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Washington Wrap: FOMC remains dovish, FDIC approves liquidity proposal

The Washington Wrap isa weekly look at regulation, news and chatter from the Capitol. Send tips andideas to mcosta@snl.com.

News:

As expected, the Federal Open Market Committee left its keyfederal funds rate unchanged,at between 0.25% and 0.50%. While economic activity has slowed, labor marketconditions have improved since the FOMC's last meeting in March, the committeesaid in a statement.

Federal Reserve Bank of Kansas City President Esther Georgewas the lone vote against the policy statement and wanted to raise interestrates at the April meeting.

The FOMC is most likely to raise rates at its June andDecember meetings because of scheduled press conferences and because thosedates are not too close to Election Day, Channel Capital Research ChiefInvestment Officer Doug Roberts said in an interview.

"Given the regulatory environment right now, theydon't want to do anything that's hinting of playing politics," he noted.Alternatively, he said it is possible the committee could just raise rates atits December meeting, leaving the second hike for 2017.  


The Consumer Financial Protection Bureau is planningto supervise online lenders by 2017, TheWall Street Journal reportedon April 27. The bureau plans to release a proposal in the fall to superviselenders that offer small-dollar loans and could include marketplace lenders inits definition of "installment" lending, the WSJ reported.

The CFPB is also planning toissue a notice of proposed rulemaking on its mortgage disclosure rules,commonly known as TRID, in late July. Director Richard Cordray wrote an April28 letter to industry trade groups acknowledging that implementation of therule "poses many operational challenges." The CFPB will arrangemeetings with the associations before the rule is issued to discuss it further,he wrote.

Legislation/Regulation:

The FDIC board this week approved a proposed net stable funding ratio rule. Therule applies to the biggest banks and would give a higher stability rating toretail deposits and certain instruments with a maturity of one year or longer.The rule is now open for public comment.

The board also approved a final rule updating the FDIC's depositinsurance assessments for small banks and voted in favor of an interagency ruleon governing incentive-based compensation.


As part of an Obama administration initiative to helpstudent loan borrowers pay back their debt, the CFPB is public comment until June on anew set of student loan servicing disclosures. The Payback Playbook givesborrowers personalized information about their monthly repayment options.


Sen. Tim Scott, R-S.C., is introducinga bill that aims to incentivize private investment in economically distressedcommunities. The bill would allow a temporary capital gains deferral inexchange for reinvesting in certain low-income areas. It would also create"Opportunity Funds" to encourage investors to pool resources.


The House passed a number of bills related to thefinancial industry this week:

* H.R. 4096, the Investor Clarity and Bank Parity Act,changes the Volcker Rule so an investment adviser with a bank can share thesame or similar name as a hedge fund or private equity fund. It passed theHouse 395-3 on April 26.

* H.R. 4498, the Helping Angels Lead Our Startups (HALOS)Act, defines angel investor groups and clarifies an SEC regulation to allowbusinesses to solicit investments. It passed the House 325-89 on April 27.

* H.J. Resolution 88 disapproves of the rule submitted bythe Department of Labor relating to the definition of the term"fiduciary." The bill would block the rule form taking effect. Itpassed the House on a party-line vote of 234-183 on April 28. President BarackObama saidhe would veto the bill.

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