Global Pressure Grows on Capital Distributions, Bonuses
Although the FRB and other federal agencies have so far permitted dividend payments and discretionary bonuses for most banking organizations, the EU regulators today increased pressure against bank capital distributions, with the ECB going beyond its previous insistence that banks cease dividends and share buy-backs until October with a new and stronger statement against them until 2021.
Emergency Fed Facilities Extended to Year End
Reflecting recent downturns in the midst of the pandemic, the Fed today extended through the end of the year its emergency lending facilities (see Client Report COVID10). The extension applies to the Fed’s Primary Dealer Credit Facility, Money Market Mutual Fund Liquidity Facility, Primary Market Corporate Credit Facility, Secondary Market Corporate Credit Facility, Term Asset-Backed Securities Loan Facility, Paycheck Protection Program Liquidity Facility, and Main Street Lending Program.
Durbin Releases Debit-Card Demand
Senate Minority Whip Durbin (D-IL) and Rep. Peter Welch (D-VT) late yesterday released the debit-card posting letter covered earlier in the day by the Wall Street Journal. The letter does not take issue with bank debit-card interchange fees in response to the Dodd-Frank provisions generally known as the Durbin Amendment (see FSM Report INTERCHANGE7), complaining instead about alleged instances in which banks do not, as also required, allow merchants to select at least two clearing networks.
OCC Launches Anti-ESG Lending Investigation
As anticipated, Acting Comptroller Brooks has told Sen. Dan Sullivan (R-AK) that he shares the senator’s view that blanket decisions by banks to cease fossil-fuel lending curtails essential economic activity and violates federal law.
HFSC Preps HEROES Act Provisions for COVID-Relief Negotiations
HFSC late yesterday highlighted several bills under consideration that may be raised at its hearing with CFPB Director Kraninger on Thursday. Although noting bills in committee memoranda does not signal plans for action on them, it does fulfill requirements under committee rules that then allows the legislation to advance at a later date.
FedFin Analysis: COVID Package Working-Capital Loan Program
Among the provisions key to clients pending in the controversial COVID package is Senate GOP language (sec. 112) to create a “Recovery Sector Loan” program. Established within the broad ambit of the SBA’s 7(a) authority, these working-capital loans could go to small businesses (generally fewer than 250 employees) with significant operations in lower-income areas that experienced revenue drops of fifty percent or more due to the pandemic.
GOP Senators Question FRB’s COVID Role
At today’s Senate Homeland Security hearing on oversight of CARES Act financial relief, the Fed’s role came under increasing criticism. Chairman Johnson (R-WI) took issue with growing FRB purchases of Treasury debt, warning that rising reserve levels come at the expense of bank lending to the private sector.
Biden: Expand CRA, Press FedNow, Impose Fed Racial-Equality Reports
Advancing many provisions of the Biden-Sanders unity task force, the Biden Campaign today unveiled its plan to combat racial economic inequality. Going beyond that work but echoing other campaign recommendations, the final plan includes a pledge to strengthen and expand the Community Reinvestment Act to cover nonbank financial institutions, including mortgage, insurance, and fintech companies.
HFSC Leadership Demands FHFA Capital-Rule Delay
Reflecting views recently expressed in letters to FHFA from both industry and consumer advocates, HFSC Chairwoman Waters (D-CA), Housing Subcommittee Chairman Clay (D-MO), and Rep. Heck (D-WA) today sent a letter urging FHFA to “pause” its capital rule for Fannie Mae and Freddie Mac and provide additional information on the implications for persons of color.
CFPB Considers AI, Disparate Impact, Financial Inclusion in ECOA Review
In lieu of a fall symposium, the CFPB today issued an RFI seeking comment on ways to prevent credit discrimination, encourage responsible innovation, promote credit access, and address regulatory uncertainty under its ECOA regulations.