3- This Week – Federal Financial Analytics

1 12, 2023

Al120423

Eliza Allen2023-12-01T16:41:48-05:00December 1st, 2023|3- This Week|

Capital Conundrum

Early signals indicate that GSIB CEOs summoned this week before Senate Banking will do their best to use the session to solidify Congressional calls for substantive changes in pending capital rules based on a far more transparent, systematic CB analysis. Signals such as the Brown/Reed letter last week also make it clear that Democrats will push hard for tougher GSIB-specific standards to offset increasingly-likely changes to the capital rules. Democratic advocates of specific changes – i.e., with regard to LMI mortgages and small-business credit – will also use the session to navigate a path between helping regional banks on key points while looking tough on the overall question of big-bank capital. Again, sticking it to GSIBs may be their tactic. Republicans won’t let up against the capital rules, but we suspect they’ll also focus on borrowers and regional banks, side-stepping GSIB surcharges and other top-tier questions wherever possible.

Al120423.pdf…

22 11, 2023

Al112723

Eliza Allen2023-11-22T12:17:10-05:00November 22nd, 2023|3- This Week|

Weekly Analyses Returning Next Week

In observance of Thanksgiving, FedFin’s offices will be closed on Thursday, November 23 and Friday, November 24. Weekly report will be abbreviated this week. In-depth analysis of Weekly developments will resume on Friday December 1st. All of us at FedFin wish you a joyous Thanksgiving.

Al112723.pdf…

17 11, 2023

Al112023

Eliza Allen2023-11-17T16:34:27-05:00November 17th, 2023|3- This Week|

That’s Different

As we noted in our in-depth reports last week, Congressional hearings with top bank supervisors are always eventful, but rarely game-changers. This proved to be the case when FRB Vice Chair Barr, Acting Comptroller Hsu, and FDIC Chair Gruenberg came before Senate Banking (see Client Report REFORM229) and HFSC (see Client Report REFORM230). One surprising takeaway affects policy and the other is political, but each has the potential to change the end-game landscape as well as that of the Biden Administration’s financial rulemaking for the rest of the President’s term.

Al112023.pdf…

9 11, 2023

Al111323

Eliza Allen2023-11-09T17:10:30-05:00November 9th, 2023|3- This Week|

No Weekly Alert for the Week of November 13

Federal Financial Analytics’ weekly report will be abbreviated this week due to the U.S. Veterans Day holiday. In-depth analyses of weekly developments will resume on Monday, November 13.

Al111323.pdf…

3 11, 2023

Al110623

Eliza Allen2023-11-13T15:42:56-05:00November 3rd, 2023|3- This Week|

Bye-Bye Basel???

Later this week, HFSC’s Financial Institutions Subcommittee plans finally to hold a long-delayed hearing scrutinizing another aspect of controversial capital proposals: how closely these hue to global norms and, if they do, the extent to which U.S. agencies are sacrificing U.S. interests in pursuit of global comity. The GOP hasn’t much use for most of this comity if it comes attached to new rules, and this point will be more than clearly expressed at the hearing. Democrats generally don’t expend much political capital defending global institutions. Indeed, when these threaten home-town interests, they join with Republicans as Sen. Brown (D-OH) did in 2014 when it came to passing legislation demanding that international insurance rules be significantly altered in concert with new transparency standards forcing U.S. agencies to tell Congress what they might be about when it came to endorsing future global insurance proposals (see FSM Report INSURANCE41). This time around, House bills are pending to force similar transparency and limits when it comes to global banking rules. We doubt Sen. Brown this time will agree to them, but it will first be up to Chairman McHenry (R-NC) to decide the next steps. These are likely to include mark-up, but the panel has a lot else to do on its other issues more critical to the chairman – e.g., crypto legislation – caught up in the prolonged speakership battle.

Al110623.pdf…

27 10, 2023

Al103023

Eliza Allen2023-10-27T17:00:24-04:00October 27th, 2023|3- This Week|

Take a Deep Breath

But don’t relax too much as newly-minted Speaker Johnson (R-LA) figures out what he’s going to do with the gavel now that he’s got it. The House has barely three weeks to see if unanimity holds and a shutdown is avoided in favor of yet another can-kicking continuing resolution. Regardless, with HFSC Chairman McHenry (R-NC) happily freed of his Speaker Pro Tem assignment, HFSC will this week (see below) return to the high-impact hearing schedule if was forced to cancel during the speakership battle, move a raft of bills through mark-up, and work hard to put Mr. McHenry’s plans to realign crypto jurisdiction into must-pass legislation if the House agrees (likely) and the Senate doesn’t object (far less certain). Among the bills to be marked up and those on the Senate’s agenda will surely be measures reviewed at last week’s Senate Banking hearing to ensure Treasury is super-tough when it comes to Iran and Hamas. Secondary sanctions are in the works, putting any financial institution doing business in the U.S. on notice that offshore activities so far out of law-enforcement’s reach are about to come in range. And, if that’s not enough, then there’s all the regulatory action.

Al103023.pdf…

20 10, 2023

Al102323

Eliza Allen2023-11-13T15:46:12-05:00October 20th, 2023|3- This Week|

Relentless Pressure and Resulting Concession

On Friday, the Federal Reserve offered an olive branch – small and partial, but still a branch – to Republican critics of pending standards and the big banks powering up all this pain. As we noted, the comment deadlines for the capital and GSIB-surcharge rules have been extended to January 16, a move also designed to thwart litigation based on procedural considerations. The Fed has also announced a new data-gathering exercise in which stakeholders can send in “data” but due to which much more input will also surely flow. This exercise also answers procedural critics and protects the bill, with the deadline here also January 16.

Al102323.pdf…

13 10, 2023

Al101623

Eliza Allen2023-10-13T16:28:42-04:00October 13th, 2023|3- This Week|

A Troubling Time

Although federal officials – at least those outside the House of Representatives – are going about their daily business, the awful casualties and looming threat of the Israel-Hamas war hang over a cite that has grown used to other geopolitical risks in Ukraine, Taiwan, and the world’s many other hot spots. The political situation in Washington is fluid not only because the House can do nothing consequential, but also because conditions on the ground change hourly and the prospects for broader conflict loom large. In the near term, we expect hard supervisory questions of large banks with Middle East exposures, bipartisan demands for the Administration to do what it’s already one with the $6 billion Iran-fund freeze, more pressure on Senate Banking Chairman Brown (D-OH) to move the Warren/Marshall crypto-crime bill and HFSC action on numerous sanctions bills if Speaker Pro Tem McHenry (R-NC) is able to trade one gavel for another.

Al101623.pdf…

6 10, 2023

Al100923

Eliza Allen2023-10-06T14:59:46-04:00October 6th, 2023|3- This Week|

Weekly Analyses Returning Next Week

In observance of Indigenous People’s Day, FedFin offices will be closed Monday, October 9^th. As always, staff will be monitoring email and do their best to respond to client inquiries in a timely manner.

Al100923.pdf…

25 09, 2023

Al092523

Eliza Allen2023-09-25T11:00:27-04:00September 25th, 2023|3- This Week|

Systemic Steps

We held this weekly update on Friday because Washington was awash with rumors that FSOC would issue final versions of proposed systemic-evaluation standards (see FSM Report SYSTEMIC95) along with a new designation methodology (see FSM Report SIFI35). As it turned out, FSOC said so little in its closed-door meeting readout that it didn’t suffice even for a client alert, let alone a weekly. Still, something is coming soon and, when it does, it will start yet another partisan and sometimes even emotional debate over financial regulation redefining the sector’s strategic landscape.

Al092523.pdf…