Regulatory Developments
SEC Staff Updates 2014 Money Market Fund Reform FAQs
On May 23, the staff of the Securities and Exchange Commission’s (SEC) Division of Investment Management published additional responses to frequently asked questions regarding the SEC’s 2014 amendments to the rules governing money market funds. Although the staff’s responses do not constitute a formal rule, regulation or statement of the SEC, they provide further guidance on some of the most frequently asked questions posed by the industry in areas that were not fully addressed in the 2014 amendments’ adopting release. The update provides additional interpretive guidance regarding, among other things, money market fund advertisements, compliance dates, insurance separate accounts, government money market funds and use of performance records.
CFPB Reform Bill Advances Through House Appropriations Subcommittee on Financial Services
On May 24, the House Appropriations subcommittee on financial services passed its 2017 fiscal year spending bill, which would, among other things, implement reforms of the Consumer Financial Protection Bureau (CFPB) long favored by the financial services industry. Specifically, the bill would (1) replace the director of the CFPB with a bipartisan five-member commission, (2) fund the CFPB through congressional appropriations, rather than directly from the Federal Reserve, and (3) require the CFPB to study the use of pre-dispute arbitration prior to issuing final regulations thereon. The bill would also provide full funding for the Small Business Administration’s 7(a) and 504 business loans programs, and amend the U.S. Bankruptcy Code to facilitate the orderly resolution of a failing financial firm.
FDIC Report Outlines Strategies for Banks to Engage Underserved Consumers
On May 25, the Division of Depositor and Consumer Protection of the Federal Deposit Insurance Corporation (FDIC) released a report that identifies six strategies for banks to meet the needs of the unbanked and underbanked: improving customer access to timely account information; expediting access to money; making banking more affordable through better account management; addressing real and perceived security shortfalls; increasing awareness of mobile tools; and encouraging long-term financial management. The FDIC has invited bankers to provide feedback on how they are currently employing these strategies, how best to shape a demonstration project and how interested they are in participating in a demonstration. Comments are due by June 15 and may be emailed to MFSDemonstration@fdic.gov.
Senate Votes to Block Enforcement of DOL’s Fiduciary Rule
On May 24, the U.S. Senate voted 56-41 to pass a resolution that would block the enforcement of the Department of Labor's Conflict of Interest Final Rule, commonly known as the Fiduciary Rule. Under the “Congressional Review Act” (CRA), Congress can overturn actions by a federal agency following the formal publication and submission of a rule to Congress. If the resolution of disapproval is signed by the President, it would nullify the fiduciary rule even if portions have already gone into effect. The House of Representatives passed companion legislation in April. While President Obama is expected to veto the legislation, its passage demonstrates that significant controversy regarding the rule remains. Significant aspects of the Fiduciary Rule were detailed in a client alert published by Goodwin partners Scott Webster, Jamie Fleckner and Alison Douglass from our ERISA & Executive Compensation and ERISA Litigation practices.
Congressmen Curious about Regulatory Framework’s Impact on FinTech Companies
On May 24, a group of congressmen wrote a letter to the Comptroller General of the United States Government Accountability Office requesting information about the impact of the current regulatory framework upon partnerships between banks and financial technology companies (FinTechs). The Congressmen were especially interested in learning (1) how fragmentation and overlap in financial regulation has slowed or harmed innovation and restricted financial firms from pursuing new technological ventures; (2) how collaboration between financial firms and FinTechs has improved efficiency; (3) what challenges financial institutions and FinTechs face under the existing regulatory regime; and (4) how regulators can streamline their processes to foster partnerships between banks and FinTechs. This letter coincides with a broader governmental interest on FinTechs, as illustrated by OCC’s whitepaper on responsible financial innovation, which was discussed in the April 6, 2016 edition of the Roundup. In connection with their requests, the congressmen expressed their commitment to ensuring innovation, partnership, and collaboration in the financial marketplace.
