The Bank Lobbyist Act was just signed into law and, as the nickname suggests, it is a banker’s wet dream. In this episode, learn the details of this new law including the many favors to banks big and small – which undoubtedly make our entire financial system riskier – along with a few good provisions that can help you protect your identity and maybe even increase your credit score. Joe Briney joins Jen for the thank you’s.
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S. 2155: Economic Growth, Regulatory Relief and Consumer Protection Act (“The Bank Lobbyist Act”)
TITLE I: IMPROVING CONSUMER ACCESS TO MORTGAGE CREDIT
Section 101: Exempts banks with under $10 billion in assets from ability-to-pay documentation requirements for mortgages as long as the loans do not have interest-only or principal increasing features. The bank is also supposed to keep the loan in their portfolio but there is a loophole that allows the loan to be sold as long as the next bank keeps the loan in their portfolio.
Section 103: Exempts banks from having do to appraisals of property located in rural areas for transactions under $400,000
Section 104: Exempts banks and credit unions from reporting data about credit scores, debt-to-income ratios, and loan-to-value ratios of their loans if the bank issues fewer than 500 loans per year, which includes 85% of all banks and credit unions.
Section 107: Allows people selling manufactured homes to guide their customers towards getting loans from certain banks as long as they disclose to the customer in writing that they have a corporate affiliation with the bank and as long as they do not directly negotiate the loan terms. The home seller would be allowed to be paid for steering customers to the bank.
TITLE II: REGULATORY RELEIF AND PROTECTING CONSUMERS ACCESS TO CREDIT
Section 201: Exempts banks with less than $10 billion in reported assets from rules limiting their stock market trading with deposits, reporting requirements, and other standards as long as they hold on to (maintain a “community bank leverage ratio”) of between 8 and 10 percent.
Section 202: Frees banks that accept “broker deposits” from other banks (banks that help rich people get around FDIC insurance limits –specifically Promontory) from having to hold onto more money to make up for the risk these accounts pose to the banks who accept them.
TITLE III – PROTECTIONS FOR VETERANS, CONSUMERS, AND HOMEOWNERS
Section 301: Requires that credit reporting agencies place a security freeze, free of charge, for consumers within 1 business day if requested by phone or Internet or 3 business days if requested by mail. Within 5 business days, the agencies must then inform the consumer that the freeze has been placed and inform the consumer how to remove the freeze. Removals must be done within one hour of a phone or Internet request and 3 business days if requested by mail. Temporary removal requests must be granted for the time requested by the consumer.
- Credit freezes will not stop law enforcement, debt collectors, or “any person using the information for employment, tenant, or background screening purposes” from accessing a “frozen” credit report.
- Requires that the credit reporting agencies each set up a website for requesting freezes, requesting fraud alerts, and opting out of having their personal information sold to marketers. The Federal Trade Commission will also set up a single website linking to the websites of the credit reporting agencies (likely www.identitytheft.gov)
Section 302: In response to the reporting of medical debt of veterans due to delayed payments to non-VA doctors as part of the Veteran’s Choice Program, if a medical service is delinquent by less than a year, the veteran can submit information to the credit rating agencies and have that medical debt removed from their report.
- Within 1 year, the Secretary of Veteran’s Affairs must create a database to allow credit reporting agencies to verify veterans’ medical debt.
- Within 1 year, the Federal Trade Commission will have to create regulations requiring that active duty military members be given credit monitoring services for free
Section 303: Grants immunity to people and the banks who employ them for reporting financial fraud against a senior citizen as long as they have received training for spotting financial abuse.
TITLE IV: TAILORING REGULATIONS FOR CERTAIN BANK HOLDING COMPANIES
Section 401: By the beginning of 2020, the threshold for a bank to be subjected to stress tests and extra requirements for holding onto actual cash will be changed so that the only banks subject to those regulations are ones with over $250 billion in assets, as opposed to the $50 billion threshold enacted by Dodd-Frank.
- Also changes the frequency of stress tests for big banks (over $250 billion in assets) from “semiannual” to “periodic”, which could be as little as once every three years. It also reduces the number of scenarios to be test from 3 to 2.
Sec. 402: Loosens the definition of a “custodial bank” in a way that allows the big banks to qualify. It then allows the money the banks have in a the Federal Reserve or other central banks to be omitted from calculations for their supplementary leverage ratio, allowing the banks to cook the books in order to hold onto less money.
TITLE V: ENCOURAGING CAPITAL FORMATION
Section 504: The “Supporting America’s Innovators Act” allows venture capital funds with up to 250 investors to get out of registering with the Securities and Exchange Commission. The previous threshold was 100 individual investors.
Section 507: Doubles from $5 million to $10 million the amount of securities a company can sell in a year before having to give additional information to investors, which will increase along with inflation.
TITLE VI: PROTECTIONS FOR STUDENT BORROWERS
Section 601: Prohibits private banks from declaring an automatic default or accelerated repayment of student loans in the case of a co-signer’s death and banks will have to release from responsibility a co-signer if the student dies.
- This will only apply to student loans that are created in 2019 or after.
Section 602: Allows banks to remove a customer’s student loan debt from their credit report if the bank decides to give the student a new monthly loan repayment program and the student makes their payments.
- Amicus Brief: Mark Janus v. American Federation of State, County and Municipal Employees, Council 31, et al.
- Company Info: Vanderbilt Mortgage
- Congressional Budget Office: Cost Estimate of S. 2155
- Congressional Budget Summary: S. 2155, Economic Growth, Regulatory Relief, and Consumer Protection Act
- Graph: Commercial and Industrial Loans, All Commercial Banks, FRED, May 18, 2018.
- Govtrack: H.R. 2954: Home Mortgage Disclosure Adjustment Act
- Govtrack: S. 2155: Economic Growth, Regulatory Relief and Consumer Protection Act
- Govtrack: H.R. 650 (114th): Preserving Access to Manufactured Housing Act of 2015
- OpenSecrets.org: Commercial Banks Info
- OpenSecrets.org: Manufactured Housing Institute
- OpenSecrets.org: Citigroup Inc.
- Senate Archives: Class I – Senators Whose Term of Service Expire in 2019
- Chain of Title: How Three Ordinary Americans Uncovered Wall Street’s Great Foreclosure Fraud by David Dayen
- Article: Investors throwing caution to the wind when shopping for CLOs by Glen Fest, Asset Securitization Report, May 24, 2018.
- Report: The finance 202: Banks give richly to three Senate Democrats who backed deregulation by Tory Newmyer, The Washington Post, May 23, 2018.
- Article: Insurers welcome global regulation provision in banking reform bill by Andrew G. Simpson, Insurance Journal, May 23, 2018.
- Report: House passes Dodd-Frank reform bill, approval now pending from President Trump by Caroline Basile, Housing Wire, May 22, 2018.
- Report: Reg relief bill S. 2155 passes House; monumental win for credit unions by CUNA, CUInsight, May 22, 2018.
- Report: Dodd Frank rollback passes house, moves to President’s desk for signature to become law by JD Alois, Crowdfund Insider, May 22, 2018.
- Letter: Oppose S. 2155, the “Economic Growth, Regulatory Relief and Consumer Protection Act” by Vanita Gupta, President & CEO of The Leadership Conference, CivilRights.org, May 21, 2018.
- Article: Bill aimed at saving community banks is already killing them by David Dayen, The Intercept, May 16, 2018.
- Opinion: Big banks crying wolf over another key Dodd-Frank regulation by Mayra Rodreguez Valladares, The Hill, May 12, 2018.
- Report: At $1 trillion, leveraged loans are closing in on junk bonds by Yakob Peterseil and Cecile Gutscher, Yahoo Finance, May 3, 2018.
- Article: Bank earnings are rising, but look past the obvious players by David Borum, NASDAQ, May 1, 2018.
- Report: Elliot eyes push into Wall Street’s hottest debt trade by Sridhar Natarajan, Sally Bakewell, and Katia Porzecanski, Bloomberg, April 30,2018.
- Article: Washington wants to weaken bank rules. Not every regulator agrees by Peter Eavis, The New York Times, April 24, 2018.
- Article: Revenge of the stadium banks by David Dayen, The Intercept, March 2, 2018.
- Article: Behind a key anti-labor case, a web of conservative donors by Noam Scheiber and Kenneth P. Vogel, The New York Times, February 25, 2018.
- Article: Lower tax rate fuels record profit for Buffett’s Berkshire Hathaway, CNBC, February 24, 2018.
- Report: The richest 10% of Americans now own 84% of all stocks by Rob Wile, Money, December 19, 2017.
- Report: H.R. 477, the Small Business Mergers, Acquisitions, Sales, and Brokerage Simplification Act of 2017, Republican Policy Committee, December 4, 2017.
- Brief: Clayton buys CO’s Oakwood Homes in latest site-build deal by Mary Tyler March, Construction Drive, July 7, 2017.
- Opinion: Who will benefit from the newly passed supporting America’s Innovators Act? by James Murphy, Forbes, May 3, 2017.
- Article: Minorities exploited by Warren Buffet’s mobile-home empire by Mike Baker and Daniel Wagner, The Seattle Times, December 26, 2015.
- Article: The mobile-home trap: How a Warren Buffett empire preys on the poor by Mike Baker and Daniel Wagner, The Seattle Times, April 2, 2015.
- Article: Furor over move to aid big banks in funding bill by Jonathan Weisman, The New York Times, December 11, 2014.
- Article: Citigroup wrote the Wall Street giveaway the House just approved by Erika Eichelberger, Mother Jones, December 10, 2014.
- Article: Testing theories of American politics: Elites, interest groups, and average citizens by Martin Gilens and Benjamin I. Page, Princeton Scholar Publication, September 2014.
- Article: See how Citigroup wrote a bill so it could get a bailout by Erika Eichelberger, Mother Jones, May 24, 2013.
- Report: Banks’ lobbyists help in drafting financial bills by Eric Lipton and Ben Protess, The New York Times, May 23, 2013.
Sound Clip Sources
Video: Dark Money and the Federal Courts: The Secret Push to Weaponize the First Amendment, May 21, 2018.
Sheldon Whitehouse: I think what has very clearly happened is that unlimited money?and its nasty big brother, unlimited dark money?have showed up since the Citizens United decision and basically driven Congress into a state of servitude to those who have the wherewithal to engage with us with all that dark money. So, parity _____(01:07) the problem. It’s just not capable of being?reaching a state of parity by its nature, which is why spotlighting it and going after it and explaining it to the American people is so important, because there is a winning and important story to be told here. And if we win this issue?this is like the Death Star. In Star Wars, they didn’t go fight the evil empire on every single planet; they went after the Death Star, and once they won the Death Star, everything else moved in a better direction. If we can solve the dark-money problem, then we can start to win on pharmaceuticals, on Wall Street, on environment, on fossil fuels, on a whole variety of other issues. And that’s why they fight so desperately to protect this, because they know it’s their Death Star, too. If you look out at the American public, you see a very large segment of the American public that feels it is not being listened to. They don’t believe that Washington is listening, they don’t believe that the powers of government reflected here are listening to them, and they’re not wrong. If you look at the Bartels’ Princeton study, it shows that there is essentially zero statistical correlation between what we do in Congress and what regular people want Congress to do. Move up to the one percent, move up to the big corporations, and suddenly there’s a very, very powerful statistical correlation. So it is very clear that in fact in many significant ways the government of the United States has indeed been captured by big special interests. The DISCLOSE Act, requiring transparency for all political contributions, is permitted by the Citizens United decision. And if you live in a tropical climate and go into the kitchen at night and turn on the light, you will often see cockroaches skittering for the shadows and for the corners when you turn on the light at night in the kitchen. In the same way, you turn on the light of disclosure?and I think a lot of the cockroaches skitter for the shadows, and probably, and my guess, two-thirds of the unlimited spending supported by Citizens United goes away when it’s not anonymous any longer. The dark-money operation is all over. It is after us in elections, it is after us in administrative agencies, it is after us with lobbying in the halls of Congress, it is after us in all these different ways I’ve just described in the courts. We are taking essentially dark money, artillery fire, every single moment on multiple fronts. In artillery, there is a thing called counter battery, where you fire back at the artillery that is firing at you. That needs to be a priority for Democrats. We need to make sure that the spotlight of disclosure is on these webs, on these networks, focused on the special interests behind the front groups, focused on the creepy billionaires who are spending this money, so that the American public sees what is really going on. That is our job, and every day that we are not doing that job, we are losing and we are failing in our duty to this country.
Video: LinkedIn Lobbyist Group and Dodd Frank, Laws and Sausage TV, April 24, 2018.
Jeffrey Taylor: Well, again, that’s the other thing: trying to get on the?try to get support for your bill from the industry associations and the think tanks that weigh in on these kinds of things. Early on, we had the more free market, the more?well, free market, like the Chamber of Commerce and other financial services groups, but a little later in the process, we also had on a group that is considered left of center, the national state securities secretaries association called NASAA. And the minute they came on the bill, “Katy, bar the door!” All of a sudden, a number of Democrats had to say, “Well, if they’re on the bill, there must be some merit here.” And that’s actually when we started to have more dialog on the Left, trying to make this a bipartisan bill.
Jeffrey Taylor: When you have NASAA and the U.S. Chamber, you’re now covering the waterfront on the political spectrum, and we were able to move forward. There are some people like Senator Warren that you will never get, because they believe in highly regulating the financial services. And you can talk to Senator Warren and her colleagues all you want, and you kind of know at the end of the day, we tried but we know we’ll never get there. But there are others like Senator Heitkamp, Senator Donnelly, Senator Warren that there’s a good chance, because they’re pro-business Democrats, that maybe we can get them on board, and then once we get one or two on board, others will come on board because they trust their judgment. So, it’s all putting a puzzle together. And you’re absolutely right: finding the outside interests that are trusting to Democrats and are trusting to Republicans, and we were able to do that.
Host Brian Trascher: Well, Jeff, you pretty well explained your strategy thus far. How do you think you’re going to spend the rest of 2018 to try to keep your bill moving forward, and in an election year, get something done before the next Congress takes over? Jeffrey Taylor: Well, what we’re hopeful is is that the Senate banking committee actually did pass a bill recently. It had come over from the House. It’s bill S.2155. And that is a compendium of a lot of bills?securities bills?and so ours is not in that bill. But what the Senate did was, it made changes to the original House bill. So when the Senate passes a bill like that, it has to go back to the House because both bills have to be absolutely spot-on identical. And so now that it’s back in the House, we’re going back to Senator Jeb Hensarling and some of the other members and say, “Listen, in the intervening months, we passed a 426-to-zero bill. How about putting our bill into the bigger 2155?” And so based on all of the interaction we have so far, they’re seriously considering that. They’re seriously considering putting one or two bills that passed over the last four or five months into 2155. They’ll put it into 2155, send it back to the Senate, and hopefully at that point the Republicans and Democrats in the Senate will say, “Well, good grief. These are all unanimous votes. There really is nothing contentious here, so, okay, we will now pass the revised 2155,” which actually has our bill 477 in it, and we’re in good shape at that point. So those are the kind of negotiations that are going on right now, putting our smaller bill into the larger bill going. And so we’ll keep ______(01:58?with that). Go ahead. Trascher: Yeah, and piggybacking is also a very good strategy when sometimes your particular instrument stalls or meets with some resistance, a lot of times you can get it thrown into something that has a lot more momentum and is in a posture to pass.
Host Brian Trascher: Well, you’re right: it is rare to get a unanimous vote in the House unless it’s to rename a post office or something. To what do you credit your success in getting that unanimous vote in the House? Was it because of the two high-profile sponsors, bipartisan sponsors, who latched onto the bill? Jeffrey Taylor: Well, Maxine Waters didn’t latch on right away. And in fact, when we made it through the committee, it was still a bipartisan bill. I think it was split right down the middle, although you could tell that there were a number of Democrats on the committee that liked the bill but it needed some corrections. And at that point, that’s when lobbyists come in and say, “Okay, Congresswoman Waters, this really is dead in the Senate if we don’t have some kind of bipartisan support in the House.” And so we sat down with her team and said, “All right. Let’s go through the bill line by line, and we’ll bring in our experts, and you bring in your experts, and let’s really tear this thing apart. You know, obviously, we can’t bring Democrats on if we all of a sudden equally lose Republicans, so where can we find that sweet spot?” And her staff was very accommodating. “Here are the three areas, Jeffrey. What can you do that doesn’t harm the overall bill?” And we were able to tweak each of these areas, and at the end of the day, to Congresswoman Waters’ credit, she said, “Done. That’s a good bill now.” We went to the floor, Mrs. Waters spoke on behalf of the bill, Chairman Hensarling spoke on behalf of the bill, and boom, 426 to zero. It can still be done. You can still find the happy medium. The problem is, it’s much more difficult in the Senate. Everybody thinks that the House is the more partisan. In fact, there’re a lot of bills going from the House to the Senate. It’s in the Senate where things are not even getting hearings and trying to get to the floor of the Senate for a vote. And I think part of that is the mismanagement of Senator Chuck Schumer, who has told all of the Democratic senators, “We are the resistance. We are not going to proceed.” And boy, when you start with a premise like that, it’s hard to get things even to the batter’s box in the U.S. Senate.
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