(Jan. 8, 2021) The election of two Democrats from Georgia to the U.S. Senate this week – giving the Democrats a slim majority and therefore control — means some changes ahead in policy and, likely, to at least two regulatory agencies.

Once newly elected Sens. Raphael Warnock and Jon Ossof are seated (following certification of their elections, likely late this month), the Democrats will take control of the Senate. That will open the door to Democrats capturing the chairs of Senate committees – including the Senate Banking Committee, which writes the laws affecting credit unions and other financial institutions. Sen. Sherrod Brown (Ohio) is now the ranking Democrat on the committee and will likely be elected chair.

Brown, over the last several years as ranking minority party member of the committee, has been sharply critical of financial institution regulatory relief efforts. This week, for example, he vilified in a press release the recommendations of the CFPB’s task force on consumer law. “From the outset, it was clear that the CFPB’s Taskforce on Federal Consumer Law was just a pretext to gut regulations and protections for consumers,” he stated. “The Taskforce members have a history of undermining the CFPB and work at law firms representing payday lenders, banks, and other corporations with a direct, financial interest in rolling back consumer protections.”

The Democrats’ control of the chamber likely also dooms the nominations for a Federal Reserve governor and a permanent comptroller of the currency. On Jan. 3, President Donald Trump (with 17 days left in office) re-nominated Judy Shelton as a Fed governor, and Brian Brooks as comptroller (Brooks now serves as acting comptroller). Those nominations are unlikely to be considered between now and Jan. 20, when President-elect Joe Biden will be inaugurated, as the Senate is in recess through Jan. 19. Biden will likely withdraw the nominations after taking office – and, even if he didn’t, the Democrat-led Senate is unlikely to ever take them up.

(Dec. 23, 2020) The Federal Reserve Board now has six (out of a total seven) members, as newest Gov. Christopher Waller joined the board after taking his oath of office last Friday. Waller was confirmed by the Senate Dec. 3; he is the former research director for the St. Louis Fed, and a former professor. Meanwhile, there is still no word on confirming the nominee to the seventh and final seat on the board. A vote on controversial nominee Judy Shelton has been stalled in the Senate since at least November; Senate leadership has yet to announce plans to take up the nomination again … Big banks saw their losses rise to more than $600 billion under conditions simulated in a second stress test conducted by the Federal Reserve – but the banks’ capital ratios, despite the losses, would continue to be well above the minimum required (falling from 12.2% to 9.6%, but still above the 4.5% minimum), the central bank said late last week. Nevertheless, the Fed plans to keep restrictions on the banks’ distributions to investors and share repurchases, and won’t make changes to capital requirements … How to spot warning signs of human trafficking is in the spotlight for a webinar next month sponsored by NCUA, set for Jan. 7. The agency said the event will provide an overview of human trafficking and its impact on communities, law enforcement’s efforts to combat it, and potential red flags in credit unions. Attendees will also learn how to report concerns about human trafficking to the proper authorities, the agency said. There is no charge for attending, although advance registration is required … This is the final issue of NASCUS Report for 2020; we’ll see you again on Jan. 8. In the meantime: Happy Holidays – and have a terrific New Year!

LINKS:
Federal Reserve Board releases second round of bank stress test results

(Dec. 4, 2020) Following the Senate’s action to fill out the membership of the NCUA Board, on Thursday the Senate filled one of two empty seats on the Federal Reserve Board, confirming Christopher Waller. But it wasn’t a cakewalk: by many accounts, it was one of the closest confirmation votes ever for a central bank board member.

Waller, now executive vice president/director of research for the Federal Reserve Bank of St. Louis (and a former professor of economics at the University of Notre Dame), was confirmed on a vote of 48-47, with all Democrats and Republican Sen. Rand Paul (Ky.) voting against.

Thursday’s vote marked the first time the Senate had confirmed a Fed governor in a lame-duck period that follows the November election before the president’s term ends in January. Further, Fed governors are more typically confirmed on much more lop-sided votes, with 60 votes or more in favor.

The close vote for Waller (considered a “non-controversial” nominee) may signal bad news for the future on the Fed Board for the nominee to the other open seat: Judy Shelton. She has received a cool reception in the Senate, particularly among Democrats, for her past comments about bringing back the gold standard, questioning the effectiveness of federal deposit insurance, and the Fed’s independence from political influence.

Last month, Shelton’s nomination came before the Senate and failed to earn enough votes to cut off debate – action that would have paved the way for a final vote on her nomination. The close vote on Waller likely indicates the controversial Shelton will have a tough time being considered again in the Senate. In fact, Senate Majority Whip John Thune (R-S.D.) said Thursday that another vote on Shelton’s nomination was “unlikely” at this point.

(Nov. 13, 2020) The NCUA Board has scheduled a 2020 budget update and reprogramming, as well as an item on the agency’s rules and regulations, “Capitalization of Interest” as agenda items for its Nov. 19 regular monthly meeting. Other items on the agenda for the meeting, set to begin at 10 a.m. ET and to be streamed live via the Internet, are board briefings on the quarterly performance of the National Credit Union Share Insurance Fund (NCUSIF) and on the state of credit union diversity, including the 2019 Credit Union Diversity Self-Assessment … The FL Office of Financial Regulation recently approved Nov. 1 the conversion of Panhandle FCU of Panama City to a state charter; the institution holds more than $263 million in assets … Controversial Federal Reserve Board NomineeJudy Shelton – criticized by some for her past views on reinstituting the gold standard, questioning the effectiveness of federal deposit insurance, and the Fed’s independence from political influence – will receive a confirmation vote as early as next week. Sen. Lisa Murkowski (R-Alaska) said Thursday she would vote for Shelton, meaning there are now enough votes among Republicans to approve her confirmation; all Democrats have vowed to reject her nomination. A vote for fellow Fed Board Nominee Chris Waller has not been scheduled, although his nomination has received little if any opposition. There is no word, yet, on a vote for NCUA Board Nominee Kyle Hauptman … Actual payment “furnishing” (or information on payments sent to consumer credit reporting agencies from financial institutions) grew steadily for mortgage, auto and student loans between 2012 and 2020, according to a report issued Thursday by the CFPB, reaching more than 90% of credit accounts. On the other hand, over the same period, the bureau said payment furnishing for credit card and retail revolving loan accounts fell to 40% of accounts. The bureau said the information in its report is used to determine whether consumers are approved for credit and the interest rates and terms consumers receive. “Financial institutions’ decisions regarding which data elements within a consumer’s credit account to furnish to consumer reporting agencies have important implications for which factors lenders can use to evaluate potential and existing borrowers,” the report states. It added that “describing trends in furnishing practices can help deepen policymakers’ and market participants’ understanding of the consumer reporting system’s key role in consumer access to credit, especially in the wake of the COVID-19 pandemic when credit standards have tightened and there has been increased strain on consumer finances.”

LINK:
New report explores the prevalence of actual payment information in consumer credit reporting