This is the latest update from Washington, designed to keep NACBA members informed about significant and relevant activity on the part of Congress, regulatory agencies and interest groups/think tanks. Feedback should be directed to Krista.DAmelio@NACBA.com
On The Hill On Wednesday, July 12, 2017 the House Financial Services Committee held a hearing titled: “Monetary Policy and the State of the Economy”. The witness list included the Honorable Janet Yellen, Chair of the Board of Governors of the Federal Reserve System. In her testimony, Yellen described an economy that appears generally strong, with continued job gains and low unemployment, but that is affected by stubbornly low inflation. During the hearing, House members pressed Yellen on how the Federal Reserve would roll back its balance sheet, the central bank’s role in ensuring full employment and her views on bank supervision. One point of interest came during Full Committee Chairman Jeb Hensarling’s (R-TX) round of questioning. He asked whether the Federal Reserve would ever buy student loans, to which Yellen answered she was unsure about student debts, but can confirm the purchase of Treasury and Agency Securities. Hensarling continued to probe on whether the Federal Reserve has any plans to buy student loans because if the reserve did, it could conceivably forgive student loans of current graduates.
In The Agencies On Monday, July 10, the Consumer Financial Protection Bureau (CFPB) announced a new rule to ban companies from using mandatory arbitration clauses to deny groups of people their day in court. Many consumer financial products like credit cards and bank accounts have arbitration clauses in their contracts that prevent consumers from joining together to sue their bank or financial company for wrongdoing. The CFPB’s rule restores consumers’ right to file or join group lawsuits. By so doing, the rule also deters companies from violating the law. Under the rule, companies can still include arbitration clauses in their contracts, but companies subject to the rule may not use arbitration clauses to stop consumers from being part of a group action. The rule also makes the individual arbitration process more transparent by requiring companies to submit to the CFPB certain records, including initial claims and counterclaims, answers to these claims and counterclaims, and awards issued in arbitration.
OTHER On Wednesday, July 12, 2017, NACBA along with 55 other coalition groups led by The Institute for College Access and Success (TICAS), sent a letter to U.S. Secretary of Education Betsy DeVos strongly opposing the delay, dismantling, or weakening of the gainful employment regulations finalized in October 2014 and the “borrower defense to repayment” and college accountability regulations finalized in November 2016. In the letter it was argued that the existence of a new rulemaking process provides no basis for the Department to refuse to implement and enforce the current regulations in the interim. If the Department wishes to alter current regulations, it must do so through negotiated rulemaking, not unilaterally outside the processes established by Congress. Please email Krista D’Amelio to obtain a final copy of the letter.