FedFin on: New Cross-Border Payment System

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21 10, 2020

FedFin on: New Cross-Border Payment System

2020-10-21T15:47:25+00:00October 21st, 2020|The Vault|

Following two initial reports, the FSB has worked with other global regulators and international financial institutions to craft a framework it hopes will enhance cross-border payments and thus improve financial inclusion, emerging-economy growth, and financial stability.  Although actions and deadlines are laid out even as the FSB readily acknowledges that the plan is preliminary, its building blocks are very ambitious and often accompanied by specific deadlines to which global organizations have committed themselves.  It thus appears that structural change in cross-border payments will begin later this year even as broader policy issues remain under consideration.

The full report is available to retainer clients. To find out how you can sign up for the service, click here.…

21 10, 2020

PAYMENT21

2020-10-21T15:36:08+00:00October 21st, 2020|1- Financial Services Management|

New Cross-Border Payment System
Following two initial reports, the FSB has worked with other global regulators and international financial institutions to craft a framework it hopes will enhance cross-border payments and thus improve financial inclusion, emerging-economy growth, and financial stability.  Although actions and deadlines are laid out even as the FSB readily acknowledges that the plan is preliminary, its building blocks are very ambitious and often accompanied by specific deadlines to which global organizations have committed themselves.  It thus appears that structural change in cross-border payments will begin later this year even as broader policy issues remain under consideration.

PAYMENT21.pdf

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20 10, 2020

Daily102020

2020-10-20T20:55:23+00:00October 20th, 2020|2- Daily Briefing|

Quarles Targets MMFs, Links to Banks as Top Global Concerns
FSB head and Fed Vice Chairman Quarles today reiterated that global regulators intend to address the NBFI risk evidenced at the start of the COVID crisis, when a “dash for cash” precipitated dangerous shocks that propagated through government bond markets.

Controversial U.S. NSFR Advances
Leading the way for inter-agency approval, the FDIC today approved a final NSFR rule that significantly departs from that in the Basel framework (see FSM Report LIQUIDITY18). Reflecting this, Director Gruenberg strongly objected; it remains to be seen if FRB Gov. Brainard does the same.

Brainard Presses CRA’s Housing-Equality Benefits
FRB Governor Brainard today stated that CRA incentives are essential to solving what she expects to be severe housing affordability and availability problems in the wake of the pandemic.

GSE Patch Sticks a Little Longer
The CFPB today finalized its extension of the GSE Patch (see FSM Report MORTGAGE116), extending the January 10 sunset date until the Bureau finalizes the General QM loan definition and it becomes effective.

Daily102020.pdf

20 10, 2020

Daily101920

2020-10-20T15:00:41+00:00October 20th, 2020|2- Daily Briefing|

Powell Reiterates Fed’s Cautious Path to CBDC
At an IMF panel this morning, FRB Chairman Powell reiterated that the U.S. has made no decision about CBDC launch, echoing the cautious approach announced recently in August by Gov. Brainard (see Client Report CBDC3).

FRB-NY: SLR Raises Market-Leverage Risk
Continuing a series on the structural impact of post-crisis rules, the Federal Reserve Bank of New York’s blog today features a post on asset correlations between hedge funds and broker-dealers.

Fed CRA Deadline Ensures No New Reg Until at Least Late 2021
The Federal Register today includes the Fed’s ANPR to craft a new CRA framework. As noted in our in-depth report (see FSM Report CRA30) the initial construct proposed is aimed at eventually crafting an inter-agency construct and thus raises many questions on which comment is requested, but also includes enough specificity to suggest that the Fed has clear views on what that should be.

Clyburn to FHFA: Automate Forbearance for Delinquent Borrowers
Select Subcommittee on the Coronavirus Crisis Chair Clyburn (D-SC) late Friday sent a letter to Director Calabria urging FHFA to require mortgage servicers to automate forbearance for borrowers who are more than sixty days delinquent and produce documents he says have been withheld by FHFA.

Dems Demand Tougher Bank M&A Reviews
In separate letters sent late Friday, Sen. Warren (D-MA) and a group of House Democrats urged DoJ to toughen standards for bank mergers as it updates its bank M&A guidelines (see Client Report MERGER5).

Unbanked/Under-Served? Rates at Record

16 10, 2020

AL101920

2020-10-16T21:16:43+00:00October 16th, 2020|3- This Week|

Tough Times
Two striking enforcement actions in the last week or so signal that, for all the talk of relaxed supervision by Trump Administration appointees, the banking agencies will take strong action when they believe bad actions warrant more than a confidential rebuke. Wells Fargo’s manifold embarrassments did lead to putative Fed action in 2018 (see Client Report CORPGOV26), but most supervisory discourse since then has been focused on crafting the new model espoused by FRB Vice Chairman Quarles that still languishes in the bowels of Fed decision-making. Now, we’ve seen two high-profile actions in such very short order that one wonders if the banking agencies are buffing up their toughness credibility ahead of sharp questioning should Democrats take charge after the election.

AL101920.pdf

16 10, 2020

Daily101620

2020-10-16T20:51:33+00:00October 16th, 2020|2- Daily Briefing|

FSB Lowers the LIBOR Boom
Continuing its efforts to propel LIBOR transition, the FSB today issued a roadmap of steps which financial and nonfinancial institutions and agencies should take to ensure that new benchmarks are fully operational ahead of the official end of LIBOR at year-end 2021.
COVID Subcommittee: Treasury/SBA, Not Banks, to Blame for PPP-Loan Patterns
The Select Subcommittee on the Coronavirus Crisis today issued a staff report concluding that Treasury and SBA encouraged big banks to provide loans to wealthy, existing clients rather than to struggling small businesses in underserved communities.
COVID Commission: MLF Gets a Pass, SMCCF Should Stop
Following what were reportedly significant and partisan disagreements, the Congressional Oversight Commission today released its report on the Fed’s Municipal Liquidity Facility (MLF).

Daily101620.pdf

16 10, 2020

Politico, Friday, October 16, 2020

2020-10-20T15:07:32+00:00October 16th, 2020|Press Clips|

Stalemate in Washington brings turmoil to banks’ emergency planning
By Victoria Guida

The battle in Washington over the size and scope of a coronavirus relief package has piled on more uncertainty for the nation’s banks as they try to plan for an already wildly unpredictable future. In calls with investors this week, executives of some of the biggest U.S. lenders voiced concern about the strength of the recovery, including the pace at which unemployed people are returning to work, and said that without more help from Congress, the economy’s struggles are likely to continue….“Their earnings depend on the economy as do their losses,” said Karen Petrou, who advises financial firms in her role as managing partner at Federal Financial Analytics. “They’re the canaries in this coal mine.” One bright spot is that banks have much larger loss-absorbing capital buffers than they did before the 2008 financial crisis because of a slew of new rules aimed at reducing their reliance on debt.

https://www.politico.com/news/2020/10/16/banks-coronavirus-planning-429978

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16 10, 2020

Karen Petrou: How Low Rates Fuel Racial Inequity

2020-10-16T18:41:45+00:00October 16th, 2020|The Vault|

As a New York Times op-ed today has it, ultra-low or even negative rates are just what’s needed to stoke growth and increase equality.  The Fed in fact buys into this narrative, at least to a point.  The problem with it is that an increasing body of evidence shows it ain’t so.

Earlier this week, we assessed a new IMF study that, while not taking direct aim at the Fed, nonetheless shows clearly that the Fed’s new “make-up” policy will be at least as disequalizing as the ultra-accommodative policy that came before.  The IMF’s paper is, like all too many, model-based and thus dependent on both the validity of the model and the soundness of the assumptions on which its theorizing is premised.  However, its internal logic is persuasive and, lest there be any doubt of it, a new Federal Reserve Bank of Boston empirical study provides a chilling case study of precisely why things don’t always go the Fed’s own theoretical and model-driven way.

Indeed, as we pointed out yesterday, this study shows how ultra-low rates actually increase racial and ethnic inequity.  Systemic racism is surely not the Fed’s fault; still, it doesn’t have to help, no matter how accidentally and unintentionally.…

16 10, 2020

m101620

2020-10-16T18:40:53+00:00October 16th, 2020|6- Client Memo|

How Low Rates Fuel Racial Inequity
As a New York Times op-ed today has it, ultra-low or even negative rates are just what’s needed to stoke growth and increase equality.  The Fed in fact buys into this narrative, at least to a point.  The problem with it is that an increasing body of evidence shows it ain’t so.  Earlier this week, we assessed a new IMF study that, while not taking direct aim at the Fed, nonetheless shows clearly that the Fed’s new “make-up” policy will be at least as disequalizing as the ultra-accommodative policy that came before.  The IMF’s paper is, like all too many, model-based and thus dependent on both the validity of the model and the soundness of the assumptions on which its theorizing is premised.  However, its internal logic is persuasive and, lest there be any doubt of it, a new Federal Reserve Bank of Boston empirical study provides a chilling case study of precisely why things don’t always go the Fed’s own theoretical and model-driven way.

M101620.pdf

15 10, 2020

Daily101520

2020-10-15T20:53:50+00:00October 15th, 2020|2- Daily Briefing|

Quarles Reiterates Calls for SCP, Treasury, NBFI Reform
FRB Vice Chair for Supervision Quarles today outlined reforms that may be required to address short-term funding risk, citing reduced commercial-paper markets liquidity in March.
Treasury Reiterates Need for MMF-Liquidity Rewrite
The SEC’s lengthy roundtable on credit-market risk and interconnectedness revisited the critical question of MMF and other asset-management substitutes for bank financial intermediation.

Daily101520.pdf

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