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Thursday, June 22, 2017

House Passes Five Flood Insurance Bills

The House Financial Services Committee yesterday approved five bills as part of a legislative package intended to reauthorize the National Flood Insurance Program.

Lawmakers unanimously approved two American Bankers Association-supported bills: H.R. 2875, the National Flood Insurance Program Administrative Reform Act of 2017, which would make administrative changes to the NFIP to increase fairness and accuracy, and decrease taxpayer risk; and H.R. 1422, the Flood Insurance Market Parity and Modernization Act, which would encourage development of a robust private flood insurance market as an alternative to the NFIP. The committee also approved by a voice vote H.R. 1558, a bill introduced by Rep. Ed Royce (R-Calif.) to amend the National Flood Insurance Act of 1968 to ensure community accountability for areas repeatedly damaged by floods.

Additionally, the committee passed two bills introduced by Rep. Blaine Luetkemeyer (R-Mo.), H.R. 2264 and H.R. 2565, both of which ABA strongly supported. H.R. 2264, the Taxpayer Exposure Mitigation Act of 2017, would enable the NFIP to engage in private-sector risk transfer deals and would allow the development of private or community flood maps as an alternative to NFIP’s outdated maps. H.R. 2565 would require the NFIP to study how it uses replacement costs in setting premiums.

Together with H.R. 2874 and H.R. 2868, which were passed by the committee last week, the bills will now move to the full House for consideration. ABA will continue to work closely with lawmakers to ensure that the NFIP is renewed prior to its expiration date on Sept. 30.

Read more.

Tuesday, June 20, 2017

Trump Names Banking Lawyer to Lead FDIC

On June 16, President Trump said he would nominate James Clinger to serve as FDIC chairman. According to the White House, Clinger will be nominated first to fill the long-vacant director position on the FDIC board and then nominated to serve a five-year term as chairman after Martin Gruenberg's term ends in November.

Clinger has been chief counsel to the House Financial Services Committee for a decade. During the George W. Bush administration, he served as a deputy assistant attorney general, prior to which he was a staffer on the Financial Services Committee for another decade. He began his legal career in private practice.

The announcement comes as Trump continues to fill out his financial regulatory team. The president recently announced that he would name Joseph Otting as comptroller of the currency. There are several vacancies on the Federal Reserve Board of Governors, and nominees are expected to be named soon for at least one of those posts.

ABA, Financial Trade Groups Meet with Trump Team on Tax Reform

As the Trump administration works to advance its tax reform initiative, ABA yesterday took part in a meeting with representatives from the National Economic Council, Treasury Department and other financial industry groups to provide feedback.

ABA President and CEO Rob Nichols, who attended the meeting on behalf of ABA, expressed his support for pro-growth tax reform that includes lower rates and simplification. Nichols emphasized that the administration must carefully analyze the potential direct and indirect effects of certain proposals, such as those that would restrict the deductibility of net business interest expense. ABA continues to engage with the administration and take part in discussions with policymakers as tax reform moves forward.

Friday, June 9, 2017

House Passes Financial Choice Act

The House yesterday passed the Financial Choice Act by a mostly party line vote of 233 to 186. The legislation is Financial Services Committee Jeb Hensarling’s sweeping, 600-page bill aimed at reforming parts of the Dodd-Frank Act’s extensive supervisory regime and providing regulatory relief for banks.

The bill includes a number of regulatory relief provisions long sought by ABA as part of its Blueprint for Growth, including a Qualified Mortgage safe harbor for mortgage loans held in portfolio, more tailored supervision based on an institution’s risk profile and business model, greater flexibility for savings associations, relief from various reporting requirements, and repeal of the Volcker Rule.

Included in the bill is a “regulatory off-ramp” for larger institutions subject to DFA’s heightened prudential standards and Basel III’s capital and liquidity standards, provided those institutions elect to maintain a 10 percent non-risk weighted leverage ratio. The Choice Act also focuses on ending “too big to fail” by replacing DFA’s Orderly Liquidation Authority with a new Bankruptcy Code designed to accommodate the failure of a large, complex financial institution.

Also targeted for reform by the bill is the Consumer Financial Protection Bureau, which would be renamed the Consumer Law Enforcement Agency and stripped of its examination powers and “UDAAP” enforcement authority. The agency would be led by a single director removable at will by the president, and subject to the congressional appropriations process.

The bill’s passage reflects an important step toward providing meaningful regulatory reform that will help America’s banks better serve their customers and communities, ABA President and CEO Rob Nichols said, though he noted that the bill “would have been much stronger had a provision to repeal the Durbin Amendment been retained.” With the bill’s passage, the fight for regulatory reform now shifts to the Senate.

Read ABA's statement.

Tuesday, May 23, 2017

Acosta: No Additional Delay for Fiduciary Rule

Labor Secretary Alexander Acosta today announced that the Department of Labor will not delay the June 9 effective date for the fiduciary rule, which greatly expanded the definition of who counts as a “fiduciary” under the Employee Retirement Income Security Act and the Internal Revenue Code. Acosta wrote in a Wall Street Journal op-ed printed this morning that the Administrative Procedures Act, which governs federal rulemaking, would not allow a further delay.

"We...have found no principled legal basis to change the June 9 date while we seek public input," he wrote. "Respect for the rule of law leads us to the conclusion that this date cannot be postponed." While the new definition takes effect June 9, additional conditions -- such as specific disclosures and representations -- are not required until Jan. 1, 2018.

DoL issued a bulletin on its “temporary enforcement policy” of phased implementation. “The department has repeatedly said that its general approach to implementation will be marked by an emphasis on assisting (rather than citing violations and imposing penalties on) plans, plan fiduciaries, financial institutions, and others who are working diligently and in good faith to understand and come into compliance with the fiduciary duty rule and exemptions,” DoL said. “Accordingly, during the phased implementation period ending on Jan. 1, 2018, the department will not pursue claims against fiduciaries who are working diligently and in good faith to comply with the fiduciary duty rule and exemptions, or treat those fiduciaries as being in violation of the fiduciary duty rule and exemptions.”

Although Acosta declined to authorize a further delay, he said that DoL will continue its review of the final rule pursuant to an executive action by President Trump. "The Labor Department has concluded that it is necessary to seek additional public input on the entire fiduciary rule, and we will do so," he wrote. "Trust in Americans' ability to decide what is best for them and their families leads us to the conclusion that we should seek public comment on how to revise this rule."

ABA has strongly advocated for an additional delay and revisions to the rule to facilitate compliance and ensure it does not negatively affect the services available to bank customers. The association expressed disappointment that DoL decided to pursue implementation of a rule that it has said remains “fundamentally flawed and unworkable in critical areas.”

Read the enforcement policy bulletin.

Read FAQs on compliance.