ElizaAllen

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So far Eliza Allen has created 679 blog entries.
31 01, 2024

GSE-013124a

2024-01-31T12:41:24-05:00January 31st, 2024|4- GSE Activity Report|

Would a Trump Victory Set the GSEs Free?

Common-stock investors clearly think so, but they’re a notably speculative lot and more than likely wrong.  In this report, we lay out why we think the limbo in which the GSEs have languished since 2008 is now a permanent quasi-vegetative state.

GSE-013124a.pdf

30 01, 2024

DAILY013024

2024-01-30T17:13:26-05:00January 30th, 2024|2- Daily Briefing|

FinCEN Estimates High Bank-BOI Reporting Costs

FinCEN via the Federal Register today requested comment on the estimated total annual reporting and recordkeeping burden for new Access Rule beneficial ownership information (BOI) reporting requirements (see FSM Report AML135).

Brown Puts More Pressure on Powell

Following Sen. Warren’s rate-cut demands and affordable housing concerns yesterday, Senate Banking Committee Chairman Brown (D-OH) today sent a letter to FRB Chair Powell also calling for less restrictive monetary policy on grounds that elevated rates negatively impact home affordability, limit the housing supply, restrict small business growth, and dampen wages.

HFSC Targets China Sanctions, Outbound Investments

Today’s HFSC National Security Subcommittee Hearing focused on China sanctions and restrictions on outbound investments.

GOP Demands Retraction of CFPB Tech-Payment Proposal

Reiterating their opposition to the Bureau’s pending digital-payment rule (see FSM Report PAYMENT27), HFSC Chairman McHenry (R-NC) alongside Digital Assets Subcommittee Chairman Hill (R-AR) and Rep. Flood (R-NE) sent a letter today urging the CFPB to reopen and extend the comment period and reconsider finalizing the rule as proposed.

Daily013024.pdf

29 01, 2024

DAILY012924

2024-01-29T16:36:27-05:00January 29th, 2024|2- Daily Briefing|

White House Advances AI Governance, Government Adoption

Following the President’s AI executive order (see Client Report AI3), the White House today released an update following a steering-group meeting.

BIS Study Examines Stablecoin Run-Risk

A new BIS study supports pending U.S. legislation and possible rules related to stablecoin reserve assets and run-risk, finding that transparency increases stablecoin stability when reserve assets are of high quality, but decreases stability when reserves are perceived to be low quality or when there are low transaction costs to convert to fiat.

Hsu Sets Course to New OCC Merger Policy with No Fed Companion in Sight

In remarks today emphasizing the need for a more transparent bank-merger process, Acting Comptroller Hsu announced that the OCC will today release an NPR eliminating the possibility that merger applications will be approved solely by the passage of time.

Warren Starts the New Year with Political Pressure on Fed Policy

Reiterating concerns about high interest rates, Sen. Warren (D-MA) along with Sens. Hickenlooper (D-CO), Rosen (D-NV) and Whitehouse (D-RI) today sent a letter to Chair Powell calling on him to reverse rate hikes, citing its impact on the current affordable housing crisis.

Daily012924.pdf

29 01, 2024

CONSUMER55

2024-01-29T15:15:54-05:00January 29th, 2024|1- Financial Services Management|

NSF Fees

The CFPB has followed up a controversial proposal to set prices for larger-bank overdrafts exempt from certain consumer standards with a proposal to simply ban certain non-sufficient fund (NSF) fees when banks decide in real time to decline a consumer-payment request.  The Bureau readily acknowledges that banks in fact generally do not now charge NSF fees in these cases, but it fears they might and wishes to preemptively prohibit this as part of the Administration’s campaign against “junk fees.”  Although the rule is aimed principally at electronic declinations, it would apply to check and ACH transactions as declination capability grows via instant-payment system adoption.

CONSUMER55.pdf

26 01, 2024

DAILY012624

2024-01-26T16:09:38-05:00January 26th, 2024|2- Daily Briefing|

Agencies Rewrite Call Reports Ahead of Final Capital Regs

Despite growing bipartisan concern over a capital proposal likely to be significantly revised, the Fed, OCC, and FDIC today requested comment on proposed changes to call reporting requirements as well as regulatory capital and market risk capital reporting requirements to ensure that these conform with the agencies’ proposal.  Many changes reflect the departure from the advanced approach, with the agencies arguing that new disclosure requirements would increase transparency and complement the supervisory review process.  Certain item instructions would also be altered to reflect AOCI transition requirements, while form terminology would change to reflect the proposed expanded risk-based approach and the scope of banking organizations covered.

Daily012624.pdf

23 01, 2024

DAILY012324

2024-01-23T16:37:28-05:00January 23rd, 2024|2- Daily Briefing|

Waters Tries to Block Libra Redux

Reflecting long-held Democratic concerns over Big Tech’s crypto plans, HFSC Ranking Member Waters (D-CA) late yesterday sent a letter to Meta Platforms CEO Mark Zuckerburg and COO Javier Olivan once again raising strong objections to Meta’s potential expansion into digital assets.  The letter highlights that several of the company’s recent patent applications relate to digital-asset services and blockchain technology, seemingly contradicting Meta’s recent assertions to HFSC Democrats that it is not working in this arena.

Daily012324.pdf

23 01, 2024

OVERDRAFT12

2024-01-23T12:13:12-05:00January 23rd, 2024|1- Financial Services Management|

Overdraft Fees

Building on a bulletin and circular from late 2022 warning banks about certain overdraft practices, the CFPB has now proposed a rule that would sharply and expressly limit fees for extensions of credit related to overdrawn transaction accounts unless the account comes under an array of consumer-protection requirements.  Part of the Administration’s campaign against “junk fees,” the proposal sets a “break-even threshold based on a bank’s costs” and provides for an alternative break-even benchmark CFPB-set fee that would allow a lender to avoid costly additional regulatory requirements, expanding the Bureau’s recent focus on mandating industry pricing evident in its controversial proposal on credit-card late fees.  Lines of credit and ready access to credit-card credit associated with overdrafts would also come under new limits and come under additional consumer-protection standards.

OVERDRAFT12.pdf

22 01, 2024

DAILY012224

2024-01-22T16:57:16-05:00January 22nd, 2024|2- Daily Briefing|

FRB Reconsiders Interchange-Fee Cuts

Bowing to critics in the banking industry and on the Board, the Federal Reserve today extended the comment period on its debit-card interchange fee proposal (see FSM report INTERCHANGE12) by a surprisingly-long ninety days to May 12.  The extension is in part due to the Board’s decision to publish additional interchange fee cap data which may have persuaded the Board that the initial data analysis supporting a mandatory pricing reduction was incorrect.

OIG Finds Reserve-Bank Trades Legal, But Problematic

The Federal Reserve’s Office of the Inspector General (OIG) today released long-awaited reviews of personal trades by former Dallas and Boston Reserve Bank Presidents two years ago that raised numerous and often vociferous assertions of conflicts of interest.  Indeed, Sen. Warren (D-MA) stated that she believed these epitomized a “culture of corruption” at the Fed, introducing bipartisan legislation to force considerably more transparency at the Reserve Banks.

FSB Plans Global Run-Risk Buffers

The head of the Financial Stability Board, Secretary General John Schindler, today briefed media on the global regulator’s plans to brief the G20 in October about viral-run risk and the standards needed to avert it.  Mr. Schindler said little about what the FSB is likely to propose although the Basel Committee is now considering rewrites to global LCR and NSFR standards likely to be reflected in the FSB’s recommendations.

Daily012224.pdf

22 01, 2024

GSE-012224

2024-01-22T16:02:39-05:00January 22nd, 2024|4- GSE Activity Report|

Securitization and Systemic Risk

A new Fed staff study uses models to conclude that government-backed mortgage securitization  exacerbates financial crises, contradicting conventional wisdom that – GSE blow-ups notwithstanding – properly-regulated GSEs create a liquid, diversified asset pool for an otherwise illiquid, risky asset class.  However, our read of the study leads us to side with conventional wisdom.

GSE-012224.pdf

18 01, 2024

DAILY011824

2024-01-18T16:58:16-05:00January 18th, 2024|2- Daily Briefing|

Basel Head Backs U.S. End-Game

In an FT interview today, the Basel Committee’s chair, Pablo Hernández de Cos, unsurprisingly endorsed the U.S. end-game proposal, indirectly but firmly rebutting assertions that it is at variance with global norms.

The Shape of Liquidity Rules to Come

Previewing the construct of what may soon be the anticipated inter-agency proposal addressing liquidity-risk lessons-learned, Acting Comptroller Hsu today argued that the liquidity coverage ratio’s treatment of retail depositors (see FSM Report LIQUIDITY17) does not address likely depositor herding as they run for the exit.

Rounds, Sinema Press for SIFI-Designation Rollback

Senate Banking Committee Member Rounds (R-SD) alongside Sen. Sinema (I-AZ) introduced S.3601, legislation to codify 2019 standards (see FSM report SIFI35) adding significantly more obstacles to systemic designation compared to FSOC’s new approach (see FSM report SIFI36).

Steele’s Good-Bye Presses for More Tough Standards

In his last speech in office, Assistant Secretary for Financial Institutions Graham Steele today called for reassessment of the treatment of unrealized gains or losses not just under the capital rules, but also in the liquidity standards (where they are in fact to some degree now captured).

House Democrats Damn Capital Proposal With Faint Praise

In this report, we begin our assessment of Congressional end-game comment letters.

Senate Letters Slam Capital Proposal’s Tax-Equity Risk Weight Changes

Here, we turn to several Senate letters on the end-game proposal.

Daily011824.pdf

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