Washington Wrap is a weeklylook at regulation, news and chatter from the Capitol. Send tips and ideas to email@example.com.
Donald Trump officially accepted the GOP presidential nominationthis week at the Republican National Convention in Cleveland. The Republican partyalso approved the 2016 platform,which echoes Rep. Jeb Hensarling's Financial CHOICE Act, including calls for regulatoryrelief for community banks and legislation to ensure banks are adequately capitalized.While there was very little mention of banks or Wall Street during the convention,the platform did call the Dodd-Frank Act a "legislative Godzilla" thatis "crushing small and community banks and other lenders."
The party also wants to end the government's use of disparateimpact theory with regards to lending. The theory allows the government to pursuediscrimination lawsuits without proving intent. The U.S. Supreme Court ruled June25, 2015, that such claims are allowed.
One surprise in the platform was a call to bring back Glass-Steagall,a bill that separated banks and investors. Bringing the bill back would not haveprevented the financial crisis, American Bankers Association President and CEO RobNichols said in a statement. Policymakers should focus on economic growth "insteadof calling for a return to Depression-era regulation that would restrain banks'ability to drive our economy forward," he said.
Presumptive Democratic presidential nominee Hillary Clinton isexpected to announce her running mate pick Friday afternoon. The top contendersare Sen. Tim Kaine, D-Va.; U.S. Secretary of Agriculture Tom Vilsack; and U.S. Secretaryof Labor Thomas Perez. Kaine seems the mostlikely pick for vice president, according to The New York Times.
Some liberal activists claim Kaine is pro-bank, the Washington Post reports.Kaine signed onto aletter from over 70 senators on Monday, asking the Consumer Financial ProtectionBureau to tailor its rules to community banks and credit unions. He also signedonto another letter to regulators, asking that regional banks be relieved from dailyliquidity reporting requirements.
The former chief economist and senior counsel to Hensarling opposesparts of the lawmaker's Dodd-Frank Act reform bill. J.W. Verret, now an associateprofessor at George Mason University, wrote in an op-edthat increasing corporate penalties by 50% is not the solution. "It's difficultto argue against that concept on its face, but corporate penalties are almost alwayspaid by shareholders — the very same shareholders who were harmed by wrongdoingin the first place," he wrote.
The Consumer Financial Protection Bureau turnedfive on Thursday. The agency was formed as a result of Dodd-Frank to provideconsumer protection from abusive and unfair practices at financial institutions.Jennifer Lee, a partner at Dorsey and Whitney LLP, said that the bureau is one ofthe most powerful and aggressive regulators because of the broad authority Dodd-Frankgives it. The CFPB will continue to litigate against financial companies regardlessof who wins the election, she said.
"Rather than regulatory or legislative pushback, the industrywill be well-served to closely watch what federal judges do to rein in the authorityof the CFPB, which is also more frequently being challenged in litigation as a naturalconsequence of many factors, including non-public investigations ripening into publicactions these last five years," she said.
The CFPB made three senior staff changes Wednesday. Chris D'Angelowill serve as the agency's associate director for supervision, enforcement and fairlending. Richard Lepley will serve as principal deputy general counsel, and NellishaRamdass will serve as the deputy chief operating officer. All three were alreadyemployed at the CFPB.
The Securities and Exchange Commission said Friday that BrianCroteau, deputy chief accountant since 2010, plans to leave the agency.
The U.S. Department of Education released a memorandum of studentloan servicing principles in consultation with the CFPB and the U.S. Departmentof Treasury. The July 20memo urges federal student loan servicers to be transparent, accountable, consistentand accurate. It is part of a new loan servicing system that is meant to make iteasier for borrowers to manage their loans, the DOE said in a pressrelease.