Clinton Says She’ll Move Beyond Dodd-Frank’s Bank Rules

Law360, New York (August 11, 2016, 3:51 PM ET) — Former Secretary of State Hillary Clinton on Thursday said that she intends to tighten financial regulations if she wins the presidential election in November even as she hopes to roll back red tape in order to spur lending by community banks and credit unions.

While Hillary Clinton’s speech focused on issues like taxes, international trade, reducing child care costs and boosting the power of labor unions, the former senator from New York also blasted Donald Trump for saying that he intended to roll back the reforms required under the 2010 Dodd-Frank Act. (Credit: AP)

Clinton, the Democratic presidential nominee, used her speech in Warren, Michigan, to contrast her vision for the U.S. economy with that presented in a speech earlier in the week by her Republican rival, self-proclaimed billionaire real estate developer and reality television star Donald J. Trump. While Clinton’s speech focused on issues like taxes, international trade, reducing child care costs and boosting the power of labor unions, the former senator from New York also blasted Trump for saying that he intended to roll back the reforms required under the 2010 Dodd-Frank Act.

“We should strengthen those rules so that Wall Street can never wreck Main Street again,” Clinton said.

During her bruising primary campaign against Sen. Bernie Sanders of Vermont, critics alleged that Clinton would not be a tough cop when it came to Wall Street wrongdoing, citing actions by her husband, former President Bill Clinton, that they say ultimately led to the 2008 financial crisis. Chief among critics’ concerns was the repeal of the Glass-Steagall Act, a Depression-era law that split investment banking from traditional banking.

Clinton also faced charges that the huge amounts of money she made in speeches to Wall Street banks, including Goldman Sachs Group Inc., would lead her to ease up on Wall Street regulation.

But Clinton has been firm in saying she wants to move beyond Dodd-Frank rules, with a focus on bringing new regulations to the “shadow banking” sector and adding an extra “risk fee” for the biggest financial institutions.

Trump, in his Monday speech in Detroit, said little about financial regulation. Instead, he promised a moratorium on new regulations and a review of all agency rules should he take office. In earlier interviews he vowed to repeal the Dodd-Frank Act, a commonly espoused Republican talking point.

Major questions remain about what a Trump administration would mean for banks.

On Thursday Clinton said Trump’s overall economic plan, including his stated goal of repealing the Dodd-Frank Act as well as a repeal of the estate tax and other measures, were meant to help the Republican candidate and his wealthy friends.

She also blasted Trump for wanting to eliminate the Consumer Financial Protection Bureau, the federal consumer finance watchdog and one of the major pillars of the Dodd-Frank legislation.

“Why would you get rid of that?” she asked.

Yet Clinton suggested that there were areas where banks could use a boost.

In a section of her speech about cutting back on red tape, Clinton said that she wanted to make it easier for community banks and credit unions to extend credit to small businesses and entrepreneurs in a bid to boost jobs.

Revised 92900-A FHA Form Now Required

As a reminder—the Federal Housing Administration (FHA) announced on March 15, 2016 in Mortgagee Letter 2016-06—FHA’s revised HUD/VA Addendum to the Uniform Residential Loan Application (Form 92900-A, Loan-Level Certification) became effective for use by FHA-approved mortgagees for case numbers assigned on or after August 1, 2016. Mortgagees can access the revised Loan-Level Certification on HUD’s Client Information Policy Systems (HUDCLIPS) HUD Forms page. The previous version of this form is available on the Single Family Housing Supplemental Documents Archive web page.


Two Important TRID Clarifications in CFPB Proposal


Modifying Disclosures for Sharing with Sellers and Third Parties

Whereas Regulation X required providing sellers and the parties’ agents with the HUD-1, it has not been clear how the Closing Disclosure can be shared. Section 1026.38(t)(5)(v) and (vi) state that the Closing Disclosure can be modified to create separate disclosures for buyers, sellers and third parties by removing certain information. The CFPB has provided additional guidance in the commentary on how to achieve this:

Paragraph 38(t)(5)(v).

  1. Permissible form modifications to separate consumer and seller information. The modifications to the form permitted by § 1026.38(t)(5)(v) may be made by the creditor in any one of the following ways:
  2. Leave the applicable disclosure blank concerning the seller or consumer on the form provided to the other party;
  3. Omit the table or label, as applicable, for the disclosure concerning the seller or consumer on the form provided to the other party; or

iii. Provide to the seller, or assist the settlement agent in providing to the seller, a modified version of the form under § 1026.38(t)(5)(vi), as illustrated by form H-25(I) of appendix H to this part. (Emphasis added). See, pg. 284.

Another roadblock to sharing this information has been privacy concerns under the Gramm-Leach-Bliley Act (GLBA) and Regulation P. The CFPB also addressed privacy concerns surrounding sharing the disclosures in the preamble:

Regulation P generally provides that a financial institution (such as a creditor or settlement agent) may not disclose its customer’s nonpublic personal information to a nonaffiliated third party without providing notice to the customer of such information sharing and an opportunity to opt-out of such sharing.

There are several exceptions to these notice and opt-out requirements, however. For example, GLBA section 502(e)(8) provides an exception that applies if a financial institution shares its customer’s non-public personal information to comply with Federal, State, or local laws, rules and other applicable legal requirements. GLBA sections 502(e)(1) and 509(7)(A) provide another exception that applies if a financial institution’s sharing of its customers’ nonpublic personal information is required, or is a usual, appropriate, or acceptable method, to provide the customer or the customer’s agent or broker with a confirmation, statement, or other record of the transaction, or information on the status or value of the financial service or financial product. See, pg. 147.

Requirements for Disclosing the Ability to Shop and the Written List of Providers

The amendments also add some language to comments 2 and 4 to section 1026.19(e)(1)(vi) that require the creditor to specifically identify services that are payable by the consumer and can be shopped for by the consumer. Comment 4 is being amended to specifically require that a creditor specifically identify those services payable by the consumer and for which the consumer is permitted to shop on the written list of providers. There is clarification in the commentary regarding packaged services. Below is the new language added to comment 1026.19(e)(1)(vi)-4:

If the charge for a particular service for which the consumer is permitted to shop is payable by the consumer, the creditor must specifically identify that service and an available provider of that service on the written list of providers unless, based on the best information reasonably available to the creditor at the time the disclosure is provided, the creditor knows that the service is provided as part of a package (or combination of settlement services) offered by a single service provider. Specific identification of each service in such a package is not required provided they all are services for which the consumer is permitted to shop. (Emphasis added.) See, pg. 223.

Comment 3 to section 1026.19(e)(1)(vi) is being amended to clarify that use of model form H-27 is deemed compliant, but is not required. Use of the model form was discussed in detail in the preamble to the proposed amendments:

Unlike the model forms for the Loan Estimate and the Closing Disclosure, which, under §§ 1026.37(o)(3) and 1026.38(t)(3), respectively, are mandatory forms for a transaction that is a federally related mortgage loan (as defined in Regulation X), form H-27(A) is not a mandatory form. Moreover, TILA section 105(b) permits creditors to delete non-required information or rearrange the format of a model form without losing the safe harbor protection afforded by use of the model form if, in making such deletion or rearranging the format, the creditor does not affect the substance, clarity, or meaningful sequence of the disclosure. Accordingly, the proposed revision to comment 19(e)(1)(vi)-3 would clarify that, although use of the model form H-27(A) of appendix H to this part is not required, creditors using it properly will be deemed to be in compliance with § 1026.19(e)(1)(vi)(C). (Emphasis added.) See, pg. 48.


CFPB Announces Updates to ‘Know Before You Owe”

This past Friday, the CFPB announced proposed updates to TRID. Proposed changes include: 1) Tolerance provisions for the total of payments that parallel existing tolerances for the finance charge and disclosures affected by the finance charge. 2) further promotion on Housing Assistance programs by clarifying that recording fees and transfer taxes may be charged in connection with those transactions without losing eligibility for the existing ‘partial exemption’. These fees will also be exempt from the rule’s limitation on costs. 3) All Cooperatives will now be covered under the rule regardless if they are treated as real property or personal property by state law. 4) Clarification as to how creditors may provide separate disclosure forms to the consumer and the seller. The proposal is open to public comment until Oct. 18, 2016.