Politico, Friday, February 21, 2025
Trump’s plan to rein in agencies sparks alarm for the Fed
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21
02, 2025
20
02, 2025
FedFin on: Debanking Prohibition
In concert with other efforts to prevent debanking, two Republican senators have introduced legislation to bar insured depository institutions from certain government contracts if the IDI or its affiliate refuses to do business with lawful enterprises they dislike on what the bill describes as social-policy grounds. The bill is very brief and thus does not provide an administrative framework for implementation in areas such as determining which entities banks inappropriately dislike and which contracts are to be barred.
The full report is available to retainer clients. To find out how you can sign up for the service, click here and here.…
19
02, 2025
FedFin Assessment: What Happens When OMB Runs Bank Regulation
In this report, we build on our earlier alert regarding the President’s executive order (EO) bringing federal financial regulation and supervision directly under the Executive Branch. Although some commenters have suggested this will have little material impact given pending Trump nominees to key posts, we expect it will at the least slow and in many cases alter what would be largely technical decisions by moving them into the often-viral political environment in ways far beyond changes now effected through the Congressional Review Act. Further, areas where the banking industry seeks new rules – e.g., a rewrite of current capital standards taking the best of the 2023 proposal, cryptoasset certainty, debanking, NBFI constraints from the SEC/CFTC – could be complicated by White House or OMB demands based on little knowledge of financial markets and bank operations, along with political pressures rarely evident in the insular realm of banking-agency rulemakings….
The full report is available to retainer clients. To find out how you can sign up for the service, click here and here.…
16
12, 2024
FedFin on: A Half-Empty Privatization Glass
Markets are getting very excited by ongoing Trump transition rhetoric about GSE privatization and a Friday CBO study refining its 2020 scenarios to conclude that release-and-recapitalization could proceed more quickly and prove less costly than four years ago suggested. That said, CBO remains cautious about what would happen if recap/release actually began, standing by its earlier, conservative view of budgetary implications and systemic impact. One little-noticed conclusion of note for those favoring privatization for free-market reasons: if privatized GSEs can’t sustain GSE volume, CBO concludes (we think rightly) that …
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16
12, 2024
American Banker, Monday, December 16, 2024
Where the Fed’s Michael Barr goes from here
By Kyle Campbell
Michael Barr has a lot to do and little time to do it. His term as vice chair for supervision at the Federal Reserve ends in 19 months. Before then, he hopes to change liquidity standards, require more banks to issue long-term debt and rewrite the capital framework for the nation’s largest banks…The proposal stems from an agreement struck by the Basel Committee on Banking Supervision in 2017, which was itself a product of the group’s post-global financial crisis policy response. Implementing the Basel endgame has been a thorny issue for regulators around the world. The U.K. and the European Union also have not fully adopted the standards into their bank oversight regimes.But Karen Petrou, managing partner of Financial Federal Analytics and a leading expert in regulatory policy, said the U.S. proposal put forth last year was simply too flawed to be codified. “The fundamental reason why the endgame capital rules and other priorities never advanced is that they were a combination of intensely technocratic detail combined with overarching, often inexplicable purposes, such as simply significantly raising capital requirements,” Petrou said. “Proposals like that, with so many technical flaws and inconsistencies combined with controversial objectives, almost always fail. It is a very poor approach to federal rulemaking.”
https://www.americanbanker.com/news/where-the-feds-michael-barr-goes-from-here…
25
11, 2024
Marketplace, Monday, November 25, 2024
Trump taps Scott Bessent for treasury secretary
Host, Sabri Ben-Achour, talks with FedFin managing partner, Karen Petrou, about the role of Treasury Secretary. (2:00min)
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18
11, 2024
Politico, Monday, November 18, 2024
The one institution that Trump can’t afford to break
Some of Trump’s closest advisers are angling for the president-elect to choose a candidate who will shake things up at Treasury.
By Sam Sutton
Donald Trump has chosen to move fast and break things with his early picks for top Cabinet posts. He is facing stiff resistance to that strategy when it comes to the Treasury Department. The president-elect has been hung up for days over who will get the nod for Treasury secretary, the most powerful economic post in his Cabinet. It had been a two-man race between billionaire Howard Lutnick, Trump’s transition team co-chair, and Scott Bessent, a hedge fund executive, until internal squabbling created openings for other candidates, including former Federal Reserve Gov. Kevin Warsh, Sen. Bill Hagerty (R-Tenn.), and Apollo Global Management CEO Marc Rowan….A mismanaged Treasury could “add more uncertainty to the Treasury bond market, which is already in a potentially fragile condition due to liquidity shortages, deficits and a number of other challenges,” Karen Petrou, managing partner of Federal Financial Analytics, said. Rising federal deficits have also fomented concerns about the dollar’s role as a reserve currency and the U.S. government’s ability to respond to any economic crisis in the future. Markets are more likely to respond favorably if they have faith that the person running the show has a firm grasp on how policy shifts affect the broader economy….
https://www.politico.com/news/2024/11/18/trump-treasury-disruption-00190250
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15
11, 2024
FedFin Assessment: It’s Still Not Game-On for Most Bank Mergers
As promised, this post-election forecast looks at bank-merger policy, providing a cautionary note in response to the go-go, game-on forecasts for new mergers often touted by investment bankers. While community- and midsize-bank mergers will move with more certainty, more alacrity is unlikely unless the OCC and FRB join the FDIC with at least an initial deadline. The same banking-agency staff who will work on bank mergers next year are also the same banking-agency staff working on them now. However, we also expect new OCC and FDIC leadership to retract recent agency merger policies, saying at the same time that new ones are forthcoming. Why is there a need for new ones? As detailed in this report, aspects of the new policies addressed….
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13
11, 2024
FedFin Assessment: The Fate of the Federal Reserve
In a recent client brief, we provided our forecast of what might happen to Federal Reserve independence, process, powers, and personnel under either a Harris or Trump presidency. This is of course no longer an either/or matter, with this report thus reviewing and, where needed, updating our initial assessment of what Mr. Trump could do to the central bank even where Chair Powell says he can’t. Sherrod Brown’s defeat makes the Fed particularly vulnerable in the Senate, where Elizabeth Warren (D-MA) stands a strong chance of becoming the Banking Committee’s ranking Democrat. She and incoming chair Tim Scott (R-SC) will agree on a lot about the Fed, especially if Sen. Rick Scott – a frequent Warren ally on the Fed front – becomes Majority Leader….
The full report is available to retainer clients. To find out how you can sign up for the service, click here and here.…
8
11, 2024
FedFin Assessment: Are Crypto’s Wins the Banks’ Losses?
One of the more striking results of the election is the enormous win crypto firms got for their $135 million of Congressional-campaign spending: victories so far in every race it entered. Much of this is due not just to crypto’s lure; instead, it reflects choices based not only on a candidate’s crypto sentiments, but also on the opponent’s vulnerability. As a result, at least some of crypto’s luster could fade when Congress gets back to work. However, Donald Trump campaigned on a pro-crypto platform, endorsing legislation such as the Lummis (R-WY) bill to create a “strategic reserve” for bitcoins…
The full report is available to retainer clients. To find out how you can sign up for the service, click here and here.…