Search results for: index.php

As promised late last year when it addressed nonbank financial intermediation (NBFI), the Financial Stability Board is seeking comment on ways to reduce the risk that money-market funds (MMFs) succumb to runs under stress or, as occurred in both 2008 and 2020, require taxpayer backstops. Rather than laying out a specific reform proposal, the consultation describes a series of options largely aimed at non-public MMFs (i.e., prime funds). Echoing some in the U.S., the consultation mentions in passing barring these funds, but options on which comment is sought would instead change the business model. Some of these options are so structurally significant that they might shutter some prime funds. The overall construct of MMF sponsors could also change if, for [...]

The Senate has passed by a wide margin legislation taking an array of actions to counter the threat now seen to be posed by the People's Republic of China.  Among these are optional and mandatory sanctions against a far wider range of targets linked directly or indirectly to China engaging in or benefiting from "malign" activities.  Far broader use of sanctions would create additional legal, reputational, and even charter risk for banks and other financial institutions doing business in the U.S. or with U.S. financial institutions.  New law makes it possible to, when such sanctions are invoked, impose them extraterritorially by virtue of any correspondent relationship with a U.S. bank by the parent company even if that correspondent relationship is [...]

Advancing some of the most controversial ideas in a 2019 discussion paper,  the Basel Committee has now formally proposed capital, liquidity, risk-management, and supervisory standards it believes nations should apply to bank cryptoasset exposures.  Global regulators have adopted a cautious approach that, despite high-cost proposals for higher-risk cryptoassets, may create a framework in which banks can profitably engage in a wide array of cryptoasset activities and thus expand cryptoassets with the stability and liquidity essential for many of the uses now proposed for them. The full report is available to retainer clients. To find out how you can sign up for the service, click here.

President Biden has issued an executive order (EO) setting in motion a series of administrative actions designed to reduce both climate risk in the financial sector and in any way financial companies make it worse.  Mandatory action by HUD and other agencies is also required to redesign federal mortgage backstops.  These could have significant impact, but the White House otherwise has limited authority over U.S. financial regulation because all of the key agencies responsible for it are independent and thus not subject to direct mandates via an EO. The full report is available to retainer clients. To find out how you can sign up for the service, click here.

Although the banking agencies today tried to make as little news as possible in their appearance before the House Financial Services Committee, Members made it hard for them to leave the witness table without providing important insight into regulatory policy as a new agency line-up takes shape. In this report, we assess key issues, spearheaded by Chairwoman Waters' (D-CA) opening statement announcing that House action revoking the OCC's true-lender rule will, as we forecast, proceed as quickly as possible. The chairwoman was also harshly critical of efforts she believes under way at the Fed to weaken bank-merger review, citing Gov. Brainard's objection to the PNC/BBVA merger as a problematic case in point. The full report is available to retainer clients. [...]

Leaving its interchange-fee restrictions intact – at least for now – the Federal Reserve is proposing to expand on its existing requirement that all debit-card transactions must be enabled for processing on at least two unaffiliated payment-card networks for card-not-present (e.g., online) transactions. The NPR does not address the still more contentious question of the ceilings on debit-card interchange fees, but it does indicate that the FRB may turn to these. The full report is available to retainer clients. To find out how you can sign up for the service, click here.

In this report, we assess the details of the Fed's most recent financial-stability report, focusing on policy and regulatory ramifications with near-term strategic impact.  As always, the Fed's language is muted lest any clear expressions of alarm spook financial markets.  This report nonetheless signals a change in which the U.S. central bank publicly recognizes that strong banks do not necessarily ensure a strong financial system.  In her statement accompanying the report, Gov. Brainard emphasized the benefits of counter-cyclical capital buffers in response, but we believe the Board and FSOC will instead pursue NBFI reform through an array of channels rather than a bank-focused macroprudential strategy. The full report is available to retainer clients. To find out how you can sign [...]

When the Fed announced its new instant payment system in 2020, it made it clear that access would be limited to traditional insured depository institutions (IDIs) and ever since has shown no public inclination to open the system.  Now, however, it is seeking views on precisely that, a move surely reflecting the OCC's decision to authorize a special-purpose fintech charter and new cryptocurrency national trust banks along with plans for a national payment charter and demands from tech-platform companies for payment system access either directly or via industrial loan company (ILC) and similar charters. The full report is available to retainer clients. To find out how you can sign up for the service, click here.

Advancing their efforts to ensure “responsible innovation,” federal agencies have taken an initial, cautious step into assessing the prudential, compliance, risk-management, and fairness implications of artificial intelligence (AI) and machine learning (ML).  Posing only very general questions on matters most clearly within their purview, the agencies appear open and perhaps in some ways even eager to govern AI/ML use, but most uncertain about how to do so. The full report is available to retainer clients. To find out how you can sign up for the service, click here.

Reflecting views of the Biden Administration and those of its nominee to chair the SEC, Acting Chair Allison Herren Lee is requesting public views ahead of more formal proposals revising the climate-risk disclosures to be required of publicly registered companies.  The SEC now has only posed a series of questions, but the questions and an accompanying speech make it clear that the Commission is moving as quickly as possible to craft a climate-risk disclosure regime that relies to the greatest extent possible on comparable, quantifiable data that may vary by industry sector, registrant size, and other factors. The full report is available to retainer clients. To find out how you can sign up for the service, click here.