#credit cards – Federal Financial Analytics

18 09, 2023

DAILY091823

Eliza Allen2023-09-18T16:46:46-04:00September 18th, 2023|2- Daily Briefing|

Dems Slam Fed Climate Scenarios

Sens. Markey (D-MA), Warren (D-MA), Sanders (I-VT) and eight additional Democratic Senators and House Members sent a letter to Chair Powell today demanding that the Fed ensures that the financial institutions it oversees properly address the threat of climate change. Claiming that the Fed’s climate pilot scenarios are not sufficiently rigorous, the letter demands that the Fed require banks to submit and execute plans to align their activities with climate targets, such as reducing financed emissions.

Top Treasury Official Sounds Big-Tech Payments Alarm

Treasury Assistant Secretary for Financial Institutions Graham Steele Friday warned that Big-Tech firms’ entry into financial services could result in increased market concentration and predatory pricing, highlighting their ability to leverage existing commercial relationships as well as network effects. Mr. Steele also named consumer-data rights and junk fees as top priorities, praising the CFPB’s actions on personal data (see FSM Report DATA3) and credit-card late fees (see FSM Report CREDITCARD36).

Daily091823.pdf…

14 09, 2023

DAILY091423

Eliza Allen2023-09-14T16:47:09-04:00September 14th, 2023|2- Daily Briefing|

IOSCO Proposes Leveraged Loan, CLO Best Practices

IOSCO today released a consultation report proposing best practices for leveraged loans and CLOs that address origination and refinancing, EBITDA and documentation transparency, aligning interests from loan origination to end investors, managing conflicts of interest throughout the intermediation chain, and disclosures.

Durbin, Marshall Press Credit-Card Interchange Bill

Reiterating concerns expressed last month and comments yesterday on the Senate floor, Senate Whip and Judiciary Chairman Durbin (D-IL) and Sen. Marshall (R-KS) were joined this time by Sen. Welch (D-VT) and four House Members calling on Visa and Mastercard to reverse planned fee hikes.

GAO Presses for FSOC Power to Regulate, Not Just Designate

The GAO today issued a report recommending that Congress consider legislation allowing FSOC to compel regulatory action, arguing that this would better accomplish the Council’s mission because FSOC currently has limited power to respond to systemic risk.

HFSC GOP Highlight CBDC Privacy Concerns

As anticipated, HFSC Digital Assets GOP Members continued their staunch opposition to a U.S. CBDC, with Subcommittee Chairman Hill (R-AR) and Majority Whip Emmer (R-MN) asserting that private innovation can modernize payments without the risk of government surveillance.

Brown Doubles Down on Opposition to House Crypto Bill

Making it still more clear that he is not supportive of pending House cryptoasset legislation, Senate Banking Chairman Brown (D-OH) today sent a letter to Treasury Secretary Yellen, SEC Chairman Gensler, and CFTC Chairman Benham asking for views on where new authority may be needed.

Daily091423.pdf…

1 09, 2023

DAILY090123

Eliza Allen2023-09-01T12:18:22-04:00September 1st, 2023|2- Daily Briefing|

Durbin, Marshall Reinforce Demand for Card-Fee Cuts

Pressing their bill to limit credit-card interchange fees (see FSM Report INTERCHANGE10), Senate Whip and Judiciary Chairman Durbin (D-IL) and Sen. Marshall (R-KS) this week called on Visa and Mastercard to reverse planned fee hikes. Sen. Durbin is pressing hard to attach the bill to a must-pass vehicle later this month; as noted, it would extend routing-system requirements to credit cards and could lead to significant reductions in card-fee income for banks.

GSIB Surcharge Revisions in Register

The Federal Register today includes the Federal Reserve’s proposal to revise how systemic risk scores that lead to GSIB designation are calculated. As noted (see FSM Report GSIB22), while the Board estimates that the overall impacts of the changes to the surcharge are small, our analysis concludes that the scoring changes could result in higher capital requirements for large regional banks and certain IHCs.

Daily090123.pdf…

8 08, 2023

FedFin on: Equity and Securitization Capital Standards

Arezou Rafikian2023-08-08T13:44:33-04:00August 8th, 2023|The Vault|

Based on our analysis of the inter-agency capital proposal’s framework and its credit-risk provisions, FedFin turns now to the proposed approach to equities as well as to that for securitization exposures (i.e., those that are tranched rather than simple secondary-market issuances of packages of loans or other assets backed as needed by a single credit enhancement). The proposal in some cases liberalizes the current, “general” standardized approach (SA), but more often toughens it to account for elimination of the advanced approach…

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

8 08, 2023

CAPITAL232

Eliza Allen2023-08-08T10:52:38-04:00August 8th, 2023|1- Financial Services Management|

Equity and Securitization Capital Standards

Based on our analysis of the inter-agency capital proposal’s framework and its credit-risk provisions, FedFin turns now to the proposed approach to equities as well as to that for securitization exposures (i.e., those that are tranched rather than simple secondary-market issuances of packages of loans or other assets backed as needed by a single credit enhancement). The proposal in some cases liberalizes the current, “general” standardized approach (SA), but more often toughens it to account for elimination of the advanced approach. This will have particular bearing on significant aspects of category III and IV bank activities (e.g., credit-card securitizations, MMF funding), but all covered banking organizations will see significant capital increases as many activities now permitted within the banking book would need to move to the trading book under the new market-risk rules. Securitization-related capital standards are generally brought closer to those for underlying assets in simple securitizations, giving banks more balance-sheet flexibility and credit-risk mitigation opportunities if investors accept these structures. The treatment of equity exposures is generally tightened, sometimes so much as to effectively prohibit certain activities – e.g., non-traditional equity investments in covered funds and BHC subsidiaries. The new treatment of investment funds will also have significant implications for banks that fund themselves through prime MMFs or sponsor investment funds through equity positions.

CAPITAL232.pdf…

26 07, 2023

DAILY072623

Eliza Allen2023-07-26T16:37:20-04:00July 26th, 2023|2- Daily Briefing|

Senate Democrats Stand Firm On “Junk Fee” Campaign

Today’s lightly-attended Senate Banking Financial Institutions Subcommittee hearing on banking and consumer fees showcased broad Democratic alignment with the Administration’s “junk fees” campaign and persistent Republican aversion to this effort as well as to the CFPB.

CFPB Flags UDAAP, Other Problematic Practices for Enforcement

The CFPB’s latest supervisory report not only details recent actions and priorities, but also expressly stipulates that certain activities identified in the course of supervision that have yet to be addressed by formal agency action are UDAAP.

SEC Targets AI Advice

Acting as anticipated following Gary Gensler’s fiery talk last week about AI risk, the SEC today voted 3-2 to propose new rules curtailing what it believes to be broker dealer and investment-adviser conflicts of interest due to predictive analytics.

Crypto-Jurisdiction Bill to Advance; Stablecoin Measure Likely to do so Tomorrow

Chairman McHenry (R-NC) and Ranking Member Waters (D-CA) announced at today’s HFSC markup that bipartisan negotiations on the committee’s stablecoin bill continue and despite the absence of any breakthrough.

DOJ Officials Seeks Merger Answers

In remarks today, Policy Director David Lawrence of DOJ’s Antitrust Division went beyond new, draft DOJ/FTC merger guidelines (see FSM Report MERGER12) to lay out questions on which the agencies particularly seek answers.

Powell Stresses Bank Discount Window Readiness

FRB Chairman Powell’s press conference today focused almost entirely on monetary policy, but the chair agreed that the discount window performed badly during the recent crisis and that banks need to …

14 07, 2023

Al071723

Eliza Allen2023-07-14T16:19:20-04:00July 14th, 2023|3- This Week|

All Roads Lead To Chokepoint

As we noted last week, HFSC’s anti-ESG agenda includes a strong poke at banks and their regulators, going beyond the climate-risk concerns that lie at the center of these sessions also to resurrect efforts during the Trump Administration to sanction any bank that decides on reputational or other grounds not to lend to a creditworthy, legal business (see FSM Report ESG3). Much is said in this context about “Operation Chokepoint,” a decade-plus old effort by the FDIC and OCC to block bank exposures to payday lenders, firearms firms, or others the agencies believed posed so much reputational risk as to make the loans unsafe or unsound.

Al071723.pdf…

11 07, 2023

DAILY071123

Eliza Allen2023-07-11T16:38:06-04:00July 11th, 2023|2- Daily Briefing|

FRB-NY Staff: Climate Tradition Risk Meaningful, Manageable

A new blog post from Federal Reserve Bank of New York staff concludes that climate-transition risk in bank loan portfolios is meaningful, but also manageable. The paper uses general-equilibrium models to focus on forward-looking climate risk in scenarios based on current policy as well as orderly and disorderly transitions, an approach it believes differ from much retrospective analysis of carbon emissions as a measure of transition risk.

CFPB, OCC Team Up To Sanction BofA Transaction, Card Account Practices

The CFPB and OCC today took action against Bank of America in ways that renew questions about potential overlaps between the CFPB’s jurisdiction and that of the banking agencies. The costlier of the two actions from the CFPB ordered the bank to pay over $170 million in civil monetary penalties and restitution for a range of practices the Bureau regards as abusive and deceptive (see FSM Report CONSUMER39).

GOP Urges Supreme Court to Uphold Fifth Circuit CFPB Decision

Continuing the GOP’s longstanding campaign to redesign the CFPB, HFSC Chairman McHenry (R-NC), Senate Banking Ranking Member Scott (R-SC), and 130 Members of Congress filed an amicus brief today urging the Supreme Court to uphold the Fifth Circuit’s decision declaring the CFPB’s funding mechanism unconstitutional.

Daily071123.pdf…

7 07, 2023

DAILY070723

Eliza Allen2023-07-07T16:47:33-04:00July 7th, 2023|2- Daily Briefing|

House Judiciary Joins GOP Asset-Manager ESG Attack

Continuing the GOP campaign against ESG, House Judiciary Chairman Jordan (R-OH) and Reps. Massie (R-KY) and Bishop (R-NC) sent letters late yesterday to the leadership of BlackRock, Vanguard, State Street Global Advisers, the Glasgow Financial Alliance for Net Zero, and the Net Zero Asset Managers initiative, claiming that what they call “collusive agreements” violate antitrust law.

FRB-KC: Farm Credit System Mergers May Influence Ag-Bank Portfolio Strategy

New research from Federal Reserve Bank of Kansas City staff concludes that, while Farm Credit System mergers over the past twenty years had relatively minor effects on agricultural-bank profitability and efficiency, they may have altered bank portfolio decisions with broader implications both for banks and the communities they serve.

CFPB, Treasury, HHS Launch Interagency Inquiry Into Medical-Payment Products

As part of the White House initiative to address medical-sector “junk fees” and consumer protection, the CFPB today was joined by HHS and Treasury in issuing an RFI on high-cost specialty financial products it says harm medical patients by driving up debt.

FHFA Joins Repeat-Offender Crackdown

Acting on the “repeat-offender” crackdown initiated by the CFPB and recently picked up by the OCC, FHFA today issued a proposed rule that would revise its Suspended Counterparty Program (SCP) regulation to authorize FHFA to immediately suspend business between the GSEs and counterparties who are found to have committed civil or criminal misconduct in connection with real property management or ownership.

Daily070723.pdf…

30 06, 2023

Al070323

Eliza Allen2023-06-30T16:32:36-04:00June 30th, 2023|3- This Week|

Fireworks Start After the Fourth

We expect July to be particularly full of sound and fury ahead of the August recess. It’s a traditional time in which Members of Congress try to position bills for floor action in the crazed race to whatever comes of adjournment after the usual fiscal year-end follies. This year’s July will be still more fiery given the underlying political context forged by GOP investigations of the Biden Administration and family, appropriations battles, and geopolitical instability.

Al070323.pdf…