Max Camateros-Mann

6 06, 2023

COMPENSATION36

Max Camateros-Mann2023-06-06T12:50:52-04:00June 6th, 2023|1- Financial Services Management|

Compensation Clawbacks

Sen. Warren (D-MA) has introduced a revised version of legislation to ensure that both the FDIC and other federal banking agencies can demand that executives and others governing failed banks refund direct and indirect compensation to the federal government. As with Sen. Warren’s prior bill to do so, this bill is bipartisan, now also containing compromise language on several points from the prior bill to increase the odds of enactment. For example, the bill would apply only to those at failed banks with assets over $10 billion, making it more difficult to claw back compensation at smaller banks regardless of the level of compensation or nature of the actions of covered persons.

COMPENSATION36.pdf…

31 05, 2023

CHINA17

Max Camateros-Mann2023-05-31T16:21:22-04:00May 31st, 2023|5- Client Report|

Senate Banking Targets China’s Crypto, Data Controls

While largely focused on countering fentanyl, today’s Senate Banking hearing on China, saw Committee Democrats try to ascertain the details of a potential outbound investment executive order and Republicans addressing what they believe to be shortcomings in data privacy, AML regulation, and sanctions policy. Despite broad agreement on the national security and economic threat of China, the only apparent Congressional actions address crypto and data privacy.

CHINA17.pdf…

30 05, 2023

M053023

Max Camateros-Mann2023-05-30T09:32:01-04:00May 30th, 2023|6- Client Memo|

How to Short-Circuit a Social-Media Run

Was the social media run Silicon Valley Bank’s kiss of death? Its former CEO says so. Regulators agree because the more the failure came from the great beyond, the less material their manifold supervisory mistakes. But, while it’s true that managerial malfeasance and supervisory forbearance played a huge role in recent failures, social-media herds can still trample a bank flatter than a morning croissant. FedFin outlined solutions shortly after the mid-March failures, but we didn’t then know what we also know now about investor runs. This memo reviews the runs, updates the regulatory responses, and shows why new liquidity buffers – surely the least controversial of any pending proposal – are urgently needed before the next round of regional bank stress.

m053023.pdf…

30 05, 2023

Karen Petrou: How to Short-Circuit a Social-Media Run

Max Camateros-Mann2023-05-30T16:36:05-04:00May 30th, 2023|The Vault|

Was the social media run Silicon Valley Bank’s kiss of death? Its former CEO says so. Regulators agree because the more the failure came from the great beyond, the less material their manifold supervisory mistakes. But, while it’s true that managerial malfeasance and supervisory forbearance played a huge role in recent failures, social-media herds can still trample a bank flatter than a morning croissant. FedFin outlined solutions shortly after the mid-March failures, but we didn’t then know what we also know now about investor runs. This memo reviews the runs, updates the regulatory responses, and shows why new liquidity buffers – surely the least controversial of any pending proposal – are urgently needed before the next round of regional bank stress.

Why do I say regional banks aren’t out of the woods? Maybe they are and here’s hoping, but market volatility combined with three new studies suggest we may well be in a calm before the next storm.

Recent data on deposit outflows, Fed-window use, and Home Loan Bank advances remain so worrisome that federal officials are still promising that all deposits are protected all the time even though federal law says they aren’t. Still, this moral-hazard safety net did not save First Republic and it’s been insufficient to secure other large regional banks from the threat of near-term failure. The reason for this is to be found in social media, and not just the kind that powered Silicon Valley’s run– the real threat now isn’t coming from …

25 05, 2023

DAILY052523

Max Camateros-Mann2023-05-25T17:44:03-04:00May 25th, 2023|2- Daily Briefing|

Gensler Calls On Banking Regulators To Tighten Short-Term, Collective Fund Rules

In remarks today, SEC Chairman Gensler announced that the SEC is in talks with bank regulators to close what he believes are regulatory gaps in short-term and collective-investment funds governed by the banking agencies, not the SEC.

HFSC Reports Transparency, LLPA Bills

After the lengthy debate and Democratic amendments we described yesterday at yesterday’s HFSC markup, the committee late last night reported both Rep. Barr’s (R-KY) regulatory transparency bill and Rep. Davidson’s (R-OH) LLPA rescission bill on strictly party lines by votes of 26-22.

OCC Redesigns Liquidity-Risk Framework to Capture Recent High-Impact Developments

In conjunction with a tough new enforcement policy (see forthcoming FedFin analysis), the OCC today updated the liquidity section of its examination Handbook to gather the data the agency believes essential in light of recent history.

OCC Targets Poor CAMELS, Repeat-Offender Banks With New PCA Framework

In conjunction with a new liquidity manual designed to position examiners to address recent risks (e.g., social-media runs, FHLB funding), the agency today issued a touch new enforcement policy.

House Judiciary Leadership Accuses BofA of Politically-Inspired Data Breaches

Bringing banks into the GOP campaign against “weaponizing” domestic activities, House Judiciary Chairman Jordan (R-OH) and Antitrust Subcommittee Chairman Massie (R-KY) today sent a letter to Bank of America’s CEO alleging that the bank voluntarily provided the FBI with sensitive transaction information related to the violent protests during January 6^th without any legal process.

DAILY052523.pdf…

19 05, 2023

CRYPTO44

Max Camateros-Mann2023-05-19T09:47:04-04:00May 19th, 2023|5- Client Report|

Preemption, SEC Remain Principle Stablecoin Roadblocks

Although there were still considerable party-line differences of opinion on stablecoin legislation, today’s HFSC Digital-Assets Subcommittee hearing suggests that remaining divides are narrowing, increasing the odds of a new federal-regulatory framework. However, this is not to say that HFSC Members will be able to overcome the most partisan differences – the role of the SEC and federal preemption – or that Sen. Brown (D-OH) will agree to yet another regulatory role for the Fed even if he does decide to advance a bill in this arena.

CRYPTO44.pdf…

16 05, 2023

REFORM224

Max Camateros-Mann2023-05-16T17:34:14-04:00May 16th, 2023|5- Client Report|

Fed, FDIC Stand Their Ground Under Withering GOP Assault

In their first appearance following the reports on recent failures, FRB Vice Chairman Barr and FDIC Chairman Gruenberg were harshly criticized by Republicans for both the bank failures and recommended remedies. HFSC Chairman McHenry (R-NC) blamed the Fed for faulty monetary policy that led to inflation and unduly quick rate hikes that endangered financial stability as well as lax supervision that missed glaring failures at SVB, SBNY, and First Republic. Mr. McHenry was unconvinced by Vice Chair Barr’s defense of the reports finding that Fed supervision had undergone a “cultural” shift under Vice Chair Quarles; Mr. Barr defended the finding based on interviews with the San Francisco Fed’s staff. Democrats fired back, with Ranking Member Waters (R-CA) arguing that Republicans were politicizing consideration of essential supervisory and regulatory reforms

REFORM224.pdf…

15 05, 2023

DEPOSITINSURANCE120

Max Camateros-Mann2023-05-15T12:46:44-04:00May 15th, 2023|1- Financial Services Management|

DIF Special Assessment

As the law requires and the FDIC Chairman promised after SVB and Signature Bank were declared systemic, the FDIC has now proposed a special assessment to compensate the Deposit Insurance Fund (DIF) for the cost of backing the two banks’ uninsured deposits. The FDIC has proposed to do so via an assessment covering IDIs with uninsured-deposit holdings above $5 billion. This thus exempts most smaller banks, with the FDIC adopting this approach on grounds that it justly penalizes IDIs that benefited the most from these systemic rescues. The new assessment would be applied over at least eight quarters beginning in January of 2024, with the FDIC’s analysis persuading it that the capital and income costs of this targeted approach are sustainable at covered insured depository institutions (IDIs).

DEPOSITINSURANCE120.pdf…

10 05, 2023

CRYPTO43

Max Camateros-Mann2023-05-10T16:54:20-04:00May 10th, 2023|5- Client Report|

HFSC-Ag Hearing Splits on Party Lines Over Need for New Crypto Framework

Today’s joint HFSC-House Ag hearing on assessing crypto’s regulatory gaps saw bipartisan calls for Congressional action, but none on what should be done. HFSC Chairman McHenry (R-NC) and HFSC Republicans pressed strongly for a new regulatory framework to ensure regulatory certainty and draw clear lines between the SEC and CFTC. HFSC Ranking Member Waters (D-CA) indicated that cryptoassets did not warrant an entirely new construct, instead favoring targeted legislation on issues such as stablecoins. House Ag Members on both sides of the aisle agreed that the CFTC should be given authority over spot markets and additional resources, but did not directly address giving the SEC broader authority as proposed in the Senate Ag sweeping crypto bill.

CRYPTO43.pdf…

5 05, 2023

Al050823

Max Camateros-Mann2023-05-05T16:59:58-04:00May 5th, 2023|3- This Week|

Weekend Warriors

As we finalize this update, we along with everyone else focused on the financial market is back on weekend watch for large regional-bank resolutions. What Congress does in response to the failures so far seems clear, but changing events could redefine our current view that no substantive legislation will address anything about recent failures other than give the FDIC additional clawback authority along the lines discussed at last week’s Senate Banking hearing. And even that isn’t clear given the breadth of Sen. Warren’s bill (see FSM Report COMPENSATION35) and questions Republicans have about it no matter the GOP cosponsors Sen. Warren enlisted.

Al050823.pdf…

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