Bowman Presses New Community-Bank Regulatory Construct
FRB Gov. Bowman today recommended that community banks be differentiated from larger ones based not on asset size as now, but rather by their business model. Key criteria, she says, should be a simple and local business model focused on relationship banking. Community-banking standards should reflect this business model in contrast to other banking strategies and be “fair,” i.e., focused on how challenging and costly it is for community banks to comply with rules that may not meaningfully apply to them.
IMF Targets Margining Risks
Reinforcing the work of global regulators addressing margining liquidity-risk fears, the IMF released a staff study finding that as much as a third of EU investment funds that are large derivatives end-users could not meet their variation-margin requirements under stress.
HFSC Set to Demand Much from Treasury, FinCEN
The HFSC majority-staff memo on Wednesday’s FinCEN hearing makes it clear that Under-Secretary Nelson and FinCEN director Gacki will face hard questioning on anti-money laundering and CFT topics. These will surely include critical GOP scrutiny of Treasury’s request for additional authority for greater monitoring and enforcement authority over digital assets even though the Digital Asset Subcommittee plans a hearing specifically on this topic later this week.
FFIEC Redesigns Valuation-Bias Exam Protocol
Arguing that deficient real estate valuations due to bias or discrimination cause consumer harm and pose safety-and-soundness risks, the FFIEC today issued a statement of examination principles regarding valuation discrimination and bias in residential lending. While the principles primarily concern valuation and appraisal, they also emphasize the assessment of residential real estate lending-risk profile as key.