Banking/Financial Institutions

The Consumer Financial Protection Bureau (CFPB) launched on Thursday a public database of more than 90,000 consumer complaints, but drew bank complaints in the process.

The database, the largest ever of its kind made public, details grievances consumers have aired about credit cards, mortgages, bank accounts and other financial services. The watchdog hopes releasing the information will help paint a picture of problems in the consumer financial marketplace, while opening up the information to others who could use it.

But the data release has banks crying foul, arguing that the complaints were made public before the bureau has determined if they are valid.

Richard Hunt, president and CEO of the Consumer Bankers Association, called the database a "serious step in the wrong direction." He contended that because the validity of the complaints are not verified before publication, the database could do more harm than good for consumers by exposing them to unreliable information.

"This approach is unnecessary, misleading and ultimately harmful to consumers," he said. "A better service to consumers would have allowed for collaboration between the CFPB and financial institutions to determine if a complaint is indeed valid, prior to publication."

Mobile banking is continuing to gain a foothold in the United States, according to a new survey from the Federal Reserve.

The percentage of mobile phone owners using that technology for banking and other financial purposes was on the rise at the end of 2012. Twenty-eight percent of all mobile phone users, and nearly half of smartphone users, reported they had used their devices for banking purposes in the last year. Those numbers represent a 33 percent increase from the last Fed survey on the issue at the end of 2011.

In particular, the Fed found that mobile financial services have gained a significant foothold among people who are either "underbanked" — have bank accounts but still use check cashers or payday lenders — or "unbanked" — have no bank accounts.

The Consumer Financial Protection Bureau is scaling back rules on credit card fees in order to dodge a court battle with the financial industry.

The top Democrat on the House Financial Services Committee is praising an oft-criticized housing regulator for taking on costly "forced" insurance plans imposed on homeowners.

Rep. Maxine Waters (D-Calif.) hailed the Federal Housing Finance Agency (FHFA) Tuesday for considering restrictions on such "force-placed" policies, arguing the rules would help protect consumers from costly collusion between banks and insurers.

"The proposed change in the FHFA’s policy will benefit consumers who pay dearly for insurance that is artificially inflated because of cozy financial relationships between banks and insurers," she said in a statement. "The current practice is deeply wrong and I appreciate the fact that the FHFA is finally yielding to legitimate concerns about abuses in this market."

Sen. Sherrod Brown (D-Ohio), one of Wall Street's harshest critics, could end up leading the Senate Banking Committee if Democrats retain control of the Senate in 2014.

Chairman Tim Johnson (D-S.D.), who has led the Banking Committee since 2011, will announce Tuesday he does not plan to seek reelection, according to multiple industry sources.

The seat, in red-state South Dakota, will be difficult for Democrats to defend, but it also could set off a scramble to for the coveted chairmanship of the Banking panel.

Depending on how that plays out, it's possible that noted bank-basher Brown could take over the chairman's gavel. One industry source said it was "very likely" Brown would take control of the committee in 2014 if Democrats retain control of the chamber.

Top Republicans on the House Financial Services Committee believe the Securities and Exchange Commission (SEC) is mishandling its regulation of credit rating agencies.

Specifically, the lawmakers are questioning a move by the regulator to advance work on a provision of the Dodd-Frank financial reform law studying the credit rating industry before finishing work on a separate provision of the law pertaining to raters.

Committee Chairman Jeb Hensarling (R-Texas) and Rep. Scott Garrett (R-N.J.), who chairs the panel's Capital Markets subcommittee, warned that such a move could run counter to the intent of the law by entrenching the power of the top three credit raters — Moody's Investors Service, FitchRatings and Standard & Poor's — instead of reforming them and encouraging competition.

"Only by removing the government 'Good Housekeeping' seal of approval can we increase competition among rating agencies, lessen investors' reliance on ratings, and reduce the likelihood of future crises based upon fundamentally flawed credit risk analysis," they wrote to SEC Chairman Elisse Walter Friday, according to a copy of the letter obtained by The Hill.

Old-fashioned placards that notify consumers about ATM fees are coming down.

Federal regulators have issued new rules that allow operators to take down the signs about fees and charges and replace them with touch-screen notifications.

Financial institutions and trade groups lobbied Congress for the rule change last year, arguing the placards had become a costly anachronism that opened them up to frivolous lawsuits. The Credit Union National Association said complying with the regulation could cost as much as $2,000 per institution. 

The nation's biggest and most powerful financial institutions took a few hits during the marathon Senate budget debate.

Among the hundreds of amendments introduced during the debate that stretched into the early hours of Saturday morning, the Senate easily cleared a handful of amendments that, while nonbinding, fire warning shots across the bow of Wall Street's major players.

In a chamber that is divided on almost everything, members agreed unanimously to an amendment offered by Sens. David Vitter (R-La.) and Sherrod Brown (D-Ohio) that would end federal subsidies for banks that are "too big to fail."

“This is a really impressive sign that we mean business on ending too-big-to-fail,” said Vitter. “Mega-banks are still receiving special handouts that create an uneven playing field — making it harder for our community banks and credit unions to compete with the mega-banks."

The amendment would end any subsidies or funding advantages massive banks enjoy due to their size, targeting banks worth more than $500 billion. It passed 99-0.

"Being against 'too big to fail' is like being in favor of motherhood and apple pie," said Brian Gardner, senior vice president for Washington research at Keefe, Bruyette and Woods. "In some ways, it's a 'check the box.' You have to be on the right side of it."

Community banks are employing a powerful weapon to pressure regulators writing new regulations — Congress.

A top Senate Republican is pressing for approval of an amendment that would prohibit any increase in the guarantee fee that is charged by Fannie Mae and Freddie Mac to offset any additional federal spending. 

Sen. Bob Corker (R-Tenn.), a member of the Senate Banking Committee, is co-sponsoring on an amendment to the budget resolution that is part of a broader bill to wind down the government-controlled mortgage finance agencies.

"The reality is that if Congress were to spend g-fee revenue from the GSEs on other programs, reforming Fannie and Freddie would become nearly impossible," Corker said.  

"I believe this amendment, as well as my standalone bill, takes a necessary step to ensure housing finance reform can happen as soon as possible.”

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