2- Daily Briefing – Federal Financial Analytics

26 04, 2024

DAILY042624

Eliza Allen2024-04-26T16:53:42-04:00April 26th, 2024|2- Daily Briefing|

Treasury Slams PR Banking AML, Sanction Compliance

Providing an unusually blunt warning, Treasury Undersecretary Brian Nelson yesterday stated that further action is necessary in Puerto Rico to combat illicit finance, tighten supervision, and increase transparency.

BCBS Moves Forward With New Counterparty Risk Guidelines

As anticipated, the Basel Committee this week announced that it approved a consultation on proposed guidelines to strengthen bank counterparty credit risk management, replacing the Committee’s 1999 global guidance that failed to address the now-significant role of NBFIs and their heightened leverage.

HFSC Merger Hearing to Test Agency Proposals

The memo for Wednesday’s merger hearing before HFSC’s Financial Institution Subcommittee indicates that witnesses are senior attorneys from the OCC and FDIC sure to be grilled by Republicans on their agencies’ proposed merger-policy rewrites.

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25 04, 2024

DAILY042524

Eliza Allen2024-04-25T17:12:36-04:00April 25th, 2024|2- Daily Briefing|

FSB Tackles CCP Resolvability

Continuing its NBFI work, the FSB today released final CCP-resolution standards. The standards call on systemic-CCP regulators to have tools and backstops specific to orderly resolution in addition to those deployed to ensure rapid recovery under the FSB’s recent actions addressing margining and CCP liquidity.

FDIC Considers, Tables Passivity Proposals

As anticipated, the FDIC today took up proposals to address concerns regarding index-fund managers’ compliance with passivity commitments. Surprisingly, there were two competing proposals, both of which were withdrawn prior to a vote.

BIS Head Suggests NBFIs Get a Targeted Global Standard-Setter

BIS General Manager Carstens this week said that there is insufficient global momentum to address the risks posed by NBFIs, asking international bank supervisors to consider the need for a committee akin to Basel for NBFIs.

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24 04, 2024

DAILY042424

Eliza Allen2024-04-24T16:29:15-04:00April 24th, 2024|2- Daily Briefing|

CapOne/Discover Deal Open for More Comment

The FRB and OCC today took the unusual step of extending the public comment period on the Capital One/Discover merger until May 31. Typically, the agencies keep the comment deadlines as is, receiving more comments when desired via public hearings and then delaying action on a proposal until it suits them to make an announcement. This move seems intended to ensure that the furor over this merger is not exacerbated by assertions that the agencies cut short the public-comment process in any way.

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23 04, 2024

DAILY042324

Eliza Allen2024-04-23T16:38:38-04:00April 23rd, 2024|2- Daily Briefing|

New Fed Study: Economic Inequality Key to Growing NBFI Role, Systemic Risk

A new Fed staff note builds on prior research to show not just the link between economic inequality and financial instability, but also how heightened systemic risk due to factors such as NBFI growth is driven by economic inequality. The study for the first time finds significant correlations between economic inequality and the growing role of nonbank asset managers, investors, and short-term wholesale lenders, observing the proven link between NBFIs and financial-system amplification.

Asset-Manager Passivity Standards Set for Thursday Rewrite

As anticipated, the FDIC has set this Thursday as the date at which it will address concerns that index-fund and other asset managers are no longer passive investors in banking organizations and thus may warrant BHC designation. We will of course analyze the FDIC’s action immediately after it is released and then provide clients with an in-depth analysis of a proposal that, depending on how far it goes, could not only bring some NBFIs within the regulatory perimeter, but also have a negative impact on banking-organization market capitalization.

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22 04, 2024

DAILY042224

Shane Smith2024-04-22T16:37:29-04:00April 22nd, 2024|2- Daily Briefing|

FHFA Sets Comment Deadline for Freddie Closed-End Loan Product

The Federal Register includes the FHFA’s comment request on a new Freddie Mac product that would
give borrowers access to their locked-up equity without a new first lien at a higher rate or a traditional homeequity second riding piggyback atop the first lien.

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19 04, 2024

DAILY041924

Shane Smith2024-04-19T16:22:08-04:00April 19th, 2024|2- Daily Briefing|

GAO Gives CFPB Clear Bill of Financial Health

The GAO today released the report initially scheduled for the Financial Institutions Subcommittee hearing earlier this week convened to discuss CFPB financial management.

Deadline Set for Comment on Controversial FDIC Merger Proposal

The Federal Register today sets the comment deadline on the FDIC’s request for comment on its bank merger policy (see FSM Report MERGER15).

House Bill Revises Exam Appeal Process

HFSC Vice Chair Hill (R-AR) and Rep. Scott (D-GA) yesterday introduced H.R. 8071, a bill to create an FFIEC independent review officer for banks seeking review of supervisory judgements and require supervisors to respond more quickly to bank queries.

FDIC’s Paperwork Request Illuminates Proposed Merger Policy

In conjunction with today’s publication of the FDIC’s proposed merger-policy rewrite (see FSM Report MERGER15) comes a proposed change in the filings that would need to accompany any merger application submitted to the FDIC.

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18 04, 2024

DAILY041824

Eliza Allen2024-04-18T17:08:48-04:00April 18th, 2024|2- Daily Briefing|

G7 Backs NBFI Reform

Although prioritizing Ukraine and broad statements about the global economy, the new statement from G7 finance ministers and central bankers also emphasizes the need to pursue the kind of NBFI reforms advanced yesterday by the FSB.

Bowman Battles New Liquidity Regs

FRB Gov. Bowman today reiterated her conviction that sufficient contingency funding should be a matter between banks and supervisors, not a cause for new rules.

Brown, Reed Press Big Banks on Wire Transfer Fraud

Building on their longstanding campaign pressing banks on Zelle, Senate Banking Chair Brown (D-OH) and Sen. Reed (D-RI) today sent letters to the CEOs of JP Morgan, Wells Fargo, Bank of America, and Citi stating that banks have a responsibility to proactively monitor and prevent fraudulent wire transactions and should reimburse customers when these obligations are not met.

House Select Committee Targets Index-Fund Chinese Investments

Building on its prior report pressing financial institutions to address exposures to China and potential systemic risks, the House Select Committee on the CCP today released a bipartisan report sharply criticizing index-fund and asset managers for investing American savings in sanctioned Chinese companies associated with the PLA and/or human-rights abuses.

Daily041824.pdf…

17 04, 2024

DAILY041724

Eliza Allen2024-04-17T17:36:07-04:00April 17th, 2024|2- Daily Briefing|

Global Regulators Tackle NBFI Margining, Collateral Transformation

As it has long promised, the FSB today issued a consultation on standards designed to buttress derivatives, commodity, and securities-financing markets under stress through more stringent margining and collateral requirements.

Basel Head Says Go Slow re AI Risk, Supervisory Models

Basel’s Secretary General, Pablo Hernández de Cos, today focused on AI’s risk-reward profile in the banking sector, concluding that it raises a series of profound questions global regulators must work cooperatively to address.

Lummis, Gillibrand Begin Senate Stablecoin Debate

As long anticipated, Sens. Lummis (R-WY) and Gillibrand (D-NY) today introduced a significantly revised version of their 2022 Bill (see FSM Report CRYPTO28) laying out U.S. stablecoin standards.

FIO Subpoena Power Faces Rollback

At HFSC’s mark-up today, the committee began with Rep. Fitzgerald’s (R-WI) Insurance Data Protection Act, H.R. 5335, which would repeal the Federal Insurance Office’s authority to subpoena insurance companies for data collection.

HFSC Likely to Pass RegTech Bill

At HFSC’s extended mark-up today, the committee turned to H.R. 7437, a bipartisan bill that would require federal banking regulators to regularly review and report to Congress on their use of technology to ensure they’re equipped to address threats to the financial system.

HFSC Set to Pass AOCI Recognition, Systemic-Risk Designation Study Measures

Continuing our coverage of today’s mark-up, HFSC was generally supportive of the two bills on the agenda from Democrats, H.R. 4206 from Rep. Sherman (D-CA) requiring large banks with available for sale securities to mark to market …

16 04, 2024

DAILY041624

Eliza Allen2024-04-16T17:10:39-04:00April 16th, 2024|2- Daily Briefing|

House GOP Takes on New Merger Guidelines

The House Small Business Committee today sent a GOP letter to the FTC and Justice Department strongly protesting new merger guidelines (see FSM Report MERGER13) on grounds that they sharply curtail needed small-business capital.

House Hikes Iran Sanctions

Working through a series of sanctions bills in the wake of recent geopolitical developments, the House yesterday voted 294-105 to advance H.R. 5921, a bill introduced by Rep. Huizenga (R-MI) that prohibits Treasury from authorizing transactions by U.S. financial institutions in connection with Iranian imports or exports other than food, medicine, and other humanitarian assistance.

House Passes Bill Targeting China-Iran Petroleum Trade

Continuing its response to recent geopolitical events, the House yesterday voted by a 383-11 margin to pass H.R. 5923, a bill from Reps. Lawler (R-NY) and Gottheimer (D-NJ) that would require the President to periodically determine if any Chinese financial institutions have purchased petroleum or petroleum products from Iran, stating that U.S. financial institutions also may not open or maintain certain accounts with Chinese institutions that have done so.

Warren Again Targets OCC Merger Decisions

Continuing recent attacks on the OCC’s approach to mergers, Sens. Warren (D-MA) and Blumenthal (D-CT) yesterday sent a letter to Acting Comptroller Hsu sharply criticizing the agency’s decision first to allow NYCB to acquire Flagstar bank and then do the same shortly thereafter for Signature.

OCC Toughens LCR, NSFR via New Reporting Requirements

The OCC today sought public comment as required by law for …

15 04, 2024

Daily041524

Arezou Rafikian2024-04-15T16:42:00-04:00April 15th, 2024|2- Daily Briefing|

Warren, Whitehouse Attack Chamber’s CFPB Litigation

Continuing their support of the CFPB’s credit-card rule (see FSM Report CREDITCARD37), Sens. Warren (D-MA) and Whitehouse (D-RI) took on the Chamber of Commerce, writing to protest its “outrageous and unwarranted” legal challenge.

HFSC Set for Marathon, Partisan Mark-Up

Wednesday’s HFSC mark-up will feature predictable partisan battles over an array of GOP resolutions to repeal the CFPB’s credit-card rule (see FSM Report CREDITCARD37) and all of the banking-agency climate-risk standards (see Client Reports in the CLIMATE series).

Fed Paper: CBDC May Increase Run Risk, Digital Asset Stability

A new Fed staff paper analyzes a CBDC’s potential impact on financial stability, finding that CBDC introduction could cause a small increase in run risk, but could also improve financial stability in the digital-asset space and enhance cross-border payments.

Does Supervision Make Banks Safer? FRB-NY: Probably

Noting that the impact of bank supervision has received far less attention than that of regulation, the Federal Reserve Bank of New York’s blog today includes a post summarizing literature in this area, one that has of course taken on new importance in the wake of last year’s failures and resulting agency self-assessment.

BIS Presses Tokenized Unified Ledger

Building on prior work advocating for unified ledgers to achieve digital efficiencies without added risk, the BIS’s General Manager Agustín Carstens and Infosys Chairman Nandan Nilekani today extended prior analyses to tokenization.

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