#Beatty – Federal Financial Analytics

17 04, 2024

DAILY041724

Eliza Allen2024-04-17T17:36:07-04:00April 17th, 2024|2- Daily Briefing|

Global Regulators Tackle NBFI Margining, Collateral Transformation

As it has long promised, the FSB today issued a consultation on standards designed to buttress derivatives, commodity, and securities-financing markets under stress through more stringent margining and collateral requirements.

Basel Head Says Go Slow re AI Risk, Supervisory Models

Basel’s Secretary General, Pablo Hernández de Cos, today focused on AI’s risk-reward profile in the banking sector, concluding that it raises a series of profound questions global regulators must work cooperatively to address.

Lummis, Gillibrand Begin Senate Stablecoin Debate

As long anticipated, Sens. Lummis (R-WY) and Gillibrand (D-NY) today introduced a significantly revised version of their 2022 Bill (see FSM Report CRYPTO28) laying out U.S. stablecoin standards.

FIO Subpoena Power Faces Rollback

At HFSC’s mark-up today, the committee began with Rep. Fitzgerald’s (R-WI) Insurance Data Protection Act, H.R. 5335, which would repeal the Federal Insurance Office’s authority to subpoena insurance companies for data collection.

HFSC Likely to Pass RegTech Bill

At HFSC’s extended mark-up today, the committee turned to H.R. 7437, a bipartisan bill that would require federal banking regulators to regularly review and report to Congress on their use of technology to ensure they’re equipped to address threats to the financial system.

HFSC Set to Pass AOCI Recognition, Systemic-Risk Designation Study Measures

Continuing our coverage of today’s mark-up, HFSC was generally supportive of the two bills on the agenda from Democrats, H.R. 4206 from Rep. Sherman (D-CA) requiring large banks with available for sale securities to mark to market …

31 01, 2024

DAILY013124

Eliza Allen2024-01-31T16:57:15-05:00January 31st, 2024|2- Daily Briefing|

Senate Banking Turns to AI’s Impact on Housing Finance

Today’s lightly-attended Senate Banking Subcommittee hearing on AI and Housing focused principally on AI governance issues including accountability, model explainability, transparency, and bias. Sen. Warnock (D-GA) called for action on S. 3692, legislation to prohibit use of algorithmic systems to coordinate – and it is believed thus inflate – rental prices or reduce supply. Although Subcommittee Chairwoman Smith (D-MN) lauded AI for its potential to boost the housing supply, she and other Democrats raised serious concerns that AI reinforces biases in lending decisions.

Democrats Remain Dubious About the Capital Proposal

Today’s Financial Institutions Subcommittee hearing on the capital rules made it still more clear that more than a few Democrats share at least some GOP concerns. Chair Barr (R-KY) reiterated points he has frequently made about the poor analytics behind the proposal; Full Committee Ranking Member Waters (D-CA) and Rep. Green (D-TX) were unequivocal in their support. Other Democrats raised concerns many had previously expressed in comment letters, with Rep. Sherman (D-CA) pointing to problems with the proposal’s impact on capital markets and its lack of credit for private mortgage insurance and Rep. Beatty (D-OH) highlighting concerns with small business credit availability.

Daily013124.pdf…

30 01, 2024

DAILY013024

Eliza Allen2024-01-30T17:13:26-05:00January 30th, 2024|2- Daily Briefing|

FinCEN Estimates High Bank-BOI Reporting Costs

FinCEN via the Federal Register today requested comment on the estimated total annual reporting and recordkeeping burden for new Access Rule beneficial ownership information (BOI) reporting requirements (see FSM Report AML135).

Brown Puts More Pressure on Powell

Following Sen. Warren’s rate-cut demands and affordable housing concerns yesterday, Senate Banking Committee Chairman Brown (D-OH) today sent a letter to FRB Chair Powell also calling for less restrictive monetary policy on grounds that elevated rates negatively impact home affordability, limit the housing supply, restrict small business growth, and dampen wages.

HFSC Targets China Sanctions, Outbound Investments

Today’s HFSC National Security Subcommittee Hearing focused on China sanctions and restrictions on outbound investments.

GOP Demands Retraction of CFPB Tech-Payment Proposal

Reiterating their opposition to the Bureau’s pending digital-payment rule (see FSM Report PAYMENT27), HFSC Chairman McHenry (R-NC) alongside Digital Assets Subcommittee Chairman Hill (R-AR) and Rep. Flood (R-NE) sent a letter today urging the CFPB to reopen and extend the comment period and reconsider finalizing the rule as proposed.

Daily013024.pdf…

18 01, 2024

DAILY011824

Eliza Allen2024-01-18T16:58:16-05:00January 18th, 2024|2- Daily Briefing|

Basel Head Backs U.S. End-Game

In an FT interview today, the Basel Committee’s chair, Pablo Hernández de Cos, unsurprisingly endorsed the U.S. end-game proposal, indirectly but firmly rebutting assertions that it is at variance with global norms.

The Shape of Liquidity Rules to Come

Previewing the construct of what may soon be the anticipated inter-agency proposal addressing liquidity-risk lessons-learned, Acting Comptroller Hsu today argued that the liquidity coverage ratio’s treatment of retail depositors (see FSM Report LIQUIDITY17) does not address likely depositor herding as they run for the exit.

Rounds, Sinema Press for SIFI-Designation Rollback

Senate Banking Committee Member Rounds (R-SD) alongside Sen. Sinema (I-AZ) introduced S.3601, legislation to codify 2019 standards (see FSM report SIFI35) adding significantly more obstacles to systemic designation compared to FSOC’s new approach (see FSM report SIFI36).

Steele’s Good-Bye Presses for More Tough Standards

In his last speech in office, Assistant Secretary for Financial Institutions Graham Steele today called for reassessment of the treatment of unrealized gains or losses not just under the capital rules, but also in the liquidity standards (where they are in fact to some degree now captured).

House Democrats Damn Capital Proposal With Faint Praise

In this report, we begin our assessment of Congressional end-game comment letters.

Senate Letters Slam Capital Proposal’s Tax-Equity Risk Weight Changes

Here, we turn to several Senate letters on the end-game proposal.

Daily011824.pdf…

12 12, 2023

DAILY121223

Eliza Allen2023-12-12T17:09:22-05:00December 12th, 2023|2- Daily Briefing|

IMF Calls for Enhanced Climate-Risk Analyses, Stress-Testing

Calling for implementation of the Basel Committee’s climate-related financial risk principles (see FSM Report CLIMATE14), the IMF’s Monetary and Capital Markets Department Director, Tobias Adrian, today pressed central banks to enhance their climate risk analyses and adapt stress-testing frameworks to better reflect climate-financial risk transmission and amplification channels.

Agencies Come Under Still More Workplace-Practice Scrutiny, Political Pressure

As we noted last week, House Republicans are now using ongoing assertions of FDIC workplace dysfunction to attack the OCC.

HFSC Subcomm Considers Sanctions Enforcement

Today’s HFSC National Security Subcommittee hearing focused primarily on critiques of US energy sanctions enforcement related to Russia, Iran, and Venezuela.

House Select Committee Calls on Fed to Stress Test China Risk

The House Select Committee on the Strategic Competition between the United States and the Chinese Communist Party today released a bipartisan report urging Congress to direct the Fed to stress-test U.S. banks for their ability to withstand Chinese market risk, produce classified reports on these assessments, and consider the financial market impact of potential sanctions on Chinese financial firms.

Basel Proposes Modest Fix to IRR Standards, Post-SVB Revisions Await

As anticipated, the Basel Committee today released a consultation revising global interest-rate risk (IRR), standards updating current banking-book standards (see FSM Report IRR7) to toughen the IRR-shock calibration.

McKernan Extends Capital Olive Branch

FDIC Director McKernan today offered an end-game compromise that might actually lead to final rules in 2024 that defer some of the …

4 01, 2023

DAILY0104123

Eliza Allen2023-01-04T16:42:13-05:00January 4th, 2023|2- Daily Briefing|

Beatty Continues Dem’s Fed Diversity Attacks

Signaling a new line of Democratic attack against the FRB on diversity, Rep. Joyce Beatty (D-OH) today introduced H.R. 9705, requiring the Fed to establish goals for the use of diverse asset managers when using its 13(3) asset-purchase powers. Rep. Beatty also introduced H.R. 9706, which requires the Fed to interview at least one gender- and one racially-diverse candidate for all Reserve Bank president positions.

Daily010423.pdf…

24 03, 2022

DAILY032422

Eliza Allen2023-04-03T12:54:18-04:00March 24th, 2022|2- Daily Briefing|

Waller Adds Residential Real Estate to Monetary Policy Criteria

In remarks today, FRB Gov. Waller addressed the impact of what he calls the “red-hot” housing market on monetary and fiscal policy. Noting that nonbank servicers were able to survive the 2020 crisis due to the refi boom’s liquidity benefit and a Ginnie facility, Mr. Waller reiterates ongoing policy concern about nonbank-servicer resilience without detailing any preferred policy actions.

HFSC Expands Diversity Data Demands to Large Insurers

Chairwoman Waters and Diversity Subcommittee Chairwoman Beatty expanded the committee’s diversity efforts today to include insurers via a letter sent to the largest insurance companies.

IOSCO Decries DeFi, US Regulatory Intervention Likely

Going beyond the general DeFi concerns outlined in a February FSB report, IOSCO today released a detailed report arguing that most DeFi products are directly akin to regulated investment, lending, and clearing products, posing not only the risks otherwise captured within the prudential perimeter, but also numerous additional risks presented by the manner in which DeFi generally operates.

HFSC Wants Names re Russian Business Exposure, Sanctions Compliance

HFSC Chairwoman Waters sent a letter today to financial and business trade associations requesting detailed information on each sector’s efforts to divest from Russia. The letter applauds current efforts, but states that HFSC must nonetheless seek additional details about exit strategies and sanctions compliance, along with the names of companies continuing to do business within the Russian Federation or with Russian-based firms.

Daily032422.pdf…

9 12, 2021

Daily120921

Arezou Rafikian2023-05-23T12:50:03-04:00December 9th, 2021|2- Daily Briefing|

IMF Presses for Fast, Hard Global Crypto Standards
The IMF today reiterated its commitment to work with global regulators to craft crypto regulation due to inherent risks in the sector exacerbated by disorderly capital flows resulting from regulatory arbitrage.

FRB-NY Tackles Maternal-Health Inequity
Although Reserve Banks are facing harsh criticism from Senate Banking Ranking Member Toomey (R-PA) about “woke” actions he believes beyond the Fed’s mission, the New York Federal Reserve today released a study of maternal health that – despite public concern in this area – may spark renewed criticism with problematic implications for Vice-Chair nominee Brainard.

LIBOR Fix Powers Through House
By an overwhelming 415-9 vote, the House late yesterday passed H.R. 4616, the Sherman (D-CA) bill providing legal certainty for legacy LIBOR contracts (see FSM Report LIBOR6). The bill finally reached the House floor following a revision to the reported bill ensuring that rate resets are not taxable events.

BIS: Bond Funds Need Radical Regulatory Rewrite
Today, we follow our analysis yesterday of the BIS paper on DeFi regulatory policy with an assessment of another high-impact analysis of open-end funds.

FDIC Does, Doesn’t, May Advance New Bank M&A Policy
In a most unusual move, the FDIC today announced it did not release an RFI on bank merger policy hours after two directors – Messrs. Gruenberg and Chopra – said it had.

HFSC Ducks Tough Asset-Management Diversity Demands
Although the majority staff report released ahead of today’s HFSC Diversity and Inclusion Subcommittee hearing highlighted several legislative proposals, Members …

30 09, 2021

REFORM209

Arezou Rafikian2023-07-31T15:42:27-04:00September 30th, 2021|5- Client Report|

HFSC Dems Mum on Powell Renomination

In very sharp contrast to the Senate Banking session on Tuesday with Chairman Powell and Secretary Yellen (see Client Report REFORM208), today’s HFSC session was largely devoted to partisan wrangling over monetary policy, the debt ceiling, and the Biden Administration’s overall fiscal policy. Likely complicating Democratic support for Mr. Powell, Ranking Member McHenry (R-NC) strongly endorsed renomination. Significantly, no Democrat spoke on this issue nor did any raise the trading scandal at the Reserve Banks or the Fed’s regulation of very large banks in this or, indeed, any other context.

REFORM209.pdf

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