#Chopra

Home/Tag:#Chopra
19 12, 2022

FSOC28

2022-12-19T13:00:38-05:00December 19th, 2022|5- Client Report|

FSOC Targets Usual Suspects but Also Points to Big-BHC, Nonbank Mortgage Systemic Risk

As promised, this FedFin report provides an in-depth analysis of FSOC’s 2022 annual report, focusing on findings with near-term policy implications.  As always, the report is lengthy and includes many observations and market details that provide insight into Treasury and member-agency-staff thought.  Much in it reiterates concerns about short-term funding markets, CCPs, and investment funds (with FSOC for the first time urging regulators to look not only at MMFs and OEFs, but also at collective investment vehicles).  As previously noted, the report is relatively sanguine about digital-asset systemic risk but, also reiterates findings in FSOC’s report (see Client Report CRYPTO33) demanding rapid action on a raft of reforms in this high-risk sector.  What surprised us is the discussion of large BHCs, which departs from longstanding Fed and FSOC comfort in the post-GFC regulatory regime for this sector.

FSOC28.pdf

16 12, 2022

DAILY121622

2022-12-16T17:19:37-05:00December 16th, 2022|2- Daily Briefing|

GHOS Presses Speedy Bank-Crypto Capital Standards

Basel’s governing body, the Governors and Heads of Supervision, today endorsed the Committee’s planned work schedule.

Fed Finally Finalizes LIBOR Transition Regs

Narrowly ahead of its year-end statutory deadline, the Federal Reserve today issued a final version of its detailed proposal (see FSM Report LIBOR8) to implement the LIBOR Act’s provisions on replacement rates for existing contracts without fallback language (see FSM Report LIBOR7).

Regulators Highlight P2P, Crypto, NBFI Risks at FSOC Meeting

Although most of the FSOC’s discussion today of the LIBOR transition and climate risks was perfunctory, comments on the now-released 2022 Treasury annual report were not.

McHenry, Davidson Point to Forex-Clearing Systemic Risk

Picking up a recent BIS report finding at least $65 trillion at risk in off-balance sheet foreign-exchange clearing, incoming HFSC Chairman McHenry (R-NC) and the top Republican on the panel’s fintech task force, Rep. Warren Davidson (R-OH), called on Fed Chairman Powell and Secretary Yellen to investigate what they consider a looming risk to U.S. financial stability.

Chopra Presses Cloud-Service Provider, Stablecoin Systemic Designation

CFPB Chairman Chopra’s written statement for the FSOC meeting is considerably different than the oral one described in our earlier client alert.

Daily121622.pdf

15 12, 2022

DAILY121522

2022-12-15T17:13:08-05:00December 15th, 2022|2- Daily Briefing|

FinCEN Advances Beneficial-Ownership Privacy Constraints

Following its finalization of the beneficial ownership reporting rule, FinCEN today issued a notice of proposed rulemaking that would clarify how beneficial ownership information (BOI) must be acquired, used, and stored.  The proposal limits BOI access to only federal national security agencies, law enforcement authorities with a court order, financial institutions with customer due diligence requirements, and certain foreign and Treasury officials, all of which are subject to stringent security protocols aligned with the scope of the information request.

Chopra Defends Nonbank Repeat-Offender Registry, Confirms Zelle Watch-and-Wait

Today’s Senate Banking hearing repeated much of what HFSC and Director Chopra said yesterday (see Client Report CONSUMER45), with Democrats lauding the Bureau and Republicans condemning it for politicization, poor administrative process, and an unconstitutional construct. Ranking Member Toomey (R-PA) grilled Director Chopra on the Bureau’s new proposal requiring certain nonbank financial firms to report enforcement actions, asking him what he would do if a nonbank said it was compliant with a consent order and the CFPB disagreed.

Comment Deadline Extended For Controversial DSIB-Resolution Standards

Reflecting continuing controversy, the Federal Reserve Board and FDIC today announced that they will extend by one month the comment deadline for their ANPR on large bank resolvability standards.  The former deadline was December 23; the new deadline is January 23.

Daily121522.pdf

14 12, 2022

CONSUMER45

2022-12-15T17:14:06-05:00December 14th, 2022|5- Client Report|

HFSC GOP Sets Table for Rocky CFPB Relationship

Despite early warm goodbyes to outgoing Chairwoman Waters (D-CA), GOP members wasted no time trading blows at a fiery HFSC session today with CFPB Director Chopra.  As anticipated, incoming Chair McHenry (R-NC) and committee Republicans focused their efforts on what they call “regulation by guidance,” accusing the Director of trying to influence the behavior of firms through nonbinding releases and avoiding the public rulemaking process.  In his testimony and answers to members, Director Chopra said that the Bureau is watching voluntary industry action on Zelle fraud before taking action and is more broadly focused on payment-system standards that ensure neutrality and strict data-privacy.  Republican members also highlighted how the Bureau’s proposed small-business reports (see FSM Report SMBUS27) put undue regulatory burden on small banks.  Additionally, Rep. Loudermilk (R-GA) inquired about the appropriateness of making banks liable for P2P fraud.  Democrats refrained from questioning the Bureau’s actions, instead asking about its bigtech inquiry, the resurgence of ARMs, and blackbox algorithms.  Reps. Cleaver (D-OH) and Vargas (D-CA) also continued their attacks on crypto from yesterday’s hearing, calling it dangerous and useless.

CONSUMER45.pdf

12 12, 2022

DAILY121222

2022-12-12T17:13:47-05:00December 12th, 2022|2- Daily Briefing|

FTX Hearings Promise to be Explosive but Preliminary

Our review of HFSC’s final staff memo for tomorrow’s FTX hearing confirms our forecast that it will be a lengthy, contentious affair at which Sam Bankman Fried will be raked over the coals after current management that has already excoriated him completes its testimony.  We will monitor this hearing as well as Wednesdays before Senate Banking, but we expect that policy and political implications will come clear only after Members of Congress have finished attempting to score points specific to FTX.

HFSC Previews Chopra Hearings

In addition to high-profile crypto hearings, both HFSC and Senate Banking will also have lively sessions with CFPB Director Chopra later this week as he presents his agency’s semi-annual report.

CFPB Again Targets Repeat Offenders in Nonbank Registry Proposal

Taking another shot at repeat offenders, the CFPB today proposed requiring certain nonbank financial firms to report any agency or court orders, which would then be incorporated in a public data registry to create a comprehensive and easily accessible information equivalent to that readily to be found on banking organizations.  Larger, supervised nonbanks will also be required to designate a senior executive to provide a written attestation of the firm’s compliance with covered orders.

Daily121222.pdf

30 11, 2022

DAILY113022

2022-11-30T17:09:02-05:00November 30th, 2022|2- Daily Briefing|

Brown Again Asks Treasury for Crypto Action, Recommendations

In a letter today, Senate Banking Chairman Brown (D-OH) continued his press for regulators to do something soon about cryptoassets.  He called on Secretary Yellen to work quickly with regulators to advance the policy recommendations in recent Treasury reports (see Client Report CRYPTO32), noting in particular his concerns with vertical integration, calling for rules as well as recommendations regarding any needed statutory changes.

Confirmation Seems Assured for Full FDIC Board

At today’s confirmation hearing, Republicans raised numerous concerns with Acting Chairman Gruenberg, but appear reconciled to accepting his nomination in order to win confirmation for the two Republican nominees who would fill out the board.  Ranking Member Toomey (R-PA) blasted Mr. Gruenberg over the alleged “power grab” last year and his support for climate risk initiatives, but the bulk of questioning centered around cryptoassets.

Brown Presses CFPB to Stop Silent Second Foreclosures

Chairman Brown (D-OH) today sent a letter today to CFPB Director Chopra urging the Bureau to sanction servicers foreclosing on “zombie” second liens.  These are second liens that were often piggybacks in pre-2008 high-LTV mortgages designed to ensure that first loans could be sold to the GSEs without private mortgage insurance.

Daily113022.pdf

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

Go to Top