#2022-09, March 18, 2022

President Signs Omnibus Spending Bill Containing Language Addressing LIBOR Contracts; Other Banking Provisions

Late last week, President Biden signed an omnibus spending bill passed by the House and Senate that includes bipartisan language addressing “tough legacy” LIBOR contracts.  Specifically, the provision directs the Federal Reserve to determine replacement rates for LIBOR-referencing contracts that lack fallback language and to provide a safe harbor from litigation over a change in rates after the cessation of LIBOR.

In addition to the LIBOR language, the measure includes several other banking-related provisions, including an $11 billion increase to the authorization cap for the Small Business Administration’s 504 loan program and $295 million for community development financial institutions (CDFIs), including $35 million for the Treasury Department’s Bank Enterprise Award (BEA) Program.  This represents an increase of $25 million for CDFIs, with about $10 million for the BEA program specifically.

Raskin Withdraws Fed Nomination; Other Nominees Clear Senate Banking Committee

Sarah Bloom Raskin, President Biden’s nominee to serve as vice chair for supervision at the Federal Reserve, formally withdrew her nomination yesterday after failing to secure support from several key lawmakers.  Raskin was not expected to receive support from any GOP senators, which meant that all Democratic Senators would need to support her confirmation.

As we reported previously, Raskin’s views on bank regulatory issues around climate change risk came under criticism by Republicans on the Senate Banking Committee during her nomination hearing.  At the meeting to vote to advance her nomination, Republican members of the Committee did not attend, denying Democrats the quorum needed to proceed.

After Raskin’s withdrawal, the Banking Committee approved several other nominations, including sitting governors Jerome Powell, who has been nominated to serve a second term as Fed chairman, and Lael Brainard, who has been nominated to serve as vice chairwoman, as well as Lisa Cook and Philip Jefferson, who were nominated to serve as governors.  The Committee also voted to advance the nomination of Federal Housing Finance Agency Acting Director Sandra Thompson to lead the agency.

CFPB Enhancing Fair Lending, UDAAP Supervision

Earlier this week, the Consumer Financial Protection Bureau indicated that it plans to increase its supervisory activities around fair lending laws and unfair, deceptive and abusive acts and practices (UDAAP).  Specifically, the Bureau stated that it “will scrutinize discriminatory conduct that violates the federal prohibition against unfair practices.  The CFPB will closely examine financial institutions’ decision-making in advertising, pricing, and other areas to ensure that companies are appropriately testing for and eliminating illegal discrimination.”

The CFPB also published an updated exam manual outlining how it will examine for UDAAPs.  The guide outlines the legal standards by which regulators evaluate UDAAPs and provides examples of unfair, deceptive and abusive acts and practices.

To read more, click here.