Banking/Financial Institutions

The top Democrat on the House Financial Services Committee is calling on regulators to weigh in on the worth of pending legislation that would alter the Dodd-Frank financial reform law.

Rep. Maxine Waters (D-Calif.) Thursday called on the Financial Stability Oversight Council (FSOC) to analyze several bills pending before the committee. The council is made up of the nation's top financial regulators, and is charged with overseeing the stability of the financial system.

"Since implementation of Title VII directly impacts the Council’s ability to effectively monitor and protect our nation’s financial system, I believe it is the incumbent upon the FSOC to provide an analysis of these derivatives proposals and share with the Committee how their enactment would affect FSOC’s statutory responsibilities to identify threats to the financial system," she said.

Sens. Brown and Vitter introduced legislation to require large banks to hold more capital in reserve.

Treasury Secretary Jack Lew shot down on Thursday any notion the White House was warming to GOP plans to work around the debt limit.

Asked by Rep. Kevin Yoder (R-Kan.), if he would back a bill Republicans say would allow the Treasury to prioritize payments on debt obligations if the nation's borrowing limit were reached, Lew was adamant it was not an option.

"You cannot prioritize obligations of the federal government today without resulting in a default," he told a House Appropriations subcommittee. "There are obligations that go with being the United States of America … prioritizing pretends that you can pick and choose among the commitments and avoid defaulting.

"You will be in default if you don't extend the debt limit," he added.

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Capital One and two former senior executives paid financial regulators a total of more than $3.5 million to settle charges they manipulated auto loan losses leading up to the 2008 financial crisis.

The Securities and Exchange Commission (SEC) said on Wednesday that the U.S. bank, which reported $21.4 billion in revenue last year, understated the losses the company took from subprime auto loans that could have otherwise been a signal to the looming credit bubble burst.

Losses from Capital One’s auto finance business in the second and third quarters of 2007 vastly exceeded the company’s internal estimates, the SEC says. In financial reports, however, the bank underreported the numbers by 18 percent and 9 percent during those quarters, respectively, or by as much as $72 million and $51 million.

The nation's top advocate for credit unions doesn't think that reforms under the Dodd-Frank financial law have ended the United States's dependence on major Wall Street banks.

"At this point I fail to see how anything that has been done so far has changed too big to fail," said Bill Cheney, CEO of the Credit Union National Association (CUNA) in an interview with The Hill on Tuesday.

If another financial crisis emerged, he said, "the people in the positions who made the decisions to bail out the big banks before would probably have to do the same thing today."

He added, "I think too big to fail still exists."

The nation's top consumer protection agency says payday loans create a cycle of indebtedness for many consumers. 

In a broad-ranging report released on Wednesday, the Consumer Financial Protection Bureau (CFPB) found that payday and deposit advance loans with their loose lending standards, high costs and risky loan structures can trap people in debt. 

“This comprehensive study shows that payday and deposit advance loans put many consumers at risk of turning what is supposed to be a short-term, emergency loan into a long-term, expensive debt burden,” said CFPB Director Richard Cordray. 

“For too many consumers, payday and deposit advance loans are debt traps that cause them to be living their lives off money borrowed at huge interest rates.”

House Republicans are accusing the Federal Reserve of "willful obstruction" on its plans to exit from its massive portfolio.

House Oversight Committee Chairman Darrell Issa (Calif.) and Rep. Jim Jordan (Ohio) chided Fed Chairman Ben Bernanke on Monday for refusing to provide necessary documents to Congress as they monitor the central bank's policies.

"The American people have a right to know the true risks associated with the expansion of the Federal Reserve's balance sheet," they wrote. "The Fed's obstruction and lack of transparency must stop."

House Republicans believe Richard Cordray cannot legally be recognized as the director of the Consumer Financial Protection Bureau (CFPB), but Senate Republicans apparently did not get the memo.

One day after the GOP head of the House Financial Services Committee announced that Cordray would be barred from testifying before his panel, no Senate counterparts raised objections during the regulator's appearance before the Senate Banking Committee.

Sen. Mike Crapo (R-Idaho), the ranking member of the panel, was the only member to even allude to the controversy, saying in an opening statement that he continues to believe the recess appointment putting Cordray in place was unconstitutional. He then went on to question Cordray on a range of CFPB topics.

After the hearing, Crapo reiterated that concern, but added the issue "probably will have to be resolved in litigation."

When asked if Cordray was currently permitted to testify, he said, "He obviously is. He was allowed to come in."

Rep. Maxine Waters promised to foil the Republican ban on testimony from consumer bureau chief Richard Corday