Arezou Rafikian – Federal Financial Analytics

22 06, 2021

Daily062221

Arezou Rafikian2021-06-22T20:57:50+00:00June 22nd, 2021|2- Daily Briefing|

FCA Charges Ahead on Climate-Risk Disclosures
As controversy swirls in the U.S., the U.K. continues to mandate climate-risk stress tests and today proposed to refine its climate-risk disclosure regime.

Fed Extends Comment Deadline on Controversial Interchange Rewrite
The FRB today extended the comment period on its controversial proposal to change Regulation II.

Senate Banking: Dems Prioritize Beneficial-Ownership Registry, Bipartisan Support for Anti-China Sanctions
Today’s Senate Banking confirmation hearing for two key Treasury positions – Brian Nelson to be Under Secretary for Terrorism and Financial Crimes and Elizabeth Rosenberg to be Assistant Secretary for Terrorist Financing – featured bipartisan interest in strong sanctions and cryptocurrency controls, as well as Democratic support for implementation of the new AML law.

Waters: Extend Foreclosure Moratorium
In a letter to the heads of HUD, USDA, VA, CFPB, and FHFA, HFSC Chairwoman Waters (D-CA) urged that each extend its moratorium on foreclosures until the CFPB implements its mortgage-servicing rule. As proposed, that rule would protect mortgage borrowers using forbearance from foreclosure until at least January 1.

SF-Fed President: Climate-Risk Under Review, No Action Imminent
The president of the Federal Reserve Bank of San Francisco, Mary Daly, today detailed the economic and financial impact of climate risk but reiterated that the Federal Reserve is in a watch-and-study phase rather than planning near-term monetary or regulatory policy intervention.

Powell: Digital IDs Key Question for CBDC
In testimony today to the House’s Select Subcommittee on the Coronavirus, Chairman Powell reiterated that inflation will be transitory, while acknowledging that inflation …

22 06, 2021

FedFin on: Anti-China Sanctions

Arezou Rafikian2021-06-22T20:46:32+00:00June 22nd, 2021|The Vault|

The Senate has passed by a wide margin legislation taking an array of actions to counter the threat now seen to be posed by the People’s Republic of China. Among these are optional and mandatory sanctions against a far wider range of targets linked directly or indirectly to China engaging in or benefiting from “malign” activities. Far broader use of sanctions would create additional legal, reputational, and even charter risk for banks and other financial institutions doing business in the U.S. or with U.S. financial institutions. New law makes it possible to, when such sanctions are invoked, impose them extraterritorially by virtue of any correspondent relationship with a U.S. bank by the parent company even if that correspondent relationship is not otherwise within the scope of U.S. law.

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

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22 06, 2021

CHINA16

Arezou Rafikian2021-06-22T20:45:34+00:00June 22nd, 2021|1- Financial Services Management|

Anti-China Sanctions
The Senate has passed by a wide margin legislation taking an array of actions to counter the threat now seen to be posed by the People’s Republic of China. Among these are optional and mandatory sanctions against a far wider range of targets linked directly or indirectly to China engaging in or benefiting from “malign” activities. Far broader use of sanctions would create additional legal, reputational, and even charter risk for banks and other financial institutions doing business in the U.S. or with U.S. financial institutions. New law makes it possible to, when such sanctions are invoked, impose them extraterritorially by virtue of any correspondent relationship with a U.S. bank by the parent company even if that correspondent relationship is not otherwise within the scope of U.S. law.

CHINA16.pdf

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21 06, 2021

Karen Petrou: Why Crypto Rules Could Prevent Crypto Chaos

Arezou Rafikian2021-06-21T15:39:00+00:00June 21st, 2021|The Vault|

FedFin’s in-depth analysis of the Basel Committee’s cryptoasset proposal kicked up quite a fuss. The major point of contention is our conclusion that the new approach might recast crypto in favor of regulated banks. Some said instead that the new capital requirements are punitive to the point of prohibitive. However, a close read of the consultation persuades me that, despite the need for refinements in several critical places, crypto counterparties outside the lure of illicit finance or high-flying speculation will prefer doing business with a bank and that the new rules make it possible for banks to do business with them. After all, each of us can always give our money to any person or business to hold for us; we instead deposit our money in the bank because, thanks in good part to FDIC insurance and the rules it requires, we know we’ll get our money back.

Stripped to its capital essentials, the consultation creates two classes (inexplicably called groups) of crypto assets. Those which are tokenized versions of other assets – e.g., fiat currency, a mortgage loan – come under risk-based and leverage capital rules largely comparable to those now applied to the underlying asset. Although there are additional risk-management considerations, the difference between a tokenized-digital and a “real” asset is likely a capital and liquidity wash.

Digital assets more like stablecoins get similar like-kind capital treatment, but tough standards also apply to ensure that the underlying real asset is always there and always worth what the digital …

21 06, 2021

Daily062121

Arezou Rafikian2021-06-22T13:15:40+00:00June 21st, 2021|2- Daily Briefing|

GSIB Disclosures, ID-Requirements Clarification Bills Set for Mark-Up
Ahead of its mark-up on Wednesday, HFSC’s memo indicates two bills of note from progressive Democrats will be considered. Rep. Pressley’s (D-MA) H.R. 3948 would require GSIBs to report annually on matters now largely kept confidential.

Regulators to White House: Steady as We Go
In the readout just released by the White House, U.S. financial regulators are said to have told the President that, consistent with their many public statements, the financial system is sound thanks to bank capital-and-liquidity standards.

Daily062121.pdf…

18 06, 2021

Al062121

Arezou Rafikian2021-06-20T23:10:08+00:00June 18th, 2021|3- This Week|

CRYPTO GOES CRUNCH
Last week, all of the doubters who believed cryptoassets were immune to regulatory scrutiny got a rude comeuppance. Although Facebook’s failure to anticipate policy concerns made Libra’s launch one of the most disastrous product appearances in business history, the libertarian inclinations of many crypto acolytes and even companies persuaded them that the only meaningful obstacle to a crypto revolution was ensuring AML compliance. Although Republicans have been considerably more sympathetic to wide-open cryptoassets than Democrats, senior policy-makers on both sides of the aisle are deeply worried about an array of risks – to see why, check out the President’s Working Group report (see Client Report CRYPTO16) on stablecoins issued at the end of the Trump Administration with full concurrence from Janet Yellen.

Al062121.pdf…

18 06, 2021

Daily061821

Arezou Rafikian2021-06-18T16:18:29+00:00June 18th, 2021|2- Daily Briefing|

ECB Extends Leverage Capital Relief as U.S. Contemplates SLR Changes
Citing continuing pandemic stress, the ECB today extended leverage ratio relief until March 31, 2022.

Daily061821.pdf…

17 06, 2021

Daily061721

Arezou Rafikian2021-06-17T20:46:02+00:00June 17th, 2021|2- Daily Briefing|

Treasury Heightens Focus on Affordable Housing, Supply Shortages
Emphasizing the importance of housing policy to Treasury and thus by inference also to FSOC, Deputy Treasury Secretary Adeyemo today posted an article advancing housing provisions in the American Jobs Plan.

Fair Lending Bill Fails Under Suspension
Rep. Torres’ (D-NY) bill to expand ECOA to cover LGBTQ-owned businesses (H.R.1443) failed 248-177 to pass the House under suspension last night although it was reported by HFSC on a voice vote.

Banking GOP Renew Attack on Fed “Mission Creep”
Senate Banking Republicans today released a statement highlighting a letter published by forty-two economists emphasizing Ranking Member Toomey’s (R-PA) concerns that the Fed is straying outside its mandate by engaging in environmental and social policy.

Daily061721.pdf

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17 06, 2021

GSE-061721

Arezou Rafikian2021-06-17T15:10:54+00:00June 17th, 2021|4- GSE Activity Report|

A Report of Little Consequence
We have reviewed FHFA’s massive report to Congress on its 2020 activities, finding only lots of handy facts and no significant policy insights.

GSE-061721.pdf…

16 06, 2021

GSE-061621

Arezou Rafikian2021-06-16T20:33:07+00:00June 16th, 2021|4- GSE Activity Report|

A Wrench in the Crypto Works
As detailed in our new in-depth report, the Basel Committee is proposing a new regulatory framework for bank exposures to cryptoassets that will influence not only what banks do in this critical arena, but also what the GSEs can do and thus what happens to the digital mortgage. If Fannie and Freddie come under like-kind capital and liquidity rules related to their crypto exposures, digital adoption of any asset with crypto components will be slower but the system could well be safer.

GSE-061621.pdf

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About Arezou Rafikian