#bigtech – Page 3 – Federal Financial Analytics

15 08, 2022

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

Arezou Rafikian2023-01-04T12:13:43-05:00August 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 …

10 08, 2022

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Eliza Allen2023-01-04T12:52:02-05:00August 10th, 2022|2- Daily Briefing|

Penalizes Fintech for Taking Consumer Funds Instead of Encouraging Savings

Striking at the heart of the purported financial-inclusion benefits of fintech, the CFPB today took action against Hello Digit under both its UDAAP powers (see FSM Report CONSUMER39) and its more recent stand on AI (see FSM Report FAIRLEND11).

Sen Dems Demand More re Rental Housing, Short-Term Loans in CRA Standards

Yesterday’s HFSC CRA comment letter has been followed by one from Chairman Brown (D-OH) and eighteen Democrats.

Senate Banking GOP Ramps Up Fed Demands

Following Sen. Toomey’s (R-PA) diatribe last week, Senate Banking Republicans have followed through with direct demands for greater Fed transparency and recognition of the central bank’s duties to the Congress.

Waters Demands Bureau Halt Equifax Scoring Until Erroneous-Data Problems Revealed, Remediated

HFSC Chairwoman Waters today sent a letter to the CFPB calling on the Bureau to use all of its powers to ensure remediation for consumers harmed by Equifax’s alleged credit-reporting error, as well as institute greater protections for consumers in the “broken” credit-reporting system.

CFPB Sweeps Up Bigtech in Scope of Consumer-Protection Standards

Building on its inquiry into bigtech and a controversial interpretive rule expanding its power to nonbanks (see FSM Report CONSUMER41), the CFPB today issued an expansive interpretive rule subjecting digital companies using behavioral or similar data to market consumer-finance products to the full thrust of federal consumer law.

Progresses Press Hsu on Crypto Authorizations

Sens. Warren (D-MA), Durbin (D-IL), Whitehouse (D-RI), and Sanders (D-VT) …

4 08, 2022

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Eliza Allen2023-01-04T13:25:43-05:00August 4th, 2022|2- Daily Briefing|

Global Regulators Tackle CCP Operational, Liquidity Risk

Although no new standards are planned, IOSCO and the CPMI nonetheless today released a request for views on how CCPs can best manage operational and other risks unrelated to default events.

Senate Climate Change Session Yields Familiar Talk, Little Action

Today’s Senate Banking hearing on the economic costs of climate change yielded familiar climate, energy, and financial-stability arguments along party lines.

Toomey Demands Fed Transparency, Presses Reform

In a Bloomberg interview today, Senate Banking Ranking member Toomey (R-PA) disclosed that a conservative group pressing the Fed for Reserve Trust information determined that there are at least a dozen pages germane to the question of how this firm obtained payment-system access.

CFPB Plans to Combat Bigtech in Payments and Commerce

The CFPB today released a report laying out more details of how it plans to proceed on at least one bigtech concern: the integration of payments and commerce. The report details numerous risks in this arena, including those related to security and privacy and the ability of bigtech to quickly gain a dominant market share.

Brown, Other Dems Demand USB Consumer-Account Data

Sens. Brown (D-OH), Warren (D-CA), and three other Banking Committee Democrats today demanded information from U.S. bank regarding a recent CFPB enforcement action related to improperly-opened consumer accounts.

Daily080422.pdf…

3 08, 2022

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Eliza Allen2023-01-04T13:29:59-05:00August 3rd, 2022|2- Daily Briefing|

Senate Ag Crypto Bill Lauds CFTC, Faces Many Obstacles

As we anticipated as the crypto debate continues, the Senate Agriculture Committee has sought to claim jurisdiction with a new, bipartisan bill granting the CFTC broad regulatory, supervisory, and enforcement powers over most digital-asset platforms and the assets traded on them.

ECB Study Favors CBDCs Over Private Crypto for Cross-Border Payments

A study released by the ECB today argues that CBDCs would be a cheaper, safer, and more effective vehicle for cross border payments for global transactions than privately-issued cryptoassets or stablecoins. Based on assessment of global, not just EU markets, the study thus has implications for those in the U.S. opposing a CBDC.

FRB-Minneapolis Renews Attack on Big-Bank Capital Resilience

Renewing its attack on big-bank capital ratios, the Federal Reserve Bank of Minneapolis today released its own stress-test conclusions, reinforcing its president’s longstanding view that the largest U.S. banks are woefully under-capitalized even though test results show considerable variance on a bank-by-bank basis as well as overall resilience.

FRB Philadelphia President Touts Fintech’s Financial Inclusion Potential

FRB Philadelphia President Patrick Harker today stated that fintech can increase financial inclusion, specifically citing buy-now pay-later products because they offer financial services to low- to moderate-income customers who would otherwise be locked out of traditional lending because they are more likely to be non-White, lower earning, and younger.

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19 07, 2022

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Eliza Allen2023-01-06T14:46:12-05:00July 19th, 2022|2- Daily Briefing|

Fed Seeks to Bring Order Out of Looming LIBOR Chaos

Fighting the end-September deadline demanded in the new law (see FSM Report LIBOR7), the Federal Reserve Board today unanimously proposed the formulas by which benchmark-rate compliance will be judged in LIBOR-based legacy contracts without rate-fallback contractual clarity.

House Advances Sanctions, Cash-Access, Credit-Union, Mortgage Legislation to Uncertain Senate Fate

Chairwoman Waters (D-CA) today released an accounting of all the HFSC measures included in the massive National Defense Authorization Act (NDAA) approved by the House late last week.

House Judiciary Damns Bigtech, Skirts Financial Services

House Judiciary Committee Democrats today tried to reinvigorate antitrust legislation focused on bigtech companies with a report concluding that stronger antitrust and merger enforcement is needed for Google, Amazon, Facebook, and Apple.

CFPB Presses SPCs

The CFPB today issued a staff statement reiterating key points in February’s inter-agency statement encouraging special-purpose credit (SPC) programs. The new CFPB release reiterates the criteria for SPCs that comply with the Equal Credit Opportunity Act, noting also the benefits such programs may afford to racial equity.

OFR Details Commercial Real Estate Recovery, Emerging Risks

OFR today released a study detailing how the commercial real estate (CRE) market weathered the 2020 recession, also describing CRE’s future risks.

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11 07, 2022

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Eliza Allen2023-01-24T15:11:32-05:00July 11th, 2022|2- Daily Briefing|

FSB Highlights Crypto, Stablecoin Risk

The FSB today issued an unusual statement warning of cryptoasset risk. Rejecting the BIS’s more sanguine view that stablecoins and other digital assets have yet to prove, the FSB warns that inter-connectivity with the financial system already poses grave hazard.

HFSC to Consider CRA Reform, Rewrite

As noted, the HFSC Consumer Protection and Financial Institutions Subcommittee on Wednesday will consider the inter-agency CRA rule (see FSM Report CRA32).

Basel Committee Will Be Slow to Advance Climate-Risk Capital, Disclosure Standards

The head of the Basel Committee, Pablo Hernández de Cos, today reiterated that global bank regulators are dedicated to a cautious but determined set of climate-risk standards.

BIS Group Charts Course to Cross-Border CBDC

As part of the G20 cross-border payments roadmap, the BIS, IMF, and World Bank released a joint report today urging governments working on a CBDC to coordinate their designs and account for cross-border functionality early in their process.

FRB Atlanta Blog Refutes Dem’s Zelle Allegations

Coming in the wake of a letter sent by Senate Democrats alleging Zelle of mishandling fraud, FRB Atlanta today published a blog post defending the payments industry in cases where customers willingly authorize a fraudulent payment.

Chopra Promises to Promote Fierce Competition

CFPB director Chopra today reasserted his agency’s authority over ensuring financial-market competitiveness, describing recent actions against credit-card companies (see FSM Report CREDITCARD35), bigtech, and “junk fees” (see FSM Report CONSUMER38).

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5 07, 2022

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Eliza Allen2023-01-24T15:42:23-05:00July 5th, 2022|2- Daily Briefing|

Fed Develops a Measure of Operational-Risk Exposures

In a research note late last week, Federal Reserve staff proposed a new approach to quantifying a bank’s operational-risk exposure, a timely contribution to the debate sure to rage when the U.S. advances Basel’s proposed rewrite of operational-risk-based capital requirements (see FSM Report OPSRISK18).

FHLB Banks Said to Pose Grave Risks, Require Reform

A new paper from Fed staff and former Gov. Dan Tarullo argues that the Federal Home Loan Banks pose structural problems to federal bank regulation and systemic stability by virtue of their hybrid status and the absence of clear purpose under contemporary market circumstances.

FRB-New York: Digital Currencies Could Strengthen the USD

Contrary to Congressional fears (see Client Report CBDC13), a new blog post from the Federal Reserve Bank of New York projects that digital currencies might bode well for the continued international dominance of the dollar.

Liang Calls for New-Age CCyBs, Open-End Fund Reform, Digital-Asset Macropru

In remarks today, Treasury Under-Secretary Liang concludes that post-2008 macroprudential standards strengthened the financial system as evidenced by its ability to support the real economy in 2020.

Global Regulators Find Risky Connectivity Between Banks, BigTech

The BIS Financial Stability Institute today released a report investigating what it calls the regulatory blind spot of bigtech inter-dependency, recommending that regulators develop an entity-based regulatory framework for bigtech operations in the financial sector and, while they work on this longstanding goal, use an new, indirect approach.

Daily070522.pdf…

24 05, 2022

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Eliza Allen2023-02-21T13:49:08-05:00May 24th, 2022|2- Daily Briefing|

BIS Committee Fears Debt Build-Up Poses Systemic Risk

The BIS Committee on the Global Financial System has concluded that sharp increases in household and corporate debt pose increasing systemic risk.

CFPB Creates New Competition Office, Plan

Reflecting its director’s continuing focus on consumer-finance competition, the CFPB today recast an office that previously encouraged “sandbox” product launches into an office focused principally on enhancing the ability of small firms and start-ups to compete with big banks, fintech, and bigtech.

FRB-Dallas Staff: TALF Worked for CMBS

The Federal Reserve Bank of Dallas has issued a new report documenting the manner in which Fed support at the pandemic’s outset supported U.S. commercial real estate.

IDIs Sound, but Worrisome Signs

The FDIC’s report on banking-sector 1Q data shows that, despite continuing strong earnings and robust credit quality, some IDIs are facing serious challenges.

HFSC Disabilities Hearing Confirms Little Appetite for New Legislation

As anticipated, HFSC’s Subcommittee on Diversity and Inclusion hearing today covered issues faced by persons with disabilities such as under-banking, unemployment and housing inaccessibility.

Brainard to Lay Out Key CBDC Considerations

The HFSC staff memo today on Thursday’s CBDC hearing confirms that it will be a consequential session.

HFSC Backs OLA, Climate Action in FY23 Budget

The House Financial Services Committee today released its views on the FY2023 budget, detailing broad support for the administration’s financial stability, climate, and housing efforts to guide its future authorizing work and that of the appropriations committees to the extent they heed HFSC’s request.…

27 04, 2022

FedFin on: Nonbank Consumer-Finance Supervision

Arezou Rafikian2023-03-01T15:07:08-05:00April 27th, 2022|The Vault|

Using what it describes as “dormant” authority, the CFPB is seeking comment on a rule setting the procedures under which it expands its authority to nonbank financial companies it believes pose consumer-protection risk. The procedural rule is just what this term implies – one that establishes procedural standards that may change upon finalization – rather than a request for views on the extent to which the CFPB has the authority it claims. Indeed, the Bureau clearly intends to use the authority stipulated in this rule for supervisory interventions even as comment on the procedures has yet to be completed…

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

27 04, 2022

CONSUMER41

Arezou Rafikian2023-03-01T15:06:39-05:00April 27th, 2022|1- Financial Services Management|

Nonbank Consumer-Finance Supervision

Using what it describes as “dormant” authority, the CFPB is seeking comment on a rule setting the procedures under which it expands its authority to nonbank financial companies it believes pose consumer-protection risk. The procedural rule is just what this term implies – one that establishes procedural standards that may change upon finalization – rather than a request for views on the extent to which the CFPB has the authority it claims. Indeed, the Bureau clearly intends to use the authority stipulated in this rule for supervisory interventions even as comment on the procedures has yet to be completed.

CONSUMER41.pdf…