FHFA Sets out to Circumscribe GSE Liquidity Risk
As we predicted just yesterday, FHFA today proposed to add a liquidity rule to the capital framework finalized in today’s Federal Register. We will shortly provide clients with an in-depth analysis of the liquidity proposal, which in very broad terms tracks the LCR (see FSM Report LIQUIDITY17) and, now, the NSFR (see FSM Report LIQUIDITY32) applicable to large banking organizations, albeit with numerous changes FHFA thinks needed for the GSEs’ unique business model.

BIS Reiterates Calls for MMF Capital, NBFI Reform
Another BIS senior official, Benoît Cœuré, today seconded Managing Director Carstens’ call for NBFI “self-insurance” – i.e., capital. Mr. Cœuré’s analysis of NBFI growth and risk tracks that in the FSB’s “holistic” review (see Client Report NBFI), but he goes on to make clear what the influential central bank of central banks wants the FSB also to do.

Climate-Risk Controls Proposed Also for Insurers, Nonbanks
Although the bill will not advance this year, Sen. Diane Feinstein (D-CA) today put forth legislation that reframes the climate-risk financial services debate ahead of concerted action next year by the Biden Administration and Congress.

OCC, FDIC Propose SAR Exemption Process
Following FDIC board approval yesterday of an NPR allowing it to exempt supervised institutions from SAR requirements, the OCC today issued its own, substantively-similar NPR.