19 01, 2024


2024-01-19T16:07:07-05:00January 19th, 2024|2- Daily Briefing, Uncategorized|

Bipartisan House Letter Slams Basel Proposal’s Capital Markets Impact

Following up on our analyses yesterday of Congressional pressure on the banking agencies, we here turn to a bipartisan letter from 15 Members of the House led by Capital Markets Subcommittee Ranking Member Sherman (D-CA) and Subcommittee Chair Wagner (R-MO) warning the agencies of the proposal’s adverse capital-markets impact.

Brown Leads Campaign for Strong End-Game Standards

The first unequivocal expressions of support for the capital rules from key Members we have found came today from Banking Committee Chairman Brown (D-OH) and eleven Senate Democrats.

Banking Agencies Seek NBFI Data from FBOs

The OCC, FRB, and FDIC today requested comment on a proposal to gather more granular information on call reports filed by FBOs related to loans and lease receivables.

GOP Leadership Reignites “Operation Chokepoint” Concerns

Reigniting GOP concerns about “Operation Chokepoint” political regulation, Senate Banking Ranking Member Scott (R-SC) today sent a letter to Treasury Secretary Yellen and FinCEN Director Gacki raising concerns that Treasury urged banks to surveil customers’ transaction-level data using what he calls politically-charged search terms such as “Trump” and “MAGA” as well as merchant category codes to detect activity such as legal firearm purchases.


12 07, 2023

American Banker, Wednesday, July 12, 2023

2023-07-13T09:01:26-04:00July 12th, 2023|Press Clips, Uncategorized|

Regulators are aligned on capital reforms. Congress is a different story

By  Kyle Campbell

July 12, 2023Federal regulators have lined up behind stronger capital requirements for large banks, but questions remain about how much political support they can generate in Washington — and how much they will need for their efforts to last.  Unlike the last time bank capital standards were increased after the subprime mortgage crisis, this latest push lacks clear champions in Congress…. Karen Petrou, managing partner of Federal Financial Analytics, said the full impact of the changes will have to be spelled out in the regulators’ notice of proposed rulemaking. In particular, Petrou said the focus will be on differences between the current advanced approaches model used for determining risk-based capital requirements and the new standard approach that will be implemented to align with the so-called Basel III endgame. While capital levels overall will go up as a result of this change, she said, the treatment of specific exposures under the new rules will determine which firms bear the brunt of increase. For banks that have been subjected to the advanced regulations, a switch to a new standard could actually bring a modicum of relief. Because of this, Petrou said she puts little stock in Barr’s assertion that the changes will result in an average increase in capital of 2% across the impacted banks, or that banks could raise the additional equity needed in just two years.”That’s just an average. It’ll have a big impact …

26 05, 2023

American Banker, Friday, May 26, 2023

2023-05-30T11:54:36-04:00May 26th, 2023|Press Clips, Uncategorized|

What’s next for Fed supervision? Basel’s Pillar 2 may hold the key

By Kyle Campbell

Regulatory changes are coming to the Federal Reserve in response to this spring’s three large bank failures, and while some will take years to hash out, others can be implemented much more quickly…Karen Petrou, managing partner of Federal Financial Analytics, said Pillar 2 was created to address safety and soundness concerns that are difficult to control uniformly via top-down, standardized capital or liquidity requirements. It grants supervisors broad jurisdiction over concerns not explicitly addressed in Pillar 1 capital framework — namely credit risk, market risk and operational risk. “When the Basel Committee was figuring out how to handle interest rate risk in the express capital standards, they said supervisors and regulators need to do this themselves, either by express interest rate risk capital requirements suitable for their jurisdiction or supervision,” Petrou said. “Same thing with sovereign risk concentrations and a number of other governance issues. When regulators issue core principles for bank governance, those are Pillar 2 standards.”




10 05, 2023


2023-05-10T17:20:41-04:00May 10th, 2023|2- Daily Briefing, Uncategorized|

McHenry Seeks To Use Appropriations Denial As Legislative Weapon

In his letter to Appropriations Committee leadership late yesterday afternoon, HFSC Chairman McHenry (R-NC) not only highlights GOP budgetary issues, but also requests that the panel deny funding for further SEC action on new rules governing open-end funds, equity-market execution, and climate-risk disclosures.

CFPB Declares Unilaterally Reopened Deposit Accounts To Be UDAAP 

Continuing its and the Administration’s campaign against “junk fees,” the CFPB today issued a circular establishing that its UDAP authority may apply to banks that unilaterally reopen a deposit account to process debits or deposits after a consumer has closed it.

FHFA Concedes on DTIs, May Even Address LLPA Controversy

FHFA today retreated far more completely on its controversial March decision to retain an upfront fee related to a borrower’s debt-to-income level, now saying that it will postpone this requirement indefinitely pending views to be solicited via a forthcoming RFI.

Barr Lambasts Regulators as Democrats Press Targeted Change

At the HFSC Financial Institutions Subcommittee hearing today, Chairman Barr (R-KY) was scathing in his denunciation of reports from the Fed (see Client Report REFORM221) and FDIC (see Client Report REFORM222) on the failures and of what he called a “term paper” from the FDIC outlining deposit-insurance options (see Client Report DEPOSITINSURANCE119).



8 05, 2023


2023-05-08T17:04:14-04:00May 8th, 2023|2- Daily Briefing, Uncategorized|

GOP Plans Bills to Open Supervisory, Emergency-Liquidity, Systemic Decisions

Although its witness list is preliminary, the majority staff memo on this week’s HFSC Subcommittee hearing makes it clear that the committee is gearing up for legislative action focused on supervision, not regulation.  The Financial Services Subcommittee session will consider the Federal Reserve report on SVB’s failure (see Client Report REFORM221) and that from the FDIC on Signature (see Client Report REFORM222), deferring work on the FDIC’s subsequent report on deposit-insurance reform (see Client Report DEPOSITINSURANCE119).

Fed Announces Secure Supervisory Communication Portal

In a supervisory letter, the FRB announced that it will use the One Agile Supervision Solution (OASiS) application securely to exchange information with supervised institutions, including examination-related documents.

Scott Ramps Up GOP Anti-LLPA Campaign

Following a recent House GOP bill that would block changes to the GSEs’ LLPAs, Senate Banking Ranking Member Scott (R-SC) sent a letter today to FHFA Director Thompson taking issue with the pricing frameworks.  He does so on grounds that they reduce risk-based pricing by altering the relationship of credit risk to credit score and LTV.

Fed Stands by Systemic Resilience Despite Credit Qualms

The FRB’s semiannual financial-stability report today is decidedly more pessimistic than its November predecessor (see Client Report SYSTEMIC94).  Most notably, the report departs from the Fed’s longstanding view about banking-system resilience due to all the post-GFC rules now to say that deposit outflows may lead to depressed credit despite the “decisive” actions …

4 05, 2023


2023-05-05T12:26:40-04:00May 4th, 2023|2- Daily Briefing, Uncategorized|

Brown Reiterates Calls for Expanded Clawbacks, Tougher Bank Regs

As a precursor to upcoming hearings, Chairman Brown (D-OH) laid out his legislative priorities at today’s poorly attended Senate Banking hearing.

Brown Seeks Data On Big-Bank Voice Authentication

Senate Banking Chairman Brown (D-OH) today asked selected big banks for information on voice authentication system security, highlighting AI risks. Citing consumer data security concerns, he also asks how the banks store voice data and if it is shared with third parties. Responses are due by May 18.

Chopra Demands New Resolution Policies

In remarks today, CFPB Director Chopra took strong issue with the FDIC’s decision to sell FRC to JPMorgan, arguing that the law not only mandates a least-cost resolution, but also one that addresses financial stability and other risks. He did not indicate if this transaction was approved over his objection, stating instead that he wants quick action to finalize the agency’s pending merger standards to ensure that future resolutions are feasible without similar acquisitions. This could be accomplished also via making more use of authority under law with regard to living wills to, for example, force divestitures when a bank’s condition begins to falter. The CFPB is also looking at any authority it might have to reduce big-bank risk. He also indicated that the Bureau will use its “dormant authority” to mandate open banking, not saying how this relates to its pending data-rights rule.


3 05, 2023


2023-05-03T17:02:39-04:00May 3rd, 2023|2- Daily Briefing, Uncategorized|

Powell Stands by His Actions, SVB Report

As anticipated, Chairman Powell opened his press conference today by describing the banking system as resilient and defending the Fed’s handling of recent failures.  Asked whether or not the JPM acquisition of FRC poses systemic risk, the Chair said that the Board generally opposes making very large banks still bigger, but that this was a “good outcome.”


15 04, 2022

FedFin: BIS Finds Ways to Give Nonbanks Payment-System Access, Increase CBDC’s Inclusion Impact

2023-03-02T10:53:48-05:00April 15th, 2022|Uncategorized|

As promised, we turn here to an in-depth analysis of a paper from global regulators on whether CBDC contributes to financial inclusion – one of the most vital arguments from those advocating CBDC in the U.S. and in many other nations.  The paper is not analytical, as it is based on interviews with nine central banks exploring retail CBDC, but all of those interviewed view CBDC as an effective tool to promote inclusion if designed to do so and the paper also surveys research to back up its findings.  It details numerous ways CBDC could prove inclusive, including a first-time assessment of how making certain CBDC aspects programmable and how regtech could permit nonbanks to enter the CBDC payment system without undue risk…

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

2 11, 2021


2023-06-02T13:03:50-04:00November 2nd, 2021|5- Client Report, Uncategorized|

FedFin Assessment: The Near-Term Stablecoin Regulatory Agenda

As noted yesterday, the President’s Working Group on Financial Markets (PWG) was joined by the OCC and FDIC yesterday issuing a report calling for prompt Congressional action to regulate stablecoins and, even in its absence, also for fast action by federal regulators and the FSOC.  In part because it poses the largest regulatory void, the most worrisome of the risks the report details arises from the role stablecoins may play in the payment system and resulting threats to systemic stability and competition.  Issues germane to digital-asset trading (defined to include lending and related activities) are described but largely left to regulators; SEC Chairman Gensler has made it clear (see Client Report INVESTOR19) that he intends to act and the CFTC-chair nominee has done the same.


15 09, 2021


2023-08-03T14:58:54-04:00September 15th, 2021|4- GSE Activity Report, Uncategorized|

GSEs Get a New, If Familiar, Gig

As noted yesterday, Treasury and the FHFA pulled the Trump PSPA’s plug, although importantly and widely overlooked is that this is true only when it comes to near-term asset-purchase considerations.  Still, with this action atop all the others redefining Fannie and Freddie since Sandra Thompson took over, the GSEs are being reconfigured into agents of Administration policy in concert with being still more critical agencies for housing finance.


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