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So far Arezou Rafikian has created 1434 blog entries.
17 05, 2022

FedFin on: CRA Regulatory Rewrite

2022-05-17T16:06:30-04:00May 17th, 2022|The Vault|

Following much talk about the need to update Community Reinvestment Act (CRA) rules since this was last done in 1995, federal banking agencies have finally agreed on a proposed redesign of standards essential to banks that wish to expand or acquire as well as those seeking strong community ties and the policy and political benefit these afford.  Much of the complexity in the NPR results from the agencies’ decision to allow only partial credit for activities (e.g., mortgages) largely assumed in the past…

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

17 05, 2022

CRA32

2022-05-17T15:28:04-04:00May 17th, 2022|1- Financial Services Management|

CRA Regulatory Reform

Following much talk about the need to update Community Reinvestment Act (CRA) rules since this was last done in 1995, federal banking agencies have finally agreed on a proposed redesign of standards essential to banks that wish to expand or acquire as well as those seeking strong community ties and the policy and political benefit these afford.  Much of the complexity in the NPR results from the agencies’ decision to allow only partial credit for activities (e.g., mortgages) largely assumed in the past to benefit low-and-moderate income (LMI) households if they occurred in LMI census tracts as well as to condition product approval on the extent to which LMI-household needs are demonstrably met.  Offsetting these restrictions to some extent are broader criteria for eligible community-development and -service activities, but only wholesale and limited-purpose banks will enjoy the full benefit because new weightings require regulators to give the most weight to retail finance at most large banks.

CRA32.pdf

16 05, 2022

Daily051622

2022-05-16T16:53:32-04:00May 16th, 2022|2- Daily Briefing|

When the Fed Goes from Whatever-It-Takes to Anything-We-Can-Think-Of
On Thursday, the Washington Post included an article on all the ways in which inflation hurts middle-income families, the acute shortage of baby formula, and the cooking-oil shortage’s cost impact in places ranging from a D.C. shop selling doughnuts to sub-Saharan Africa.  Other articles chronicled stablecoins’ instability even as stock markets wobbled precariously above going so deeply into correction that investors are not just chastened, but also cudgeled.

CFPB Warns Wayward Mortgage Servicers
The CFPB released a report today showing that only a relatively small number of homeowners – about 330,000 – are struggling with mortgage modification after forbearance ended late last year.

White House Recasts Old Housing Policy for New Political Problem
Reflecting continuing political pressure from rising costs, the White House this morning announced what it calls new programs to increase housing supply in ways it says would lower costs.  Little in the plan is new, with much of it recounting ongoing work to, for example, reduce NPL sales to investors in favor of those to owner-occupants and community groups.

CFPB Takes to Circulars to Extend, Expand Jurisdiction
Following up on his announcement (see Client Report CONSUMER40) that the CFPB plans to rewrite consumer-protection standards promulgated by other agencies, Director Chopra today took the unusual step of describing processes by which the CFPB will determine key enforcement criteria via circulars to promote enforcement consistency and fair competition.

Daily051622.pdf

16 05, 2022

FedFin: Minimizing Mortgages, Maximizing Community Service

2022-05-17T16:05:41-04:00May 16th, 2022|The Vault|

As we noted last week, the federal banking agencies sighed a mighty sigh and heaved up a massive inter-agency proposal rewriting decades-old standards detailing which activities earn the Community Reinvestment Act (CRA) points essential for any bank’s strategic objectives and national reputation.  As discussed below, the new proposal is lengthy, complex, and in some cases analytically daunting or flat-out confusing.  Still one critical conclusion is clear…

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

 …

16 05, 2022

m051622

2022-05-16T12:09:58-04:00May 16th, 2022|6- Client Memo|

When the Fed Goes from Whatever-It-Takes to Anything-We-Can-Think-Of

On Thursday, the Washington Post included an article on all the ways in which inflation hurts middle-income families, the acute shortage of baby formula, and the cooking-oil shortage’s cost impact in places ranging from a D.C. shop selling doughnuts to sub-Saharan Africa.  Other articles chronicled stablecoins’ instability even as stock markets wobbled precariously above going so deeply into correction that investors are not just chastened, but also cudgeled.  The same day, Chairman Powell won his second term by a wide margin even as he told Marketplace that he couldn’t promise a soft landing, didn’t mean to commit the FOMC to only fifty basis-point hikes, and knows how hard inflation hits for most households while being unsure that the Fed can do much about it.  What markets make of this muddle remains to be seen by those not too faint of heart to look.  What I know it means is that a White House under acute political pressure will ultimately do its best to transfer blame from 1600 Pennsylvania Avenue to 20th and Constitution at considerable cost to coherent policy.

m051622.pdf

16 05, 2022

Karen Petrou: When the Fed Goes from Whatever-It-Takes to Anything-We-Can-Think-Of

2022-05-16T12:07:49-04:00May 16th, 2022|The Vault|

On Thursday, the Washington Post included an article on all the ways in which inflation hurts middle-income families, the acute shortage of baby formula, and the cooking-oil shortage’s cost impact in places ranging from a D.C. shop selling doughnuts to sub-Saharan Africa.  Other articles chronicled stablecoins’ instability even as stock markets wobbled precariously above going so deeply into correction that investors are not just chastened, but also cudgeled.  The same day, Chairman Powell won his second term by a wide margin even as he told Marketplace that he couldn’t promise a soft landing, didn’t mean to commit the FOMC to only fifty basis-point hikes, and knows how hard inflation hits for most households while being unsure that the Fed can do much about it.  What markets make of this muddle remains to be seen by those not too faint of heart to look.  What I know it means is that a White House under acute political pressure will ultimately do its best to transfer blame from 1600 Pennsylvania Avenue to 20th and Constitution at considerable cost to coherent policy.

One might discount my prediction of a political reckoning for the Fed by pointing to President Biden’s stout defense of his central bank last week when he tried to show the nation how much he was doing to quell inflation.  But a careful read of Mr. Biden’s statements shows a focus more on the Fed’s independence than on its skill.  So far, Secretary Yellen has persuaded White House …

13 05, 2022

Al051622

2022-05-13T16:27:41-04:00May 13th, 2022|3- This Week|

Mark-Up Mayhem

On Tuesday, the House Financial Services Committee will meet in open, hybrid session to have another go at each other.  The increasingly nasty mood was in relative abeyance when Secretary Yellen testified last week (see Client Report FSOC27), but it was on full display later in the day when Republicans launched a full-bore attack against Acting Comptroller Hsu and earlier in the week when what should have been a staid session on the credit-rating agencies became a sparring match between Chairwoman Waters (D-CA) and Rep. Huizenga (R-MI) over who controls the Committee’s agenda.  None of these ill feelings has dissipated and all will be in clear view when the panel meets to report several high-profile, controversial measures.

Al051622.pdf

10 05, 2022

FedFin: Fed is Cautiously Optimistic re U.S. Systemic Risk

2022-05-10T11:28:47-04:00May 10th, 2022|The Vault|

In this report, we assess the new Federal Reserve financial-stability report. Secretary Yellen is also testifying now about systemic risk and sure to get questions on the Fed’s conclusions. We will shortly send you an in-depth report on this hearing, but key to the Fed’s report is a more cautious, but still sanguine outlook. For example, banks are found to be resilient and well-capitalized despite growing Fed concern about indirect risk channels such as asset-market volatility, sanctions-related disruptions to payment…

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

10 05, 2022

SYSTEMIC93

2022-05-10T11:27:23-04:00May 10th, 2022|5- Client Report|

Fed is Cautiously Optimistic re U.S. Systemic Risk

In this report, we assess the new Federal Reserve financial-stability report. Secretary Yellen is also testifying now about systemic risk and sure to get questions on the Fed’s conclusions. We will shortly send you an in-depth report on this hearing, but key to the Fed’s report is a more cautious, but still sanguine outlook. For example, banks are found to be resilient and well-capitalized despite growing Fed concern about indirect risk channels such as asset-market volatility, sanctions-related disruptions to payment, settlements, and clearing, and inter-connections with large European banks. Life-insurance companies and hedge-fund leverage remains a significant concern, although the Fed finds that at broker-dealers and P&C insurers is well within reasonable range. As detailed below, the FRB is still concerned with MMF-liquidity risk, favoring the swing-pricing reforms if “properly calibrated” in the pending SEC proposal (see FSM Report MMF19) along with urging continued attention to bond and open-end funds. The report also includes a synopsis of the Fed’s CBDC discussion draft (see FSM Report CBDC10), suggesting it might reduce systemic risk without reaching any conclusions ahead of ongoing Board review.

SYSTEMIC93.pdf

9 05, 2022

m050922

2022-05-09T10:11:18-04:00May 9th, 2022|6- Client Memo|

Why the Agencies Demand a CRA Speed-Read

Was the new CRA proposal worth waiting for?  Advocates on all sides of this question are burrowing into the 678 pages delivered unto them by the FDIC last Thursday.  We’re doing the same for an in-depth analysis we’ll make as objective as possible as quickly as possible.  At first glance, there’s a lot in the proposal for all sides to like a lot.  However, the haste with which the agencies are gathering comment suggests that they hear Republican hoofbeats that may well pick up speed and strength as the industry’s deep read concludes.

m050922.pdf

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