2- Daily Briefing

20 05, 2024

DAILY052024

2024-05-20T18:04:50-04:00May 20th, 2024|2- Daily Briefing|

Barr Outlines Pending LCR Rewrite

In remarks, FRB Vice Chair Barr provided more detail on pending liquidity revisions, indicating that the agencies are now considering a rule for banks “over a certain size” that would require pre-positioned collateral for discount-window draws as a percentage of uninsured deposits.

CFPB Sides with States in Bank Enforcement Actions

In a newly-released letter, CFPB Director Chopra tells New York’s AG and those in other states that the Bureau will take action against large and even national banks found wanting in state enforcement actions if the OCC does not do so.

Gruenberg’s as Good as Gone

In a stunning reversal from Thursday’s hearing (see Client Report REFORM233), Senate Banking Chair Brown (D-OH) today called for “new leadership” at the FDIC, essentially asking Mr. Gruenberg to resign or the White House to dismiss him despite the immediate prospect of a GOP replacement whose stand will be very different than Sen. Brown’s on pending regulations.

Gruenberg Set Terms of Surrender

In a late-afternoon statement, FDIC Chair Gruenberg acknowledged the pressures on him at least since this morning, when Senate Banking Chair Brown (D-OH) made it clear that he has lost confidence following continuing workplace revelations.

Daily052024.pdf

17 05, 2024

DAILY051724

2024-05-17T16:46:55-04:00May 17th, 2024|2- Daily Briefing|

Gruenberg Turns to Regulatory Rewrites

Turning back to his day job, FDIC Chair Gruenberg today spoke to European regulators on lessons from last year’s U.S. banking crisis.

Waller Reinforces Fed Dominant Role Across U.S. Payment System

FRB Gov. Chris Waller today addressed an array of technical payment-system issues, also reiterating the Fed’s plan to remain firmly engaged in payment services as well as serving as technology convenor and dominant provider.

Freedom Caucus Republicans Resurrect Bill to Abolish the Fed

Leading a group of Freedom Caucus Republicans, Rep. Thomas Massie (R-KY) yesterday introduced H.R. 8421, a bill to abolish the Federal Reserve Board and Federal Reserve banks, along with repealing the Federal Reserve Act.

Fed Denies Petitions to Review CAMELS, Social-Commitment Disclosure

The Federal Reserve Board today voted 7-0 to reject two petitions on grounds that they do not demonstrate that the FRB erred on statutory or policy grounds.

Bowman Lumps Fed M&A Reports Into Policy Critique

FRB Gov. Bowman today reinforced the substantive nature of recent Fed changes to M&A reporting first identified in a FedFin client alert, saying that these could increase up-front costs in a way particularly harmful to small institutions.

Daily051724.pdf

16 05, 2024

DAILY051624

2024-05-17T09:49:00-04:00May 16th, 2024|2- Daily Briefing|

Basel Again Contemplates Digitalization

In its first look at technology-enable finance since 2018 (see FSM Report FINTECH18), the Basel Committee today published a report acknowledging that much has happened in areas such as AI, tech platforms, and cloud services since it last looked at digitalization.

SCOTUS Decision re CFPB Also Upholds FDIC, OCC Funding

Although we defer to counsel for interpretation of the Supreme Court’s 7-2 decision today to uphold the CFPB’s funding mechanism, we note its application not only to preserving the Bureau, but also the premium funding mechanism behind the FDIC’s DIF and the OCC’s assessments.

SEC Coming for Bank Investment Funds

SEC Chair Gensler today announced that SEC staff are talking with bank regulators about risks posed by bank trust and retirement-plan collective investment fund offerings, noting that rules governing these funds do not address illiquidity or leverage nor do they provide sufficient investor disclosure or find dependent fund governance.

Senate Strikes Down SEC’s Custody Accounting Bulletin

In a rebuke to the White House and SEC, the Senate today voted 60-38 to approve H.J. Res. 109, the CRA resolution previously approved in the House to revoke the SEC’s Staff Accounting Bulletin 121 requiring balance-sheet recognition of custody assets (see FSM Report CUSTODY5).

FHFA Starts to Rewrite How and Who Home Loans Serve

Building on its FHLB 100 report, the FHFA today advanced codification of a new FHLB mission with a request for public input on how best to do so.

Dems Demand

15 05, 2024

DAILY051524

2024-05-15T17:12:25-04:00May 15th, 2024|2- Daily Briefing|

Two Democrats Pressure Incentive-Comp Regulatory Laggards

In a prelude to questioning at this week’s hearings, Sen. Chris Van Hollen (D-MD) and Rep. Nydia Velázquez (D-NY) today pressured the FRB and SEC to join the inter-agency proposal on incentive compensation so that it can quickly advance (see FSM Report COMPENSATION38).  The letter was also addressed to the NCUA head, but the NCUA has in fact signed on to the inter-agency proposal.

Bowman Proposes Approach to Faster, More Innovation Approvals

FRB Gov. Bowman today outlined a new approach to financial innovation she believes will allow supervisors to authorize a greater number of new approaches.  She argues that new products such as tokenization must be assessed to determine if they parallel existing offerings and, if so, if they come with the same prudential standards.

Daily051524.pdf

14 05, 2024

DAILY051424

2024-05-14T17:38:28-04:00May 14th, 2024|2- Daily Briefing|

HFSC Set for Marathon Markup

According to the majority-staff memo released yesterday for HFSC’s mark-up on Thursday, the mark-up will focus on eleven bills including H.R. 8337, a new bill introduced by Rep. Barr (R-KY) which includes six previous bills.

BIS Advances Tokenized Cross-Border Payments

Advancing its general manager’s campaign to encourage tokenization, the BIS today invited private-sector financial institutions to apply to participate in Project Agorá, testing whether tokenized deposits could enhance cross-border payment functionality via tokenized commercial bank deposits and tokenized wholesale central bank money in a public-private platform.

Barr to Say Liquidity Regs Coming, Capital Standards in the Works

In the testimony he will present starting tomorrow, FRB Vice Chair Barr makes it clear that, despite the banking system’s current sound condition, banks and supervisors must remain vigilant due to emerging challenges such as CRE and consumer-debt risk.

Gruenberg’s Promised Workplace Reforms Set for Buzzsaw

Events late today surrounding FDIC Chair Gruenberg’s testimony indicate his going may be even stormier than we anticipated.

Hsu Focuses on Operational Resilience, Check Fraud

Acting Comptroller Hsu’s testimony says the banking system is sound, but also at risk of increasing disruptions with heightened impact due to natural disasters, geopolitical risk, and internal operational failings or poor risk management.

Fed, OCC Open CapOne/Discover to Public Hearing

The FRB and OCC today extended the public-comment period on the CapOne/Discover merger until July 24.

Daily051424.pdf

13 05, 2024

DAILY051324

2024-05-13T16:53:55-04:00May 13th, 2024|2- Daily Briefing|

HFSC Sets Course for Contentious Supervisory Hearing

HFSC’s majority-staff memo ahead of Wednesday’s hearing with prudential regulators lists an array of pending rules and transactions as a platform for numerous measures changing current standards.

Basel Battles on for End-Game, Punts Crypto Regs

The Basel Committee’s supervisory group of central bankers and supervisors (GHOS) today continued to press the U.S., U.K., and EU to finalize Basel III’s end-game rules quickly and compatibly with the 2017 package.

Yellen Rebukes FDIC Workplace Culture

Ahead of what are sure to be grueling hearings, Treasury Secretary Yellen today told press that the behavior described in the recent FDIC report was “totally unacceptable” and did not align with the Biden administration’s core values.

Daily051324.pdf

10 05, 2024

DAILY051024

2024-05-10T17:19:04-04:00May 10th, 2024|2- Daily Briefing|

Bowman Again Targets Pilot Climate Scenario Analysis

FRB Gov. Bowman criticized the Fed’s pilot climate scenario exercise as a “regulatory distraction,” again also warning against the cumulative effect of recent banking regulatory proposals.

Fed Takes Tougher Attitude to Bank Supervisory Rating, Finds Significant Weakness in Large Banks

Reiterating its concern about CRE, the Fed’s semiannual supervisory reportindicated that the number of large financial institutions receiving satisfactory or better ratings went down from about a half to about a third during the second half of 2023.

FSOC Demurs on Nonbank Mortgage Designation, Recommends Statutory Change Instead

Although FSOC last November (see Client Report FSOC29) indicated that nonbank mortgage companies were a prime target for systemic activity and practice designation, the Council decided instead to recommenda series of substantive, structural changes to Congress.

DAILY051024.pdf

9 05, 2024

DAILY050924

2024-05-09T17:03:02-04:00May 9th, 2024|2- Daily Briefing|

Crypto-Custody Battle Back in Bank Regulators’ Laps

The House yesterday voted 228-182 to approve H.J. Res. 109, a GOP motion under the Congressional Review Act to revoke the SEC’s Staff Accounting Bulletin 121 requiring additional disclosures and balance-sheet recognition related to cryptoasset custody (see FSM Report CUSTODY5).

GOP Tries to Place Gruenberg Blame on President Biden

Late yesterday, the GOP leadership of the House Oversight Committee sought to escalate the political focus on FDIC Chair Gruenberg, writing to the White House to demand all communications with Mr. Gruenberg and others related to workplace conduct.

Brown, Scott Take Usual Stand on “Junk,” Credit-Card Fees

Today’s Senate Banking Hearing focused on “junk fees.”

Waters Focuses on FDIC Report, Not Gruenberg

Without directly supporting FDIC Chair Gruenberg, HFSC Ranking Member Waters (D-CA) today pointed to aspects of the Cleary report that focus narrowly on Mr. Gruenberg rather than all recent FDIC Chairs.

CFPB Heightens Attack on Credit Card Rewards

At today’s CFPB-DoT hearing on credit card rewards, Director Chopra indicated that the agency will protect points against currency devaluation, stop “bait and switch” scams, examine exclusive deals, and promote interest rate competition.

Climate Scenarios Show Significant Challenges

At close of business, the Federal Reserve released the results of the climate risk exploratory stress test imposed on six of the largest banks

Daily050924.pdf

8 05, 2024

DAILY050824

2024-05-09T03:25:08-04:00May 8th, 2024|2- Daily Briefing|

FedFin Assessment: Gruenberg’s Fragile Hold

As promised, we here update our analysis of Marty Gruenberg’s political risk following yesterday’s blistering report.

FinCEN Warns re Iran-Proxy Transactions

In a de facto warning to financial institutions, FinCEN today issued an advisory on detecting illicit transactions associated with Iran-backed terrorist organizations.

FRB-KC: Core-Provider Concentration Threatens Small-Bank Competitiveness

Continuing critical Federal Reserve Bank attention to core payment-service providers, the Kansas City Fed today released a brief reinforcing prior findings about the adverse impact of core-provider concentration on payment-system innovation.

Cook Says Powell Makes the End-Game Call

FRB Gov. Cook today largely reiterated findings in the Fed’s most recent financial-stability analysis (see Client Report SYSTEMIC99), but under questioning highlighted several emerging issues.

Daily050824.pdf

7 05, 2024

DAILY050724

2024-05-07T17:04:28-04:00May 7th, 2024|2- Daily Briefing|

GAO Presses FDIC, OCC for Blockchain, Third-Party Risk Standards

The GAO today issued its annual reports to the FDIC and OCC, stating that the agencies had failed to implement two of last year’s priority recommendations on the coordination of blockchain policy and policy clarifying how banks must handle third-party relationship’s use of alternative underwriting data.

SF Fed: Less Bank Lending, Fewer Jobs

A new study from the San Francisco Fed looks at why banks curtailed lending in 2023, attributing about half of this to re-evaluating their ability to take on risk without analyzing why this internal decision might have been made.

Gruenberg Faces Fight of His FDIC Life

The key policy question aroused by the independent counsel’s blistering report today on the FDIC is whether Chair Gruenberg can survive it and, if not, what happens next to an FDIC board likely to be tied on key questions such as finalizing all the capital standards and the agency’s particularly stringent merger policy (see FSM Report MERGER15).

Daily050724.pdf

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