On November 20, the House Financial Services Committee held a hearing titled “Oversight of Prudential Regulators” to question the directors and focus on the recent actions and future plans of the Fed, the FDIC, the NCUA, and the OCC. The hearing featured testimonies from Michael Barr, Vice Chairman for Supervision at the Fed; Martin Gruenberg, Chairman of the FDIC; Todd Harper, Chairman of the NCUA; and Michael Hsu, Acting Comptroller of the OCC.
Rep. Patrick McHenry (R-NC), Chairman of the Committee, criticized the agencies for neglecting interest rate risks, leading to significant bank failures. He stated, “Your backward-looking approach to regulations harmed our financial system, innovation, and consumers.” Chairman McHenry and other Republican members of the Committee co-sponsored H. Res. 1574, “Calling for the termination of Federal Deposit Insurance Corporation Chairman Martin J. Gruenberg from his position, effective immediately.”
The CFPB’s Section 1033 open banking rule was a significant topic. Rep. Bill Foster (D-IL) supported the rule for increasing competition and consumer control over financial data. As previously covered by InfoBytes, the CFPB’s Section 1033 final rule would mandate that financial institutions, credit card issuers, and other financial providers make covered data available to consumers and third parties in a standardized format. The final rule has also been the subject of litigation alleging the CFPB exceeded its statutory authority under the Dodd-Frank Act by requiring banks to provide customer financial information to third parties without proper authorization from Congress (covered by InfoBytes here). Rep. Foster asked if the Fed had considered issues related to bank data requests and liability in the case of data breaches. Michael Barr confirmed the Fed’s consultation with the CFPB and the need for clarity on these issues.
Another key discussion was the potential pause in rulemaking. Following a letter calling for agencies to halt all rulemaking by Rep. French Hill (R-AR), Rep. Zach Nunn (R-IA) and Rep. Byron Donalds (R-FL) echoed Rep. Hill’s concerns and urged regulators to halt new regulations until the incoming administration takes office. Michael Barr and Martin Gruenberg indicated that major rulemakings, such as Basel III, would be revisited next year.
