1- Financial Services Management – Page 2 – Federal Financial Analytics

2 01, 2024

AI4

Eliza Allen2024-01-02T10:14:03-05:00January 2nd, 2024|1- Financial Services Management|

AI Financial Risk, Rules

Bipartisan Senate legislation has been introduced to press FSOC to do more than highlight artificial intelligence (AI) as a potential threat to financial stability. The measure instead requires the Council to undertake a rapid study of AI’s financial stability risk and report to Congress on conclusions that must then be advanced through FSOC designation and federal-agency action. The bill also gives the SEC more authority to address at least some of the risks its chairman has identified that may be posed by predictive analytics, including AI. New AI-related stress testing would also be likely.

AI4.pdf…

27 12, 2023

MERGER13

Shane Smith2023-12-27T12:09:12-05:00December 27th, 2023|1- Financial Services Management|

U.S. Antitrust Policy

Building on a request for comment and a formal draft, the Department of Justice (DOJ) and Federal Trade Commission (FTC) have finalized specific revisions to U.S. merger policy that significantly redesign the manner in which M&A transactions will be considered. With this final, formal policy, M&A review may be more predictable, but also still more difficult for mergers and even minority holdings. A range of new analytics will need to be considered to assess transaction feasibility including new factors such as labor-market and employee implications, information power, network effects, and second or even third-order effects on rival firms. These revisions are challenges likely to be particularly acute in U.S. financial services where government agencies believe there is undue concentration in banking, payment, private-equity, and other sectors.

MERGER13.pdf…

20 12, 2023

ILC17

Shane Smith2023-12-20T09:13:53-05:00December 20th, 2023|1- Financial Services Management|

ILC Charters

Senate Banking Committee Chairman Brown (D-OH) is now leading a renewed bipartisan charge to limit the ability of nonbanks to use industrial loan companies (ILCs) to gain access to bank privileges without the parent-company supervision required of all other domestic IDI parents. However, supervision of such parent companies and their nonbank subsidiaries would come from the FDIC, not FRB. This would reduce what some believe to be the Fed’s outsized role as bank and BHC supervisor, but the FDIC’s ability to undertake new supervisory duties is unclear, especially in the wake of recent failures.

ILC17.pdf…

20 11, 2023

DEPOSITINSURANCE122

Arezou Rafikian2023-11-21T10:40:15-05:00November 20th, 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 finalized its proposed approach to imposing a systemic assessment to reimburse the Deposit Insurance Fund (DIF) for the resolution costs related to uninsured deposits following a systemic designation. The FDIC will do so via an assessment covering IDIs with uninsured-deposit holdings above $5 billion that have assets over $5 billion. This exempts most smaller banks, with the FDIC adopting this approach on grounds that it justly penalizes large IDIs it believes benefited the most from these systemic rescues.

DEPOSITINSURENCE122.pdf…

15 11, 2023

PAYMENT27

Eliza Allen2023-11-15T15:05:15-05:00November 15th, 2023|1- Financial Services Management|

Nonbank Payment Provider CFPB Supervision

Building on its director’s longstanding focus on fintech and tech-platform companies, the CFPB has proposed to extend its supervisory reach to nonbank providers of general-use digital payments services. The Bureau’s definition of these terms is broad and thus would bring almost all covered nonbank services into its ambit with considerable potential for subsequent demands for significant operational change along with heightened legal and reputational risk. The extent to which the Bureau pursues the ends enabled by this proposal remains to be seen, but it could set high roadblocks restricting the network-effect benefits major tech-platform companies have long enjoyed not only due to real and perceived regulatory exceptions, but also by virtue of their financial and commercial activities.

PAYMENT27.pdf…

9 11, 2023

SYSTEMIC98

Eliza Allen2023-11-09T13:06:42-05:00November 9th, 2023|1- Financial Services Management|

Systemic-Risk Determinations

Rejecting the Trump Administration’s hands-off approach to designating systemically-important nonbank financial institutions or activities and practices, the Biden Administration’s FSOC has finalized its bifurcated proposals to designate systemic entities and another laying out an analytical approach to identifying systemic risk that would then guide firm and activity designation as well as Council staff coordination with primary federal regulators. This is likely to lead to new additional systemic entity-based designations, rules, product or service prohibitions/restrictions, and/or firm-specific supervisory action. The final framework is as comprehensive as the proposal, meaning that U.S. systemic standards could extend far more widely than is now the case even if firm-specific nonbank designations are few and far between.

SYSTEMIC98.pdf…

1 11, 2023

CLIMATE17

Arezou Rafikian2023-11-01T17:55:34-04:00November 1st, 2023|1- Financial Services Management|

Large-Bank Climate-Risk Principles

The banking agencies have joined together to issue inter-agency climate-risk guidance based on proposed standards from the FDIC, OCC and FRB. Most notably, the new standards expressly cover banking organizations over $100 billion, including FBO branches, but are indicative of the new approach to climate risk the agencies expect at any banking organization with elevated climate-risk exposure.

CLIMATE17.pdf…

31 10, 2023

INTERCHANGE12

Arezou Rafikian2023-10-31T09:26:49-04:00October 31st, 2023|1- Financial Services Management|

Debit-Card Interchange Fees

As suggested when the Fed last year finalized controversial new debit-card routing requirements, the central bank is now proposing a sharp reduction in the cap mandated on debit-card interchange fees under the Dodd-Frank Act’s Durbin Amendment for debit-card issuers with over $10 billion in assets.

INTERCHANGE12.pdf…

26 10, 2023

DATA4

Arezou Rafikian2023-10-26T16:30:52-04:00October 26th, 2023|1- Financial Services Management|

Consumer Data Rights/Open Banking

Following a request for information that was a de facto advance notice of proposed rulemaking,[1] the CFPB has now proposed a preliminary, but binding framework for consumer data rights covering consumer “transaction” accounts offered by banks, credit unions, and – a departure from the initial outline – nonbanks/fintechs. The proposal is sweeping with regard to data-rights and -sharing standards for covered accounts and providers, but still preliminary in that the Bureau has yet to turn as it plans to in in subsequent actions to loan products such as mortgages and student loans.

DATA4.pdf…

17 10, 2023

DEPOSITINSURANCE122.pdf

Arezou Rafikian2023-10-17T16:14:14-04:00October 17th, 2023|1- Financial Services Management|

Transaction-Account FDIC Coverage

Bipartisan senators have introduced legislation to provide FDIC coverage for certain noninterest-bearing transaction accounts, a move designed to prevent the stress and potential systemic risk evident when Silicon Valley and Signature Banks failed in March. However, expanding FDIC coverage could increase FDIC premiums, heightening pressure on IDIs and their holding companies in concert with the pending special assessment unless companies that opt out of added coverage do not bear additional costs for IDIs that choose to offer these insured accounts.

DEPOSITINSURANCE122.pdf…