7 11, 2022


2022-11-07T17:22:53-05:00November 7th, 2022|2- Daily Briefing|

Toomey Calls for More Fed Transparency

Sen. Toomey (R-PA) continued Republican demands for still more Fed transparency, sharply criticizing the Fed’s Friday proposal to provide some transparency into which institutions are granted master accounts.

Sweeping CFPB Fee Restrictions Now Effective

The Federal Register today includes the CFPB’s circular on Unanticipated Overdraft Fee Assessment Practices and a bulletin now effective on Unfair Returned Deposited Item Fee Assessment Practices.

CFPB Advances Bigtech Market Power Campaign

Continuing its campaign against bigtech’s market power, the Federal Register today includes the CFPB’s notice and request for comment on what fees bigtech payment operators levy on users for violations of acceptable use policies and whether their policies include provisions to restrict user platform access.

Fed Staff Paper Tries To Gauge Social Welfare Impact Of Liquidity, Capital Regs

A new Fed staff study attempts to lay out the social costs and benefits of large-bank liquidity and capital regulation.

Warren Continues Campaign Against Wells Fargo, Zelle

Sen. Warren (D-MA) today continued her campaign against Zelle by sending letters to its parent company and Wells Fargo, taking particular aim at what she deems the latter’s failure to provide adequate claims and reimbursement data and labelling responses to previous letters “insulting.”

Warren Denounces Fed “Culture of Corruption”

Sen. Warren (D-MA) today also continued her campaign against Chairman Powell, sending him a letter alleging “another set of egregious and embarrassing ethics breaches.”


31 10, 2022


2022-10-31T16:47:14-04:00October 31st, 2022|2- Daily Briefing|

CFPB Tackles Payment-System User Fines

Following Director Chopra’s recent focus on Paypal’s withdrawn content penalty, the CFPB today announced it will reopen the public comment period on its bigtech payments order, widening its focus beyond Paypal to all bigtech payment-service providers.  Notably, Zelle is not included in this round.  The order had required Facebook, Google, Apple, Amazon, Square, and Paypal to turn over information on their payments products, business plans, and practices.  The Bureau now seeks further information on their acceptable use policies and how and under what circumstances they levy fines.


25 10, 2022


2022-10-25T17:08:46-04:00October 25th, 2022|2- Daily Briefing|

Setting Stage for US Action, UK Regulators Target Bigtech Consumer-Finance Market Power

Focusing principally on competition, the UK’s Financial Conduct Authority (FCA) today released a discussion paper investigating bigtech’s entry into payments, deposit, consumer-credit, and insurance.

With Yellen Backing, SEC Central-Clearing NPR Advances

The Federal Register today includes the SEC’s proposal requiring that market clearinghouses submit certain secondary-market transactions for clearing along with the small percentage now already centrally-cleared.

FDIC Reports Significant Financial Inclusion Progress

Showing significant improvements in financial inclusion, the FDIC today released its biennial under- and unbanked household survey.

CFPB to Require Almost-Open Banking

At long last and as recently promised, the CFPB later this week will start a rulemaking process that would ultimately require financial institutions to share personal data with a consumer upon his or her request.

Democrats Get Ready To Blame The Fed

Continuing progressive critiques of the FOMC’s anti-inflation fight, Senate Banking Chairman Brown (D-OH) has written to FRB Chairman Powell sharply protesting current Fed policy.


9 09, 2022


2022-10-24T12:01:09-04:00September 9th, 2022|2- Daily Briefing|

White House Reaffirms Anti-Algo Stand

The White House late yesterday announced core bigtech policy principles.  These are extremely general and do not go as far in areas such as antitrust that progressives sought.

U.S. Announces Start of Work on Basel “End Game”

Ahead of what might otherwise have been a fractious Basel Committee meeting, the Fed, OCC, and FDIC today reaffirmed the U.S. commitment to finalize what FRB Vice Chair Barr Wednesday called the Basel III “end-game.”

Basel Chair Announces Preliminary AI Priorities

Pablo Hernández de Cos, Chair of the Basel Committee, announced today the work that regulators plan on AI and algorithmic decision-making.

OFR Details Climate Data-Sharing Efforts

Acting OFR Director James Martin today addressed the need for integrated climate-related financial data and challenges to forecasting and modeling climate risk.

Liang Stresses Climate-Resiliency

Treasury Under Secretary Liang today reiterated an array of agency and Administration climate-risk priorities, emphasizing ongoing Treasury and FSOC climate resiliency efforts and underscoring Treasury’s commitment to a net-zero economy.

Treasury To Issue Price-Cap Sanction Guidance

Deputy Treasury Secretary Wally Adeyemo today made it clear that enforcement of the anti-Russia oil-price caps will depend not only on restricting shipping insurance, but also doing so for financial and payment services.


6 09, 2022


2022-12-20T16:15:03-05:00September 6th, 2022|2- Daily Briefing|

BIS Staff: Banks Have Power Over Bigtech, But We’re Not So Sure

A new paper from BIS staff argues that bigtech firms have so much power over small-and-medium sized enterprises (SMEs) using their networks that they must “self-limit” this to continue to grow, leading them to share data with banks that fund loans via cheap deposits.  We find the paper puzzling given its description of the captive ecosystem in which bigtechs can readily exploit data unavailable to banks to set credit terms and also enforce loan agreements by virtue of their power to exclude an SME from a vital source of customers.

CFPB’s Sweeping Data-Protection Standards Now Effective

Today’s Federal Register includes the CFPB’s circular on insufficient data protections and security; the circular is now effective.  As noted (see FSM Report INFOSEC28), the circular states that inadequate consumer-data safeguards may constitute a breach of unfair, deceptive, or abusive acts or practices (UDAAP) protection standards subject to Bureau enforcement.  It notably expands the Bureau’s legal interpretations of UDAAP, its authority over nonbanks, and its broad reading of “service providers.”

OCC Prioritizes Community Banks

The OCC today released its five-year strategic plan.  It focuses on staffing, service, and administrative issues, but also briefly notes policy priorities. These include advancing financial inclusion and literacy, deepening collaboration with other regulators, reinforcing and minimizing the regulatory burden on community banks, and developing guidance to facilitate community banks’ transition to digital banking.


25 08, 2022


2023-01-04T10:34:26-05:00August 25th, 2022|2- Daily Briefing|

KC-Fed: Data Aggregation Requires Rules Before Mass Adoption

The Kansas City Fed yesterday released a briefing on data aggregators concluding that they can improve the efficiency and quality of consumer financial services if proper regulation protecting data security and privacy is enacted.

SEC Prioritizes Enforcement, Disclosure, Working-Families and Systemic Risk

The SEC’s new strategic plan through 2026 speaks to Chairman Gensler’s focus on fairness, economic opportunity, and enforcement.  Specifics are sparse, but the plan puts the agency’s enforcement policy in the context of protecting “working families” especially when it comes to enforcement in areas such as cryptoassets.

FSI Report: Bigtech, Third Party Vendors Pose Operational Risk

The BIS Financial Stability Institute today released a study examining operational resiliency through a macroprudential lens, offering recommendations on how to address systemic risks presented by critical third-party service providers and bigtech.


17 08, 2022

FedFin on: Data-Safeguard Legal/Reputational Risk

2023-01-04T11:55:58-05:00August 17th, 2022|The Vault|

Using another of its tools to set policy without prior public comment, the CFPB has released a circular stating that inadequate consumer-data safeguards may constitute a breach of the unfair, deceptive, or abusive acts or practices (UDAAP) protection standards subject to Bureau enforcement action.   This is the case even if no consumers have been harmed, if only one consumer is adversely affected, …

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

17 08, 2022


2023-01-04T11:55:22-05:00August 17th, 2022|1- Financial Services Management|

Data-Safeguard Legal/Reputational Risk

Using another of its tools to set policy without prior public comment, the CFPB has released a circular stating that inadequate consumer-data safeguards may constitute a breach of the unfair, deceptive, or abusive acts or practices (UDAAP) protection standards subject to Bureau enforcement action.   This is the case even if no consumers have been harmed, if only one consumer is adversely affected, or if a small amount of actual or potential damage puts many consumers at risk.  The Bureau also prescribes data-safeguard standards firms and service providers must ensure to comply with CFPB expectations.


15 08, 2022


2023-01-04T12:13:20-05:00August 15th, 2022|1- Financial Services Management|

Digital Marketing

Continuing its practice of setting sweeping policy by administrative action without prior notice or comment, the CFPB has issued an interpretive rule sharply curtailing the extent to which digital advertising and market strategies are exempted from the legal and compliance obligations associated with most parties directly providing consumer financial products or services and those acting as servicers to these entities.  The most immediate legal and reputational risk posed by this new policy is to technology-platform companies that use behavioral data to determine the products or services offered to consumers or those to whom consumers are directed.


15 08, 2022

Karen Petrou: The Sobering Lesson of Subprime Mortgages for Digital-Asset Regulation

2023-01-04T12:13:43-05:00August 15th, 2022|The Vault|

Last week, the American Banker had a synopsis of views filed on Treasury’s request for comments on digital-finance regulation.  Its quote from the ABA’s comment letter is striking, indicating that this letter pointed to the increasingly-absurd reality of no rules for nonbanks and no digital assets for banks given all their rules.  Progressive advocates pushed back, arguing that it’s right to keep banks quashed because of all the systemic hazards they pose.  To my thinking, both sides are right, with recent history not just showing why, but also how urgent it is for regulators finally to act on both overarching crypto rules and those governing bank exposures in this volatile sector.

The recent history I have in mind is the chilling precedent of subprime mortgages starting in around 2003.  I well remember a meeting at the OCC in which my late husband detailed both the borrower and market risks of new mortgage products such as those with “silent seconds” extended to borrowers with no demonstrable ability to repay even a first line from resources other than the ever-appreciating house prices investors somehow believed were a force of nature that always blew balmy winds their way.

The OCC official with whom we spoke was even more worried than we about emerging market trends, but she was over-ruled from on high.  This was first because national banks weren’t sounding the alarm, second because no other banking agency seemed worried, and finally because anything that adversely affected national banks might have undermined …

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