicated student loan office.
• H.R.1994, the SECURE Act of 2019, which would modify requirements for employer-provided retirement plans and IRAs.

The Senate Banking Committee Chair urged federal financial regulators (Federal Reserve, FDIC, OCC, NCUA) to monitor the financial services activities, including consumer protections and data privacy, of certain technology and non-depository companies.

Financial services policy news

The OCC released its Semiannual Risk Perspective report, highlighting increasing operational risk from cybersecurity threats, innovation in financial products and services, and use of third parties; continuing high compliance risks, including BSA/AML and fair lending challenges from new technologies; and strong competitive pressures from nonbank fintech and financial services companies.

The Federal Reserve:

• Chair spoke about business debt, stating that although business debt is near record levels it does not appear to present “notable risks to financial stability.”
• Published results of the senior financial officer survey on strategies and practices for managing reserve balances.
• Published its 2018 Report on Economic Well-Being of U.S. Households, including findings on retirement savings.
• Published its fifth and final report use of the ACH system and other payment mechanisms for remittance transfers to foreign countries.

The SEC:

• Scheduled a vote on Regulation Best Interest for early June.
• Released guidance for national securities exchanges and FINRA requiring data and analyses to show that proposed fees are reasonable, equitably allocated, not unfairly discriminatory, or an undue burden on competition.

The SEC and CFTC signed IOSCO’s Enhanced Multilateral Memorandum of Understanding, which adds enforcement and consumer protection sharing agreements.