#China – Page 2 – Federal Financial Analytics

6 10, 2023

DAILY100623

Eliza Allen2023-10-06T14:46:53-04:00October 6th, 2023|2- Daily Briefing|

Chopra Has Big Plans for Payments

Likely assuming the coast is clear after the Supreme Court seemed reluctant to undo its charter earlier this week, CFPB Director Chopra today announced a series of steps designed to give the Bureau considerably more control over the payment system. First, the agency plans to issue supplemental orders to “certain” bigtech companies – doubtless PayPal – to ascertain stablecoin plans and how this affects consumer data.

Waller Still Sees Little Need for CBDC

Governor Waller today continued his skeptical CBDC stance, noting that Fed work on the product is largely motivated by preparedness concerns. Nonetheless, any US CBDC will be two-tier with direct retail CBDC requiring Fed master account access not permitted under current law. Mr. Waller also strongly disputed claims that CBDCs such as those in China pose a threat to the US dollar and countered suggestions that FedNow is a CBDC-precursor, emphasizing that its primary purpose is to speed payments.

Daily100623.pdf…

20 09, 2023

DAILY092023

Eliza Allen2023-09-20T17:11:25-04:00September 20th, 2023|2- Daily Briefing|

Brown, Rounds Agree: AI Credit-Underwriting Warrants Regulatory Attention

At today’s Senate Banking hearing on AI in financial services, Chairman Brown (D-OH) argued that AI should be governed by the same rules as the rest of the financial system, with new law necessary if existing rules prove inadequate.

HFSC FinCEN Bills Draw Bipartisan Support

HFSC Chairman McHenry (R-NC) at today’s markup praised the scope of bipartisan support on today’s FinCEN, sanctions, and other national security bills.

HFSC Delays Bipartisan Sanction Bill Vote

Today’s HFSC markup also considered two bills addressing sanctions policy: H.R. 5512 from Rep. Sherman (D-CA) to require bank subsidiaries to comply with sanctions on Russia and Belarus and H.R. 760 from Rep. Barr (R-KY) imposing blocking sanctions on Chinese defense or surveillance companies and the third-party companies that supply them.

HFSC Dems Continue Strongly Opposing GOP Anti-CBDC Measure

The bipartisan spirit of today’s HFSC markup dissipated as Members fiercely debated H.R. 5403 from Majority Whip Emmer (R-MN), a bill that would bar the Fed from issuing a CBDC to individuals.

Gruenberg: New Shadow Bank Standards Would Cure a Capital Proposal Problem

FDIC Chairman Gruenberg today gave remarks arguing that FSOC along with OFR should establish a new reporting framework to assess the financial stability risks posed by nonbanks and ensure that public reporting is sufficient for market participants to understand nonbank counterparty risk.

HFSC Reports FinCEN, Sanctions, CBDC Bills

HFSC today unanimously reported H.R 760 sanctioning Chinese defense companies, H.R. 5512 requiring bank subsidiaries to comply with sanctions …

15 08, 2023

DAILY081523

Eliza Allen2023-08-15T16:28:12-04:00August 15th, 2023|2- Daily Briefing|

HFSC GOP Accuses SEC, FINRA of Crypto-Bill Sabotage

Accusing the SEC of preempting HFSC Republicans’ crypto legislative efforts via FINRA, HFSC Chairman McHenry (R-NC) and 22 other Committee Republicans today sent letters to SEC Chairman Gensler and FINRA CEO Robert Cook arguing that the timing of Prometheum Ember Capital LLC’s approval to operate as a special purpose broker-dealer (SPBD) was calculated to show that the SEC’s current crypto regulatory powers are sufficient. The letters highlight that Prometheum is unable to perform clearing or settlement services and has yet to serve any customers, also noting what are said to be the company’s close ties to the Chinese Communist Party.

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30 06, 2023

DAILY063023

Eliza Allen2023-06-30T16:31:38-04:00June 30th, 2023|2- Daily Briefing|

Warren Blasts Goldman Over SVB Dual Role

Raising an issue that could lead to broad demands for internal firewalls, Sen. Warren (D-MA) today sent a letter to the CEO of Goldman Sachs demanding more information about the bank’s dual role advising and buying financial instruments from SVB. The senator raises concerns that this caused conflicts of interest and accuses the bank of using “accounting tricks” that were very costly to the DIF.

Key House Member Posits China Sanctions For Hong Kong Banking Activities

Joined by two U.K. MPs, House Select Committee on the CCP Chairman Mike Gallagher (R-WI) today sent a letter to HSBC’s CEO raising concerns with what he says was the bank’s decision as well as that of other unnamed banks to block Mandatory Provident Fund withdrawal requests for Hong Kong residents with British National (overseas) passports. Firing what may be a first shot into the broader battle of how global banks manage their relations with China, the letter highlights instructions to the fund’s trustee institutions – which include HSBC – from the Hong Kong Mandatory Provident Fund Authority to disregard BN(O) passports.

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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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30 05, 2023

Daily053023

Eliza Allen2023-05-30T17:13:13-04:00May 30th, 2023|2- Daily Briefing|

Fed Study Validates Bank/Shadow-Bank Interconnections, Systemic Risk

A new study by staff from the Federal Reserve Banks of Boston and New York evaluates the banking-sector impact of fire sales across multiple NBFI segments, finding numerous bank vulnerabilities to nonbanks not only through direct exposures, but also through complex, indirect channels.

McHenry Protests U.S. Outbound-Investment Constraints

HFSC Chairman McHenry (R-NC) sent a letter to Secretary Yellen late Friday demanding information about a potential executive order that would enable CFIUS to prohibit or require notification of outbound investments into China, stating that the Administration’s interest in capital controls necessitates Congressional oversight.

IMF Article Calls SVB Resolution “Riskless Capitalism”

An article in the IMF’s forthcoming Finance and Development magazine issue argues that SVB’s uninsured depositors enjoyed “riskless capitalism,” concluding that high moral hazard-risks will persist without incentives for depositor due diligence.

FTC Demands Greater Debit-Card Data Access

The FTC today finalized a consent order requiring Mastercard to provide competing card networks with the customer account information necessary to process debit payments, alleging that the company illegally withheld that information to prevent merchants from using its competitors or Mastercard-branded debit cards saved in e-wallets outside of traditional networks.

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23 05, 2023

DAILY052323

Eliza Allen2023-05-23T17:15:40-04:00May 23rd, 2023|2- Daily Briefing|

House Advances Consensus Anti-China Reporting Legislation

The House yesterday voted 400-5 to approve H.R. 1156, bipartisan legislation addressing Congress’ China concerns by mandating a new study.

Gruenberg Endorses Bank On Accounts, Notes Continuing Racial Gaps

In remarks today largely devoid of policy implications, Chairman Gruenberg praised Bank On’s impact on financial inclusion, but noted that racial divides still persist as Black and Hispanic households are more likely to be unbanked than White ones at every income level.

IOSCO Aims at Ending Crypto-Market Arbitrage

Advancing global crypto standards, the International Organization of Securities Commissions today released a consultative report on the contentious question of centralized-market regulation with which a joint HFSC/AG Committee process is now wrestling (see Client Report CRYPTO43).

HFSC GOP Blasts GSE Fees, Supports FHLB System

Today’s HFSC hearing with FHFA Director Thompson was largely the LLPA battle we anticipated, with Republicans lambasting recent actions and Democrats tartly responding that Republicans did not know what they were talking about.

Hsu Echoes Gruenberg’s Bank-On Praises

Following Chairman Gruenberg’s remarks earlier today, Acting Comptroller Hsu similarly praised Bank On’s impact on financial inclusion while highlighting racial and income gaps.

Daily052323.pdf…

28 02, 2023

DAILY022823

Eliza Allen2023-02-28T17:16:34-05:00February 28th, 2023|2- Daily Briefing|

CFPB Treads Gingerly on Mortgage-Disclosure Exceptions

In a notice emphasizing the CFPB’s distaste for allowing regulatory exceptions, the Bureau asks for comment on an application for one to which it seems a bit more sympathetic.

FDIC Sees Sunny Side of Bank Earnings Data

In its review of banking-industry fourth-quarter results, the FDIC today notes a sharp increase in the gap between bank loan yield and deposit interest costs.

Basel Forecasts End-Game Capital Shortfalls

The Basel Committee today issued its latest monitoring report, finding that large global banks saw capital decreases to pre-pandemic levels even as liquidity ratios continued to improve.

Bipartisan China Bills Fly Through HFSC Markup

As anticipated, HFSC today reported five bills to censure China and protect Taiwan, along with bills addressing drug-trafficking financing, biomedical security and bank service company examinations.

Democrats Stand Firm versus Privacy Preemption

Following an orderly and bipartisan start to today’s HFSC markup, Democrats and Republicans today came to verbal blows over the Chairman’s data privacy bill.

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24 02, 2023

Al022723

Eliza Allen2023-02-24T16:57:09-05:00February 24th, 2023|3- This Week|

The Bull In China’s Shop

As we noted as Russia sanctions were introduced almost exactly a year ago and again on Friday, the U.S. is using this “soft-power” tool not only to punish Russia for invading Ukraine, but also to deter other nations – and most especially China – from going beyond rhetorical to military support. This, combined with the subsequent oil-price cap, has kept most neutral nations on the military sidelines, also forcing China to navigate carefully between anti-Taiwan bellicosity and pro-Russian sympathy. However, China has now gone beyond floating the spy balloon that so peeved Members of Congress at an earlier hearing at which sanction sabers were noisily rattled. The House Financial Services Committee will mark up the mildest of its sanctions bills on Tuesday, but China is now in full-throated alliance with Russia, possibly soon sending it armaments and other essentials in express violation of current G7 sanctions. What’s next?

Al022723.pdf…

24 02, 2023

DAILY022423

Eliza Allen2023-02-24T16:55:41-05:00February 24th, 2023|2- Daily Briefing|

HFSC Starts With A Bang

On Tuesday, HFSC Chairman McHenry (R-NC) honors his commitment to advance significant legislation with what is sure to be a raucous mark-up. Most importantly, Chairman McHenry will bring up a bill yet to be introduced rewriting consumer-data privacy standards.

FHFA New-Product Vetting Delayed

FHFA today pushed back the effective date of its New-Product Rule by sixty days on grounds that more time is needed for the agency and the GSEs to develop the internal processes necessary for compliance. The former effective date was February 27; the new effective date is April 28.

HFSC Set To Lock Horns On Data Privacy

With the opening quote in his release making clear that this will be a partisan fight, HFSC Chairman McHenry (R-NC) formally introduced the privacy legislation that, as noted earlier today, is now set for Tuesday’s mark-up.

CFPB Begins Administrative Adjudication, Speeding Enforcement Actions

The CFPB today finalized new adjudication rules that add administrative adjudication to its usual course of seeking redress in federal district courts. The agency argues that predecessors from which Dodd-Frank drew its responsibilities use administrative adjudication and it is thus within the CFPB’s purview now also to do so.

Daily022423.pdf…