#BTFP

15 02, 2024

LIQUIDITY34

2024-02-15T15:07:26-05:00February 15th, 2024|5- Client Report|

Congress Contemplates Fed Emergency-Liquidity Power, Discount-Window Use

Today’s HFSC Financial Institutions hearing on emergency liquidity featured much discussion of reform, but few indications of any action Congress will take to advance it apart from support for pending agency efforts to enhance discount-window readiness. However, GOP criticism of the Bank Term Funding Program combined with witness support for its end makes clear the Fed’s political challenge should it reverse course and retain the facility in light of NYCB’s challenges and the potential for broader regional-bank stress.  Republicans including Subcommittee Chairman Barr (R-KY) were skeptical of the Home Loan Banks’ role as lenders to banks in duress; Democrats countered with strong support for the System as a boon to community banks.  Rep. Barr also contemplates some form of legislation to prevent the Fed from crafting new emergency-liquidity programs without prior Congressional approval, with Rep. Luetkemeyer (R-MO) noting his longstanding plan to give the FDIC authority to invoke a transaction-account guarantee regardless of amount without the need for prior Congressional approval.

LIQUIDITY34.pdf

25 01, 2024

DAILY012524

2024-01-25T16:50:12-05:00January 25th, 2024|2- Daily Briefing|

Fed Surprisingly Slams the BTFP’s Doors

At an unusual time and on a day that does not comport with the usual timelines for Fed action, the Board last night unanimously announced it will shutter the Bank Term Funding Program as scheduled on March 11.

Basel Head Backs U.S. Regulators

In response to waves of recent letters pushing back on the Basel III capital rules, Basel Committee Secretary General Esho defended Basel III, arguing that there is little evidence that Basel III implementation will have a detrimental effect on banking and economic growth

FTC Tackles AI Inter-Connections, Concentration

Following remarks by FTC Chair Khan making clear that there is no “AI exception” to lawful behavior, the FTC announced that it has issued orders to Alphabet, Amazon, Anthropic, Microsoft, and OpenAI requiring them to provide their recent investment and partnership information involving gen-AI companies and major CSPs.

CFTC Kicks Off Financial-Agency AI Assessment

Just as it did years ago with climate risk (see Client Report GREEN4), the CFTC took the lead among U.S. financial regulators with respect to AI.

Daily012524.pdf

9 01, 2024

DAILY010924

2024-01-09T16:48:15-05:00January 9th, 2024|2- Daily Briefing|

Bowman Now Tackles Supervisory Transparency

In remarks late yesterday, FRB Gov. Bowman added a new concern: supervisory transparency.  She indicated that the Fed’s supervisory expectations have changed to the point at which some state agencies think the Fed goes too far, but banks have no way of anticipating possible supervisory injunctions.  As a result, she argues for near-term transparency via public notice-and-comment guidance or rulemaking.

Barr Bows a Bit

Answering questions today, FRB Vice Chair Barr indicated that the BTFP may well close on March 11, emphasizing the importance of adhering to the Fed’s emergency-liquidity mandate.  That said, loans will be extended until the one-year anniversary and may remain until 2025.  He also outlined a significant compromise on the operational-risk section of the end-game rules (see FSM Report OPSRISK22), more closely aligning the proposal with the Basel standards as our outlook anticipated.

Daily010924.pdf

1 11, 2023

DAILY110123

2023-11-01T16:52:56-04:00November 1st, 2023|2- Daily Briefing|

Vance, GOP Seek to Reverse New Immigration Credit Ruling

Following a joint CFPB-DOJ statement asserting that financial institutions’ “unnecessary or overbroad reliance” on immigration status in a credit decision may violate the ECOA, Sen. Vance (R-OH) along with all Republican members of the Senate Banking Committee today sent a scathing letter to CFPB Director Chopra and DOJ AG Garland urging the regulators to retract it on legal and financial stability grounds.

Congress Takes on SEC Custody Construct

Members of Congress are mobilizing against the SEC’s custody proposal (see FSM Report CUSTODY5) following yesterday’s block-buster GAO ruling against the SEC’s SAB 121 ruling, a ruling with considerable impact also in the broader custody rewrite.  Republicans responded to the GAO with anticipated demands for rapid Congressional Review Act repeal.

Powell Pledges Fed Capital Consensus

In the midst of much monetary-policy discussion today, Chair Powell now said more publicly that the Fed will work towards consensus on controversial capital rules.  Rep. Barr (R-KY) previously said Mr. Powell assured him that the final rule will reflect the Board of Governors as a whole, encouraging Rep. Barr and others that Vice Chair Barr will need to modulate some of the proposal’s most controversial provisions.

Daily110123.pdf

1 08, 2023

DAILY080123

2023-08-01T16:49:48-04:00August 1st, 2023|2- Daily Briefing|

Curtain Falls on Fintech-Charter Hopeful

In a blow to the waning chartering prospects for fintech and crypto banks, the OCC today announced that Figure – a fintech platform that applied in 2020 for a strikingly-novel national bank charter (see Client Report CHARTER28) – has officially withdrawn its application.  As noted, Figure’s application followed OCC revisions to federal-charter activities making any activity authorized for national banks possible via electronic, not just traditional, means (see FSM Report CHARTER27).

Discount-Window Stigma Persists

The Fed today released the results of its May 2023 Senior Financial Officer Survey, with most banks continuing to fear public disclosure of discount window advances.  As noted, the banking agencies last week told banks not only to improve contingency-funding planning, but also to look more favorably on the discount window.  This seems unlikely absent a change in current market perception or repeal of the disclosure requirements.

Daily080123.pdf

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