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Washington Report 360 | February 23, 2018

The Washington Report | For the week ended Feb 23, 2018

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Key Highlights

  • The U.S. Department of the Treasury released its report and recommendations on the Orderly Liquidation Authority, including recommendations for a new Chapter 14 of the Bankruptcy Code and retention of the OLA.
  • Multiple regulators reported on FinTech: the CFTC and the UK Financial Conduct Authority (FCA) announced they will cooperate on FinTech innovation; the Basel Committee issued a report on the implications of FinTech developments for banks and bank supervisors along with considerations for sound practices; and the FRBNY issued a mortgage lending report finding that FinTech lenders were more efficient than traditional mortgage lenders.
  • Heightened attention continues to be directed toward cybersecurity, including an SEC statement on public disclosures of cybersecurity risk and incidents, as well as the creation of a new Justice Department Cyber-Digital Task Force.
  • The CFPB released a Request for Information seeking comment on its external engagements. This is the fifth in a series; seven additional requests have been identified.

Financial services policy news

The U.S. Department of the Treasury released a report and recommendations on the Orderly Liquidation Authority (OLA); the report recommends a new Chapter 14 of the Bankruptcy Code for distressed financial companies that would include procedural features tailored to large, interconnected financial companies. Additional recommendations address reforms to the OLA, which Treasury would retain as an emergency tool.

The CFTC and the UK Financial Conduct Authority (FCA) agreed to cooperate on FinTech innovation through information-sharing and referrals of FinTech companies interested in market access.

The Basel Committee released a report on the implications of FinTech developments for the banking industry and banking supervision along with considerations for sound practices. Supervisors should ensure that banks employing innovative technologies continue to comply with relevant laws and regulations, including those related to data privacy, consumer protection, fair competition, and national security.

The Federal Reserve Bank of New York released a report on the role of technology in mortgage lending that found FinTech lenders process mortgage applications about 20 percent faster than traditional lenders, and have default rates that are about 25 percent lower.

The U.S. Attorney General created the Justice Department’s Cyber-Digital Task Force, which will report to the Attorney General in June on the ways the Department is combatting global cyber threats and how federal law enforcement can be more effective.

The Justice Department announced a nationwide enforcement sweep aimed at halting elder fraud; in coordination with the FTC and state Attorneys General, the sweep resulted in actions against more than 250 defendants charged with financial crimes against elders.

Financial services legislative and regulatory news

The SEC voted unanimously to approve a statement and interpretive guidance on cybersecurity, which provides SEC views on disclosure obligations for matters involving cybersecurity risk and incidents, and addresses the importance of cybersecurity policies and procedures.

The SEC extended by six months the deadline by which open-end funds must comply with the classification requirement and related elements of the liquidity risk management program rule. The rule, however, will go into effect as originally scheduled.

The CFTC's Division of Market Oversight extended its time-limited no-action relief to entities submitting swaps for clearing by derivatives clearing organizations operating under CFTC exemptive orders or no-action relief provided by CFTC staff.

The CFPB released the fifth in a series of Requests for Information (RFIs), this time seeking comment on its external engagements, including field hearings, town halls, roundtables, and meetings of the Advisory Board and Councils. Seven additional RFIs are expected to be forthcoming.

The FFIEC released its 2018 guide to HMDA reporting, which includes a summary of responsibilities and requirements, directions for assembling the necessary tools, and instructions for reporting HMDA data.

The U.S. Supreme Court held that Dodd-Frank's whistleblower protection only protects individuals who have reported a violation of the securities laws to the SEC, reversing a lower court ruling that extended whistleblower protection to an individual who had disclosed suspected violations only internally.

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