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About 8 weeks ago, FedFin found that a four-figure check had gone astray like so many others have for other people. We thank the USPS inspector who brought to our attention that the name of the depositor wasn’t even close to that of the payee, something one likes to think banks notice, even though none did. Given this initial goof, perhaps I shouldn’t have been surprised by how hard it is not only to remedy the loss but also to strengthen our firm’s payment practices. We agreed with the bank that they needed modernization, but three weeks after gaining the audience necessary to file the claim and ask for help, our administrators are still mired in paperwork, not enjoying the enhanced protection for which we agreed to pay for on the spot. And our lost money? Don’t even ask.

At a time of soaring fraud at ever-higher cost to banks, one might have thought ours would have been eager to facilitate our update. After all, we lose use of stolen funds, but the bank is obliged to repay us and take the loss. Which bank is on the hook is of course a battle between banks, but the payer-facing bank is the one that needs to keep the customer. I am sure the bank at every managerial level knows this, but bank culture is often so immutably mired in rigid processes and procedures that critical jobs never get done. Why is it so hard not just to get fraud remediation …

Pursuant to the President’s executive order, the President’s Working Group on Digital Asset Markets (PWG) yesterday released a detailed report outlining specific policies the Administration will now follow or pursue. As we noted yesterday, the report is unreservedly pro‑crypto, emphasizing the benefits of these assets to the United States while also reaffirming the Administration’s strong opposition to a CBDC.  The recommendations for banking agencies are most specific when it comes to new capital standards, with the report detailing how it believes cryptoassets should be treated in new standards the agencies are to issue as quickly as possible…

The full report is available to retainer clients. To find out how you can sign up for the service, click here and here.…

In this report, we assess provisions in the House-passed CLARITY Act, the Senate discussion draft, and a new Senate Banking GOP request for information on provisions in these measures affecting financial-industry structure and banking  activities. The measures are focused on recrafting the regulatory framework governing digital assets to promote rapid innovation, as well as to redefine SEC and CFTC authority.  However, the bills also alter provisions affecting what banking organizations may do and who may own them, with the Senate Gop’s draft bill suggesting still greater restructuring might advance in that chamber’s legislation. This report focuses on these provisions, which could radically reshape which types of companies are allowed to own IDIs and what IDI parent companies may do….

The full report is available to retainer clients. To find out how you can sign up for the service, click here and here.

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Reflecting a new approach to bank regulation and the strong hand of the Treasury Secretary, federal banking agencies have proposed a sweeping rewrite of the enhanced supplementary leverage ratio (eSLR) applicable to the eight U.S. banking organizations designated as global systemically important banks (GSIBs). The proposal does not expressly exempt Treasury obligations from the eSLR denominator, but it alters the manner in which the ratio is calculated….

The full report is available to retainer clients. To find out how you can sign up for the service, click here and here.…

Last week, Chair Powell mildly told the Senate Banking Committee that he favors a federal stablecoin framework without yielding to the temptation and saying what it should look like.  This is doubtless because Mr. Powell is under such virulent attack in so many quarters that he wisely decided not to pick yet another fight with a President demanding speedy action. But, if pressed, I suspect Mr. Powell would agree with the startling conclusion in an unusually blunt report last week from the Bank for International Settlements:

Society has a choice. The monetary system can transform into a next-generation system built on tried and tested foundations of trust and technologically superior, programmable infrastructures. Or society can re-learn the historical lessons about the limitations of unsound money, with real societal costs, by taking a detour involving private digital currencies that fail the triple test of singleness, elasticity and integrity.

To be sure, one must parse more than a bit of central-bank speak to understand why the BIS is so worried.  “Singleness” is a concept rarely spoken of when it comes to money, but it’s the entire point of having a fiat currency. Except when it’s counterfeit, a dollar is treated the same no matter how it’s obtained or from whom thanks to hard lessons learned in the 19^th century about “free banking” and the chaos it spawned.

The dollar-for-dollar reserve assets backing stablecoins as in the GENIUS Act legislation is designed to ensure singleness when it comes to ready exchange of …

After extensive controversy and debate, the Senate has passed S. 1582, a bill designed to create the federal framework for dollar-denominated stablecoins subject to U.S. law advocates believe are essential to speed innovation, improve the payment system, protect the dollar’s status, and ensure U.S. leadership in cryptoasset policy.  Opponents generally do not dispute these assertions about possible stablecoin benefits, but strongly object to asymmetries between how payment-stablecoin providers would be regulated compared to banking organizations even when it comes just to offering these instruments.  Concerns are also raised about the extent to which stablecoins would compete directly with bank deposits and disintermediate the economy as well as the extent ….

The full report is available to retainer clients. To find out how you can sign up for the service, click here and here.…