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15 02, 2023

DAILY021523

2023-02-15T17:02:30-05:00February 15th, 2023|2- Daily Briefing|

GOP Launches Anti-SEC Climate-Risk Legislative Attack

As anticipated, House Republicans have gone beyond blasting the SEC’s pending climate-risk disclosure proposal to laying out a consensus bill to force Chairman Gensler in fact to retract it.  H.R. 1018 has been introduced by HFSC member Lucas (R-OK) and 55 Republicans to prohibit climate-risk disclosures under securities law.

FDIC Adds Punch to FDIC-Misrepresentation Enforcement Promise

Building on its insurance misrepresentation final rule (see FSM Report DEPOSITINSURANCE113), the FDIC today issued four cease and desist orders demanding the removal of false claims and thus made it clear that it is surveying the marketplace to take far more rapid action than has been the case thus far.

Calling Out Hsu, Warren Demands Merger Reform

In a wide-ranging speech urging tough U.S. antitrust policy, Sen. Warren (D-MA) today reiterated her claims that banking agencies “rubber-stamp” mergers and pressed for immediate reform.  She took particular aim at Acting Comptroller Hsu, urging him to prepare new guidelines for the banking industry and to block anticompetitive mergers.

Will SEC Custody Rules Kill Crypto?

Conceding that rulemaking is needed on at least one crypto question, the SEC today voted 4-1 to approve proposed changes to investment-advisor asset custody regulation.  The measure would expand assets subject to custody requirements and the protections custody affords as well as revise related record-keeping requirements.

Daily021523.pdf

30 01, 2023

Karen Petrou: M&Ms, McHenry, and the Making of Financial Policy

2023-01-30T11:28:41-05:00January 30th, 2023|The Vault|

It’s a sad commentary on American politics to observe, as I feel we must, that the experienced chairman of the House Financial Services Committee, Patrick McHenry, has followed M&M’s “spokescandies” as a target of Tucker Carlson’s bilious, yet widely-watched, wrath.  The fundamental frivolity of this contrast is self-evident, but that has yet to dampen the credibility of this combustible commentator with his super conservative acolytes.  That Mr. Carlson matters so much to public discourse is deeply distressing given some of his other targets – Nancy Pelosi’s husband after a brutal attack is only one that comes immediately to mind.  Unlike him and many other Carlson targets, Mr. McHenry can more than take care of himself.  Still, going after him means super-conservatives will blast any Member or measure that falls short of purity on their rightward-loaded scale.  Since nothing these folks like can be enacted into law, all this does is reduce the hopeful odds we cast earlier this year for constructive financial-policy legislation.  Too bad – the nation could use some.

The nub of the accusation lies in his chairman’s decision to leave the word “inclusive” in the name of one of his panel’s revamped subcommittees.  Clearly, the concept of inclusion has become accursed because Democrats often used it in concert with what might seem an equally innocuous word:  diversity.  Democrats did use diversity and inclusion demands to press for racial, gender, and sexual-orientation equity in ways that rubbed many republicans raw, but the idea of inclusion is fundamental to …

30 01, 2023

M013023

2023-01-30T11:28:34-05:00January 30th, 2023|6- Client Memo|

M&Ms, McHenry, and the Making of Financial Policy

It’s a sad commentary on American politics to observe, as I feel we must, that the experienced chairman of the House Financial Services Committee, Patrick McHenry, has followed M&M’s “spokescandies” as a target of Tucker Carlson’s bilious, yet widely-watched, wrath.  The fundamental frivolity of this contrast is self-evident, but that has yet to dampen the credibility of this combustible commentator with his super conservative acolytes.  That Mr. Carlson matters so much to public discourse is deeply distressing given some of his other targets – Nancy Pelosi’s husband after a brutal attack is only one that comes immediately to mind.  Unlike him and many other Carlson targets, Mr. McHenry can more than take care of himself.  Still, going after him means super-conservatives will blast any Member or measure that falls short of purity on their rightward-loaded scale.  Since nothing these folks like can be enacted into law, all this does is reduce the hopeful odds we cast earlier this year for constructive financial-policy legislation.  Too bad – the nation could use some.

m013023.pdf

24 01, 2023

DAILY012423

2023-01-24T16:47:35-05:00January 24th, 2023|2- Daily Briefing|

FSB Chair Presses Need to Finalize Global Crypto Standards

In remarks today, FSB Chair Klaas Knot reiterated FSB’s 2023 priorities regarding NBFI, crypto, and climate change risks, also emphasizing that the FSB seeks to improve financial resilience rather than predicting the cause of the next financial crisis.

McHenry, Hill Suggest Crypto Action Plan

In a new tweet, HFSC Chairman McHenry (R-NC) emphasized the crypto plan he discussed earlier in a media interview.

Brown, Van Hollen Press Tough TLAC, Regional-Bank Resolvability Rule

Senate Banking Committee Chairman Brown (D-OH) and Sen. Van Hollen (D-MD) sent a letter to FDIC Chairman Gruenberg and FRB Vice Chair Barr late yesterday praising the agencies’ recent ANPR on large bank resolution standards (see FSM Report RESOLVE48), calling for TLAC that prevents taxpayer bailouts in the event of failure.

CFPB Kicks Off Credit Card Regulatory Rewrite

Following its credit card late-fee notice of proposed rulemaking (see FSM Report CREDITCARD35), the CFPB today sought comment on the credit card sector as a whole for its biennial review of the industry.

Daily012423.pdf

17 01, 2023

DAILY011723

2023-01-17T17:03:48-05:00January 17th, 2023|2- Daily Briefing|

FinCEN Opens Beneficial-Ownership Reports to Public Comment

Likely furthering its effort to garner greater public buy-in for its beneficial ownership information (BOI) standards, FinCEN is now requesting public comment on these reports.

CFPB Presses Consumers, Employees to Action

In a post today, the CFPB double-downed on its recent precedent-setting enforcement action against Wells Fargo (see Client Report CONSUMER46).

Breaking Up Won’t Be Hard to Do

In a high-impact speech today, Acting Comptroller Hsu expressly threatens that the OCC will not stop at the kind of growth restrictions imposed on Wells Fargo (see Client Report CORPGOV26) or the CFPB’s fines (see Client Report CONSUMER46) if a large bank is a repeat offender in safety-and-soundness arenas.

Fed Begins Big-Bank Physical/Transition Financial Climate Risk Analysis

The Fed today announced a two module structure for its upcoming GSIB pilot climate scenario analysis,  kicking off a process to identify the data, governance, and processes banks need to manage the financial risks related to physical and transition climate events.

Daily011723.pdf

12 01, 2023

DAILY011223

2023-01-12T16:51:37-05:00January 12th, 2023|2- Daily Briefing|

OCC Tightens Fair-Lending Review

Acting Comptroller Hsu took the occasion today of release of a new fair-lending manual to emphasize the OCC’s commitment to ending credit discrimination.

McHenry Chairmanship Starts With CFPB Confrontation

In his first financial-policy action since becoming HFSC Chairman, Rep. Patrick McHenry (R-NC) today blasted the Bureau and its “reckless” Director for what he described as expanding its authority beyond congressional intent.

FRB-NY Staff Renew Debate Over FBO Liquidity, Market Impact

A new post from FRB-NY staff assesses the funding strategies of FBO branches and agencies to judge their current impact setting dollar-liquidity pricing in the U.S. wholesale funding market.

OFR Cites Heightened Systemic Risk, MMF Worries

In its annual report on 2021, OFR has concluded that financial stability risks are generally elevated due to macroeconomic tightening, inflation, climate change and volatility in Treasury, crypto, and commodity markets.

DOJ Lands Unprecedented Redlining Settlement

Continuing the Administration’s racial-equity campaign, the Department of Justice today announced an historic settlement with City National Bank.

Daily011223.pdf

10 01, 2023

DAILY011023

2023-01-10T16:58:07-05:00January 10th, 2023|2- Daily Briefing|

Powell Fights for Higher Ground

Although Chairman Powell’s statement today that the Fed does not make climate policy is not unprecedented, the express emphasis he chose to place on it  speaks to even greater Fed political sensitivity about its independence given GOP control of the House.  As previously noted, the Fed will come under challenges to its mandate and even structure, making the central bank even warier than ever about emphasizing the dispassionate nature of its monetary-policy decisions.  Indeed, comments about a narrow mission also mentioned the importance of avoiding “social” objectives, implicit rejection not only of a climate mission, but also of one focused on racial equity.

Daily011023.pdf

9 01, 2023

DAILY010923

2023-01-09T16:42:26-05:00January 9th, 2023|2- Daily Briefing|

FRB Staff Criticizes GSIB Climate Action Plans

A new FRB staff paper assesses GSIB climate-action plans, finding them better but still wanting with regard to risk measurement, disclosure, and management as well as the alignment of financing activities with stated net-zero targets.  The paper largely depends on GSIB disclosures, likely not only leading authors to call for improvements given the well-known early stage of these releases, but also making uncertain its analysis of opaque areas such as internal policy alignment.  The study notes the lack of standardization in GSIB disclosures, efforts, and terminology but does not seem to address it in reaching its conclusions.

FRB-NY Staff Find Banks Target Repurchases to Constrain Capital Distribution

Reaching no conclusions about the wisdom of the Fed’s 2020 restrictions on bank capital distributions, a new blog post from FRB-NY staff finds that changes in repurchases account for almost all of the movement in bank shareholder payout since the pandemic and that the greater volatility of repurchases relative to dividends reflects long held trends.  This is because changes to repurchases are more discretionary than “highly visible” dividend changes.

Daily010923.pdf

30 12, 2022

Al010223

2022-12-30T12:27:06-05:00December 30th, 2022|3- This Week|

Warming up for 2023

The last thing another pandemic-saddled holiday season needed was a nation-wide winter weather event and major airline cataclysm, but a year that brought us the Ukraine war and inflation levels not seen since the 1980’s was sure to sign off with a bit of chaos.  We hope you were still able to celebrate and aren’t missing any luggage.  Despite it all, global and U.S. financial regulators advanced many significant issues through the holidays.  To help you catch up, here’s a round-up of what we sent over the past two weeks sure to come immediately into focus as critical issues advance:

Al010223.pdf

19 12, 2022

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

2023-01-03T15:56:33-05:00December 19th, 2022|The Vault|

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….

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

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