#Bowman – Federal Financial Analytics

22 09, 2023

DAILY092223

Eliza Allen2023-09-22T17:19:47-04:00September 22nd, 2023|2- Daily Briefing|

Bowman Stands Firm Opposing Pending Rules

Making clear that her concerns with pending rules have in no way abated, FRB Governor Bowman today stated that any proposal considered by the Board or jointly with the other banking agencies must be focused on remediating the identified concerns, informed by data and genuine discussion within each participating agency and with policymakers, and developed through a transparent process that is open to public comment. Citing the FRB’s recent proposals including the Basel III endgame (see Client Report CAPITAL234), LTD requirements (see FSM Report TLAC9), and the CRA rewrite (see FSM Report CRA32), she acknowledges that multiple interrelated proposals may complicate submitting meaningful comments, emphasizing the importance of stakeholder feedback.

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29 08, 2023

DAILY082923

Eliza Allen2023-08-29T16:55:20-04:00August 29th, 2023|2- Daily Briefing|

Agencies Advance Controversial Long-Term Debt, Resolution Proposals

The FDIC, OCC, and FRB today tackled several critical resolution issues in the wake of recent bank failures, proposals that raise strong objections from regional banks despite FDIC and FRB unanimity today on at least one of them. As anticipated, the FDIC and FRB approved an NPR that would impose minimum long-term debt requirements for banks and BHCs with assets over $100 billion, with the FDIC and Fed boards voting unanimously in favor even as FRB Gov. Bowman strongly dissented despite a three-year transition period. Similar to the ANPR floating this rule (see FSM Report RESOLVE48), the proposal would require large banks to hold a minimum amount of eligible long-term debt equal to the greater of six percent of risk weighted assets, 3.5% of average total consolidated assets, or 2.5% of total leverage exposure for banks subject to the SLR.

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27 07, 2023

DAILY072723

Eliza Allen2023-07-27T17:47:02-04:00July 27th, 2023|2- Daily Briefing|

FSB Tries to Calm CoCo Confusion

Doubtless responding to the CoCo chaos when Credit Suisse failed, the FSB today issued a report laying out how cross-border crisis-management groups are to handle unallocated TLAC (UTLAC) such as the “alternative Tier 1” bonds popular in the EU.

FDIC 3-2 Vote Presages Knock-Down Basel Battle

As anticipated, the FDIC today voted 3-2 to issue a sweeping rewrite of U.S. regulatory capital requirements.

Divided, Cautious Fed Advances End-Game, GSIB Rewrites

As anticipated, Gov. Bowman today voted against the new capital framework, as did Gov. Waller; as a result, the vote was 4-2.

Stablecoin Bill Advances, Compromises to Come

At a fiery HFSC markup today, Chairman McHenry (R-NC) announced that bipartisan negotiations had broken down largely due to the White House, choosing to proceed to a final package as he remains open to amendment before floor action.

House Republicans Skewer Basel Rules

Hill comment so far in response to the new capital rules is sparse.

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21 07, 2023

Al072423

Eliza Allen2023-07-21T17:08:03-04:00July 21st, 2023|3- This Week|

Here It Comes…

As anticipated, the banking agencies will get their capital proposals out before the August recess but close enough to it to avoid – or so they hope – a withering gauntlet of House hearings. By the time Congress reconvenes in September, the agencies expect – and with good reason – that the new rules will escape notice because attention will have turned to the most vexing issues confronting this divided Congress, most notably keeping the federal government open at the end of the fiscal year. Acting now also ensures that, even if the agencies give ground and concede to the industry’s 120-day comment deadline, at least one month of that will fly by in August, putting the timeline for issuing a final capital rule into the first quarter of 2024 and thus beyond the reach of Congressional Review Act repeal should Republicans muster enough support and the President somehow recants.

Al072423.pdf…

28 06, 2023

DAILY062823

Eliza Allen2023-06-28T17:21:14-04:00June 28th, 2023|2- Daily Briefing|

Biden Predicts End to Overdrafts

In a speech today detailing “Bidenomics”, President Biden continued his administration’s campaign against “junk fees,” specifically targeting overdrafts.

Fed Branch Approval Faced Unusual Bowman Protest

With a cryptic statement, FRB Gov. Bowman has taken the unusual step of protesting a branch application which she and all other governors approved. The issue appears to be the fact that two commenters objected to the branch application on grounds that the bank (Vantage in Texas) discriminates against African American borrowers. The Fed’s formal approval notes only these comments and otherwise approves of the bank’s fair-lending record, also noting its satisfactory CRA rating and the fact that the bank is principally a commercial lender.

Fed Finds Big Banks Resilient, Still Wants More Rules

The Fed’s stress-test release today attempts to meld both the Board’s finding that banks are not only resilient, but also “well-positioned” for a severe recession with Vice Chairman Barr’s plans to rewrite an array of new rules (see Client Report FEDERALRESERVE72) that stress tests are only one measure of strength the “resilient” evidence itself.

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26 06, 2023

Daily062623

Eliza Allen2023-06-26T16:49:47-04:00June 26th, 2023|2- Daily Briefing|

Waters Forum On Deposit-Insurance Reform Focuses On Flexibility

HFSC Ranking Member Waters (D-CA) Friday hosted a roundtable on deposit insurance reform with a panel of industry experts and a legal scholar.

Bowman Blasts Barr Agenda, Cautiously Open to End Game

In remarks yesterday, FRB Governor Bowman continued her campaign against new capital rules, urging regulators instead to focus on liquidity and supervision.

FRB Withdraws Reserve Bank Registry Proposal

The Federal Register today published a notice from the FRB announcing that the Board is withdrawing proposed amendments (see FSM Report PAYMENT26) to its Account Access Guidelines that would have required Reserve Banks to publish periodic lists of depository institutions with access to Reserve Bank accounts.

Waters Recruits Treasury, SEC To Block GOP Crypto Bill

Ahead of HFSC mark-ups on digital assets legislation next month (see Client Report FEDERALRESERVE74), Ranking Member Waters (D-CA) today sent letters to Treasury Secretary Yellen and SEC Chairman Gensler asking for analyses of the draft digital assets market structure bill strongly opposed by Democrats.

Daily062623.pdf…

6 06, 2023

DAILY060623

Eliza Allen2023-06-06T16:49:29-04:00June 6th, 2023|2- Daily Briefing|

HFSC Tackles China, CBDC

The committee memo for the HFSC National Security Subcommittee hearing tomorrow makes it clear that China is the main focus of dollar-sovereignty considerations and CBDC will play a central role in this debate.

CFPB Wants Chatbots To Stop Talking

The CFPB today released an “issue spotlight” looking at how AI in general and chatbots in particular may adversely affect retail-finance consumers, concluding that chatbots may be useful for simple inquiries, but effectiveness wanes as complexity rises.

Third-Party Guidance Gets Still More Stringent

After repeatedly saying that third-party risk management is a top priority, the banking agencies today finalized a 2021 proposal (see FSM Report VENDOR9) tightening current requirements.

GOP Questions ONRRP, Treasury RWAs

Although HFSC Financial Institutions Subcommittee Chairman Barr (R-KY) today highlighted the legislation on which today’s hearing was to focus, much of the discussion over Treasury-management policy revisited last week’s debt-ceiling battles.

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19 05, 2023

DAILY051923

Eliza Allen2023-05-19T17:03:07-04:00May 19th, 2023|2- Daily Briefing|

Bowman Strengthens Stand Against New Rules, Possible Supervisory Overkill

In case anyone doubted her meaning last week, FRB Gov. Bowman today repeated her strong opposition to the regulatory rewrites spelled out in what at first seemed the Fed’s but is now apparently only Vice Chairman Barr’s report (see Client Report REFORM221). Ms. Bowman also reiterates her call for an independent study, continued tailoring, and improved supervision.

Bills To Reduce Regulatory Independence Advance

As anticipated at his last hearing, HFSC Financial Institutions Subcommittee Chairman Barr (R-KY) has now formally introduced three regulatory transparency bills. We will shortly provide clients with in-depth analyses of these bills, which we expect quickly to proceed to mark-up on largely party-line votes.

Warren Pounces On Reports Of Treasury-Bond Assessment Proposal

Sen. Warren (D-MA) yesterday sent a strongly-worded letter to FDIC Chairman Gruenberg demanding that the FDIC reject reported big bank plans to replenish the DIF with at-par Treasury bonds rather than the proposed special assessment (see FSM Report DEPOSITINSURANCE120).

BIS’s Carstens Dismisses Crypto, Calls For Tighter Non-bank Controls

In a wide-ranging speech today, BIS General Manager Agustín Carstens sharply criticized cryptocurrencies and called for greater regulation of the nonbank sector to avert a systemic financial crisis.

Daily051923.pdf…

12 05, 2023

DAILY051223

Eliza Allen2023-05-12T17:05:25-04:00May 12th, 2023|2- Daily Briefing|

Bowman Blasts Barr

In another public sign of a growing FRB divide, Gov. Bowman early this morning followed Gov. Waller in taking strong issue with what would otherwise appear to be Board policy.

Fed Nominees Face Tough Confirmation Fight

In response to President Biden’s nomination of Philip Jefferson for Fed Vice Chair and Dr. Adriana Kugler and Lisa Cook to Fed Governor seats, Democrats have voiced strong support while Republicans are biding their time on nominations sure to prove controversial.

GOP Presses Broader FDIC, FRB Backstops

Picking up on the FDIC’s report (see Client Report DEPOSITINSURANCE119), Republicans have introduced legislation to provide limited coverage for transaction accounts and address other issues raised by recent events.

FRB-NY: SVB, Signature are 1930s Redux

Following on its post yesterday regarding changing bank-funding sources, the Federal Reserve Bank of New York today argues that the concentrated, uninsured deposit bases at SVB and SBNY are directly comparable to those of small rural banks in the 1930s.

Daily051223.pdf…

21 04, 2023

DAILY042123

Eliza Allen2023-04-21T17:02:12-04:00April 21st, 2023|2- Daily Briefing|

House Republicans Renew Anti-Woke Banking Battle

In the latest GOP-led action against “woke” finance, HFSC Financial Institutions Subcommittee Chairman Barr (R-KY) yesterday reintroduced the Fair Access to Banking Act (H.R. 2743), which would prevent large banks from limiting or refusing services to the fossil-fuel, digital-asset, and gun industries.

FRB Review Of CBDC Comments Leaves Open All Options

The Federal Reserve late yesterday released a summary of public comments received on its 2022 CBDC discussion draft (see FSM Report CBDC10), arraying comments in ways that make it difficult to judge who said what or where the preponderance of comments is to be found.

FSOC Advances Activity, Nonbank Systemic Designation, Regulation

As anticipated, all FSOC members today voted to advance two key proposals to redesign the U.S. systemic framework and speed action on two clear systemic designation priorities: hedge-fund interconnectedness with the banking system and nonbank mortgage companies.

Waters Praises FSOC, Presses for New Bank Standards

While commending FSOC’s action earlier today, HFSC Ranking Member Waters (D-CA) urged it to quickly go farther, pressing the Council to send the FRB and other banking agencies recommendations for post-SVB reforms.

BIS Paper: Fintech Innovation Amplifies Inequality

A new BIS working paper on fintech concludes that increased financial-technology innovation amplifies inequalities between sophisticated and unsophisticated investors and that bridging this gap will require policy focus on fintech accessibility and usability.

Daily042123.pdf…