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FDIC staff tried to cover up a series of internal data breachesand misled Congress on the status of some of those breaches, GOP lawmakers saidat a House Science, Space and TechnologyCommittee hearing on Thursday. The hearing was the second in responseto an investigation into how the FDIC handled a series of security breaches. Theagency has reported seven breaches since October 2015 related to employees leavingthe agency and downloading data on personal external devices, with one incidentrequiring law enforcement.
An interim staff report from the committee also found that FDICChief Information Officer Larry Gross misled Congress about a series of internalsecurity breaches at the agency and has created a hostile work environment againstwhistleblowers.
FDIC Chairman Martin Gruenberg said the agency did not reportthe incidents in a timely manner and was working to implement security protocolsrecommended by the regulator's inspector general.
Gruenberg was also underfire from lawmakers Wednesday at a House Oversight and Government ReformCommittee hearing on the agency's de novo process. GOP lawmakers accused the FDICof preventing new banks from forming by over-regulating the process. Gruenberg toldthe committee that agency is taking steps to make the process easier, includingreducing the monitoring period of de novo from seven years to three years.
In election news, Republican presumptive presidential nomineeDonald Trump tweeted out Friday that he has picked Indiana Gov. Mike Pence for vicepresident, Bloomberg News reported.He had previously postponed his announcement of vice president after an attack in Nice, France,left around 80 dead, The New York Times reported.Pence voted against the Troubled Asset Relief Program when he was a congressman.
Many Wall Street executives are staying away from the RepublicanNational Convention, which begins Monday, Politico reported.An executive at Goldman Sachs GroupInc. told the news agency that executives are choosing not to go becausecorporate attendees are likely to offend minorities and women within their companies.
Simon Johnson, a professor at the MIT Sloan School of Management,told lawmakers at a House Oversight and Government Reform Committee hearing on Wednesdaythat the Financial CHOICE Act provision to replace the orderly liquidation rulewith a new chapter in the bankruptcy code "would be a catastrophe." Whilein some cases bankruptcy could work for small banks, it would not work for big banks,he said. None of the banks' living wills show they could be resolved "withoutmajor negative effects on the financial system and the economy," he said.
Sen. David Vitter, R-La., senta letter to Attorney General Loretta Lynch on the Department of Justice's decisionto not prosecute HSBC Holdings Plcand HSBC Bank USA NA,asking if she was aware of the proceedings. At the time, Lynch was the U.S. Attorneyof the Eastern District of New York. "The American people are sick and tiredof certain people or institutions of the Administration's choosing being allowedto violate federal laws with no repercussions," the letter states. The HouseFinancial Services Committee, of which Vitter is a member, claimed in a report Monday that the DOJ has "not beenforthright" in its investigation in relation to alleged violations of anti-moneylaundering and sanctions laws and related offenses.
Rep. Maxine Water, D-Calif., also sent a letterto Lynch on Friday, urging the DOJ to pursue prosecution of HSBC employees. Shecriticized the "two-tiered American justice system," saying that finesare not "enough to stop bad actors on Wall Street."
The Federal Reserve and other regulators are considering a cybersecuritybaseline for banks, Bloomberg News reportedJuly 8. Citing "people with knowledge of the matter," the news outletsaid the Fed, OCC and FDIC were working on the minimum requirements following aseries of cyberattacks in recent years.
The House passed a number of financial services related billsthis week.
* H.R. 5421amends the Securities Act of 1933 to provide blue sky exemptions for any securitylisted as a "national securities exchange" that is registered with theSEC.
* H.R. 5322amends the Investment Company Act of 1940 and terminates a registration exemptionfor investment companies in Puerto Rico, the Virgin Islands and others. It willalso provide a three-year safe harbor for companies that apply the exemption.
* H.R. 5469would require the Secretary of the Treasury to direct the U.S. executive directorat the International Monetary Fund to support the use of the budget of the fundto prevent money laundering and terrorism financing.
* H.R. 5594would require the president to develop and publish an annual government strategyto combat money laundering and terrorist financing.
* H.R. 5602amends sections of the U.S. Code to allow the Treasury Secretary to issue geographicaltargeting orders regarding certain types of transaction in a specific area for alimited amount of time.
* H.R. 5607enhances the resources the Treasury Department uses in its efforts to combat terrorismfinancing, including reporting on a proposed pilot program aimed at giving banksand credit unions the ability to offer account services to companies with moneytransfers in Somalia.