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23 11, 2022

DAILY112322

2022-11-23T12:42:48-05:00November 23rd, 2022|2- Daily Briefing|

OFAC Updates Guidance For Price-Cap Sanction Compliance

Reflecting ongoing negotiations about the level of the oil-price cap, OFAC last night provided updated guidance to banks and insurers about when transactions may violate this latest sanction.  The new guidance identifies “covered services” for financing; this means a commitment for the provision or disbursement of debt, equity, or economic resources related to the maritime transport of Russian oil.  However, and as before, U.S. persons are authorized to provide covered services if the Russian oil is purchased at or below the price cap.

FDIC Signals Tougher GSIB Resolution Reviews

With the FDIC signaling a tough new approach to resolution plan approval, the FRB and FDIC today announced the results of the resolution plans filed by U.S. GSIBs in July, 2021.  All the banking organizations saw their plans approved except for Citigroup, which had noted shortcomings due to data quality and management concerns; the bank now has until January 31, 2023 to submit a revised plan.  FDIC Acting Chairman Gruenberg noted that, going forward, the agencies will conduct more detailed reviews of internal testing results and independent capability assessments.

Daily112322.pdf

9 11, 2022

DAILY110922

2022-11-09T16:59:00-05:00November 9th, 2022|2- Daily Briefing|

FIO, HHS Plan Longer Ponder on Federal Cyberinsurance

The Federal Insurance Office and the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency today extended the comment deadline for comments on whether a federal insurance response is warranted for catastrophic cyber risk.  The earlier notice asked what type of catastrophic attacks on U.S. critical infrastructure are most likely, how best to measure their effect, the current catastrophic insurance landscape, and how any federal insurance should be structured.

FDIC Board Stands By DSIB Resolution Reform

At today’s FDIC Systemic Resolution Advisory Committee session, Acting Chairman Martin Gruenberg defended the release of proposed DSIB resolution standards as guidelines, not rules.  Director Chopra reiterated concerns he expressed at a recent FDIC board meeting (see Client Report DEPOSITINSURANCE115), pressing for a structural rewrite of both DSIB and GSIB resolution standards.  Acting Comptroller Hsu focused largely on supervisory build-out, noting the need for more creative, forward-looking assessments of resolution plans.  Mr. Hsu also wants regulatory statements to ensure that investors understand that TLAC is a buffer of capital-at-risk in the event of extreme stress.

Daily110922.pdf

7 11, 2022

Karen Petrou: The Data-Rights Dilemma: The Balance Between CFPB Despotism and Democracy

2022-11-07T12:17:49-05:00November 7th, 2022|The Vault|

Last week, I despaired of CFPB edicts because I disapprove on principle of despotism no matter how well intentioned.  But, as shown in our in-depth analysis of the CFPB’s request for views on consumer data rights, democratic process can also be disastrous.  In what purports to be an “outline” of 71 pages and 149 questions often including numerous substantive sub-questions, the Bureau has gone back to its old habit of 1,000-plus page rules sure to do far, far more for lawyers than consumers seeking to better control their own financial destinies.

The outline and Director Chopra’s statements thereon lay out a powerful, persuasive argument about the benefits of data portability to an innovative, competitive, and inclusive retail financial system.  I get it, but after that, I’m at a loss.

Here are just a few questions we couldn’t answer about whether the CFPB’s new standards will do what the Bureau wants or heighten consumer exposure to still more cyber, privacy, and financial risk:

Will the third parties gaining control of our account data be covered by new security standards and, if so, will these be enforceable?  Will the data third parties gain via whatever authorization process the Bureau demands be deployed not just to answer our questions, but also to empower the already awesome network effects at the biggest quasi-financial companies wholly outside the reach of cross-selling and conflict-of-interest restrictions?  Will the products that third parties and their partners select based on our data do us good or ill?  For …

7 11, 2022

M110722

2022-11-07T12:17:31-05:00November 7th, 2022|6- Client Memo|

The Data-Rights Dilemma: The Balance Between CFPB Despotism and Democracy 

Last week, I despaired of CFPB edicts because I disapprove on principle of despotism no matter how well intentioned.  But, as shown in our in-depth analysis of the CFPB’s request for views on consumer data rights, democratic process can also be disastrous.  In what purports to be an “outline” of 71 pages and 149 questions often including numerous substantive sub-questions, the Bureau has gone back to its old habit of 1,000-plus page rules sure to do far, far more for lawyers than consumers seeking to better control their own financial destinies.

m110722.pdf

3 11, 2022

DAILY110322

2022-11-03T17:15:32-04:00November 3rd, 2022|2- Daily Briefing|

Gruenberg Backs Bank On

In remarks late yesterday, FDIC Acting Chairman Gruenberg pointed to the importance of Bank On accounts to retain previously un- or under-banked households brought into the system following large government payments early in the pandemic.

ECB Presses Climate-Risk Capital Regs

Moving far ahead of the Fed, the ECB has announced strict plans to ensure that EU banks not only improve governance and express climate-risk stress testing, but also hold sufficient internal-capital allocations for physical and transition risk.

Data Standard-Setters to Come Under CFPB Regs

In remarks late yesterday updating the CFPB’s open-banking rulemaking efforts, Director Chopra indicated that the new consumer-data rules (see forthcoming in-depth FedFin report) will also address   how best to set public and private-sector standards to ensure industry-wide fairness and access to critical infrastructure.

IMF Climate-Risk Priorities Include GSIB Buffers

The IMF’s Deputy Managing Director Bo Li today set priorities for central banks and bank regulators addressing financial-system climate resilience.

Daily110322.pdf

31 10, 2022

FedFin on: “Surprise” Fee Restrictions

2022-11-01T16:55:42-04:00October 31st, 2022|The Vault|

In conjunction with a Presidential speech and new White House initiative against “junk fees,” the CFPB has accelerated its own efforts in this arena with two new policy directives.  As with many other recent Bureau actions, the new circular and bulletin do not take the form of notice-and-comment rulemakings, but rather are directives with express enforcement implications unless or until the courts overturn them, the General Accounting Office intervenes to bar guidance outside the rulemaking process as it did years ago related to inter-agency leveraged-loan standards, or new law reconfigures the agency.  The most immediate implication of these edicts is a ban on blanket rejected deposit fees and further constraints on overdraft fees.

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

31 10, 2022

Karen Petrou: The Moral Dilemma of CFPB Dictate

2022-11-01T16:56:49-04:00October 31st, 2022|The Vault|

There is little question that electoral politics powered the President’s launch last week of a new Administration “junk-fee” campaign. How most of these fees matter to the majority of households fuming as they can’t handle prices at the food store and fuel pump is yet to be seen, but politics is only part of the reason for the CFPB’s high-priority blitz against “surprise” fees. Politics is easily understood, if not practiced to maximum advantage. Regulatory actions founded on moral philosophy are not only a compliance conundrum, but also an intellectual quandary.

Question for today’s class: is it right for Rohit Chopra to set rules regardless of the niceties of the rulemaking process when he believes certain acts or practices violate the natural rights of the U.S. citizenry? This may seem a hyperbolic description of the CFPB’s spate of enforceable pronouncements, but it’s the way I read many of them.

Take for example the latest edict on overdraft fees. As FedFin’s in-depth analysis will detail later today, the CFPB’s circular details a raft of laws and rules governing overdraft fees, going on to say how nice they all were but how little they matter anymore.

Because technological delivery can, the CFPB says, obscure fund availability, the Bureau concludes that fees which comply with every provision of each applicable law and rule are still unfair, deceptive, and/or abusive. Disclosures that comply with every provision in each law and rule also no longer suffice, the Bureau believes, and thus depository institutions have an …

31 10, 2022

DAILY103122

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.

Daily103122.pdf

31 10, 2022

OVERDRAFT11

2022-10-31T11:38:50-04:00October 31st, 2022|1- Financial Services Management|

“Surprise” Fee Restrictions

In conjunction with a Presidential speech and new White House initiative against “junk fees,” the CFPB has accelerated its own efforts in this arena with two new policy directives.  As with many other recent Bureau actions, the new circular and bulletin do not take the form of notice-and-comment rulemakings, but rather are directives with express enforcement implications unless or until the courts overturn them, the General Accounting Office intervenes to bar guidance outside the rulemaking process as it did years ago related to inter-agency leveraged-loan standards, or new law reconfigures the agency.  The most immediate implication of these edicts is a ban on blanket rejected deposit fees and further constraints on overdraft fees.  However, the reasoning and rationale in these orders is likely to carry over to a pending agency rulemaking on credit-card fees and possible initiatives related to remittances and even debit- or credit-card interchange fees.

OVERDRAFT11.pdf

31 10, 2022

M103122

2022-10-31T09:58:16-04:00October 31st, 2022|6- Client Memo|

The Moral Dilemma of CFPB Dictate

There is little question that electoral politics powered the President’s launch last week of a new Administration “junk-fee” campaign.  How most of these fees matter to the majority of households fuming as they can’t handle prices at the food store and fuel pump is yet to be seen, but politics is only part of the reason for the CFPB’s high-priority blitz against “surprise” fees.  Politics is easily understood, if not practiced to maximum advantage.  Regulatory actions founded on moral philosophy are not only a compliance conundrum, but also an intellectual quandary.

m103122.pdf

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