AFR Education Fund wrote a letter to banking regulators urging them to maintain risk controls for derivatives transactions at large banks Download the letter here. January 23, 2020 RE: Margin and Capital Requirements for Covered Swaps Entities (OCC Docket ID OCC–2019– 0023; Federal Reserve Docket No. R–1682; FDIC RIN 3064-AF08) To Whom It May
In revising the Volcker Rule’s proprietary trading ban last year, the regulators had already relaxed one component of the limits on investment in funds, clarifying the industry’s ability to do so on behalf of clients. Backing off some of the fund restrictions will “complete the process of neutering the rule,” Marcus Stanley, policy director at Americans for Financial Reform, said in a criticism of the regulators’ actions last year.
While the statement purports to clarify the standard for abusiveness under the law, in fact it inserts a great deal of vagueness, and signals that the CFPB is prepared to give companies a pass when they commit abusive acts. And the Bureau plans to let companies that have used abusive practices off the hook for civil penalties and disgorgement if they acted in good faith—a standard that will be in the eye of the beholder, that will encourage ignorance of the law, and that will require the CFPB to prove a negative.
Consumer advocates and academics criticized the policy, saying the agency was effectively tying its own hands. “It seems that the agency is trying to highly constrict the use of ‘abusive’ by using terms that do not fully capture the way lenders behave,” said Linda Jun, an attorney at the advocacy Americans for Financial Reform.
Americans for Financial Reform welcomes the passage of H.J. Res. 76 to roll back Education Secretary Betsy DeVos’ devastating attempt to make debt cancellation for scammed students nearly impossible. The resolution passed 231 to 180 with bipartisan support; 6 Republicans and all Democrats voted yes, with 19 members not voting.
The measure, which is scheduled for a vote at the company’s annual meeting next week, would block investors harmed by securities fraud or other corporate legal violations from bringing their claims as a class in a court of law, before a judge and jury. This would effectively end most shareholders’ ability to recover their losses in such cases, as they cannot affordably be brought individually in arbitration by any but the very largest institutional investors.