#ABS – Federal Financial Analytics

27 11, 2023

Daily112723

Arezou Rafikian2023-11-27T16:53:58-05:00November 27th, 2023|2- Daily Briefing|

Global Regulators Unveil 2023 GSIB List Methodology

Following publication of the FSB’s updated 2023 GSIB list, the BCBS today published additional details of the assessment including denominators of the high-level indicators used to calculate bank scores, high-level indicators for each bank in the sample, cut-off scores, and thresholds used to allocate GSIBs to buckets for calculating higher loss-absorbency requirements.

Carstens Presses for Unified Ledger, CBDC

Pointing to the speed of AI adoption in sharp contrast to financial-system innovation, BIS General Manager Agustín Carstens has reiterated his call for central bank “unified ledgers.” These would serve as a “network of networks” digital infrastructure, with Mr. Carstens indicating that the result would enable instantaneous payment and settlement of any transaction, use of smart contracts and composability, and seamless integration and automation of digital asset payments.

SEC Finalizes Massive, Controversial ABS-Conflict Standards

Thirteen years after the Dodd-Frank Act demanded it (see FSM Report ABS17), the SEC today voted 4-1 to approve controversial conflict-of-interest standards for asset-backed securities (ABS). The final rule is significantly amended from the proposal, so much so that SEC Commissioner Peirce said that a new proposal was required prior to final adoption.

Daily112723.pdf…

8 08, 2023

FedFin on: Say It’s Simple

Arezou Rafikian2023-08-09T14:19:41-04:00August 8th, 2023|The Vault|

Our most recent analysis of the inter-agency capital proposal focuses on significant changes to the rules for securitization and credit-risk transfer positions. In short, super-traditional securitizations have an easier path to the secondary market, but GSEs still beat banks. Complex ABS face often-formidable obstacles, as does CRT given or taken by banks.

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

8 08, 2023

GSE-080823

Eliza Allen2023-08-08T13:46:46-04:00August 8th, 2023|4- GSE Activity Report|

Say It’s Simple

Our most recent analysis of the inter-agency capital proposal focuses on significant changes to the rules for securitization and credit-risk transfer positions. In short, super-traditional securitizations have an easier path to the secondary market, but GSEs still beat banks. Complex ABS face often-formidable obstacles, as does CRT given or taken by banks.

GSE080823.pdf…

17 03, 2023

FedFin Assessment: Future of U.S. Bank Capital, Liquidity, Structural Regulation

Eliza Allen2023-03-17T16:50:38-04:00March 17th, 2023|The Vault|

In this report, we continue our policy postmortem of SVB/SBNY and, now, so much more. Prior reports have assessed the overall political context (see Client Report RESOLVE49) and likely changes to FDIC insurance (see Client Report DEPOSITINSURANCE118), with a forthcoming Petrou op-ed in Barron’s focusing on specific ways to reform federal deposit insurance to protect only the innocent. In this report, we look at some key regulatory changes likely as the banking agencies reevaluate the regional-bank capital, liquidity, and the IDI/BHC construct. As noted in our initial assessment and thereafter, we do not expect meaningful legislative action on the Warren, et. al. bill to repeal “tailoring” requirements, but we do expect bipartisan political pressure not just for supervisory accountability (see another forthcoming report), but also regulatory revisions.

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

17 03, 2023

REFORM216

Eliza Allen2023-03-17T14:27:00-04:00March 17th, 2023|5- Client Report|

FedFin Assessment: Future of U.S. Bank Capital, Liquidity, Structural Regulation

In this report, we continue our policy postmortem of SVB/SBNY and, now, so much more. Prior reports have assessed the overall political context (see Client Report RESOLVE49) and likely changes to FDIC insurance (see Client Report DEPOSITINSURANCE118), with a forthcoming Petrou op-ed in Barron’s focusing on specific ways to reform federal deposit insurance to protect only the innocent. In this report, we look at some key regulatory changes likely as the banking agencies reevaluate the regional-bank capital, liquidity, and the IDI/BHC construct. As noted in our initial assessment and thereafter, we do not expect meaningful legislative action on the Warren, et. al. bill to repeal “tailoring” requirements, but we do expect bipartisan political pressure not just for supervisory accountability (see another forthcoming report), but also regulatory revisions. While Republicans strongly opposed tougher capital rules when Chairman Powell appeared before them just last week (see Client Report FEDERALRESERVE73), we expect them now only to make token statements of concern about any changes that do not adversely affect smaller banking organizations. In addition to looking at specific regulatory rewrites, this report assesses timing, noting in particular how the pending end-game rules could serve as the vehicle for changes the agencies hope to muster quickly in order to minimize demands for structural change to their own powers.

REFORM216.pdf…

25 01, 2023

DAILY012523

Eliza Allen2023-01-25T16:55:15-05:00January 25th, 2023|2- Daily Briefing|

SEC Re-Proposes Rule Targeting ABS Conflicts of Interest

The SEC today voted 5-0 to re-propose a controversial 2011 rule required under the Dodd-Frank Act (see FSM Report ABS17) barring the kinds of conflicts of interest all too evident before the great financial crisis related to asset-backed securitizations (ABS). Although the vote was unanimous, GOP commissioners had significant concerns with the proposal, several of which were shared by Democratic Commissioner Crenshaw. Questions on which the SEC will seek comment or where regulatory changes are possible include the extent to which internal firewalls could be considered sufficient under the law as barriers to conflicts of interest and/or if disclosures to investors are a possible alternative.

FinCEN Targets CRE Sanctions Evasion

Building on its sanctions evasion alert last year, FinCEN today issued an alert detailing red flags that may signal potential sanctions evasion via U.S. CRE investment. Citing the lack of visibility in CRE markets and its large proportion of foreign investors, FinCEN again warns that Russian oligarchs may use shell companies, third-parties, or other proxies to circumvent money laundering and beneficial ownership controls. It also lists the use of an offshore private investment vehicle, ownership of CRE through multiple jurisdictions without a clear business purpose, and failure to disclose beneficial ownership information, among others, as potential red flags that may warrant a suspicious activity report.

Daily012523.pdf…

17 09, 2021

PUSH-OUT14

Arezou Rafikian2023-08-03T14:42:33-04:00September 17th, 2021|5- Client Report|

Is the SEC Planning a Push-Out Pull Back?
As we noted, SEC Chairman Gensler’s written Senate Banking testimony included a short – but very significant – statement prioritizing Commission review of key fixed-income market sectors. This did not come up at the hearing (see Client Report INVESTOR18), which focused on hot partisan issues such as climate risk and cryptoassets. However, the extent to which the SEC renews efforts to govern fixed-income activities it now thinks too far outside its reach has significant strategic implications, most immediately for large banks that might find key underwriting and capital-markets activities under additional standards and greater enforcement risk. In this report, we assess what Mr. Gensler contemplates for the corporate, muni, and asset-backed securities (ABS) markets, revisiting the “push-out” battles the Commission largely lost over a decade ago to evaluate whether the Fed could or would defend banks again from demands that key activities register with the SEC.

PUSH-OUT14.pdf…

17 09, 2021

Daily091721

Arezou Rafikian2023-08-03T14:48:43-04:00September 17th, 2021|2- Daily Briefing|

Path Paved for Interagency CRA Rule
The Federal Register today includes the OCC’s proposal to replace its controversial Community Reinvestment Act (CRA) rule (see Client Report CRA28) with the 1995 interagency CRA standard until pending inter-agency work on a new regime is complete.

Is the SEC Planning a Push-Out Pull Back?
As we noted, SEC Chairman Gensler’s written Senate Banking testimony included a short – but very significant – statement prioritizing Commission review of key fixed-income market sectors.

Daily091721.pdf…

26 10, 2001