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1 02, 2023

DAILY020123

2023-02-01T16:53:57-05:00February 1st, 2023|2- Daily Briefing|

CFPB Set To Quash Credit-Card Late Fees

Taking action as anticipated following its June ANPR (see FSM Report CREDITCARD35), the CFPB today released an NPR that would curtail credit card late fees the Bureau calls “excessive,” moving ahead also with one aspect of the White House competition agenda.

Comment Deadline Set For CFPB Contract Registry Proposal

The Federal Register today includes the CFPB’s form-contract registry proposal.  As noted (see FSM Report CONSUMER48), the Bureau’s NPR would establish a public registry requiring nonbanks to post contract provisions which the agency believes threaten consumer legal or free-speech rights.

Brown, Democrats Press Thompson On Enterprise Loan Sale Programs

Ahead of a housing hearing as soon as next week, Senate Banking Chairman Brown (D-OH) and four other Democrats today sent a letter to FHFA Director Thompson requesting a review of Fannie and Freddie’s nonperforming and reperforming loan-sales programs.

McHenry Confirms Privacy, Crypto Priorities; Rewrites HFSC Rules

At an HFSC organizational meeting, Chairman McHenry (R-NC) today emphasized that he wants to work with Democrats, but much of what he said is unlikely to facilitate this.  For example, he noted with regard to crypto legislation that he wants to end the SEC’s enforcement-focused policy; as previously noted, any crypto legislation curtailing the SEC will run afoul of Democratic views in both the House and Senate.

Daily020123.pdf

26 01, 2023

DAILY012623

2023-01-26T16:44:02-05:00January 26th, 2023|2- Daily Briefing|

Effective Date Set for LIBOR Termination

The Federal Register today includes the FRB’s final rule Implementing the Adjustable Interest Rate (LIBOR) Act, setting the rule’s effective date as February 27.  As noted (see FSM Report LIBOR9), the final rule settles many LIBOR transition questions in favor of SOFR, leaving numerous complex implementation questions  up in the air despite this added certainty.

Fed Study Finds Card Rewards Result in $15 Billion Wealth Transfer

A new Federal Reserve staff study finds that credit-card rewards annually redistribute approximately $15.1 billion a year to more financially-sophisticated consumers.  This result is likely to weigh heavily into debate later this year if, as we expect, Sen. Durbin (D-IL) reintroduces legislation to force card-routing alternatives to Visa and Mastercard (see FSM Report INTERCHANGE10).

ISDA Lays Groundwork for Crypto Rules, Law

The self-regulatory body for global derivatives, ISDA, today released a contractual framework for digital-asset derivatives.  These are now likely to be widely adopted by major financial institutions but may not resolve legal-ownership issues when cryptoasset entities use intermediaries or other avenues into global capital markets that obscure contractual rights.

Daily012623.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

23 12, 2022

DAILY122322

2022-12-23T12:16:11-05:00December 23rd, 2022|2- Daily Briefing|

FTC Tackles Debit-Card Networks, Access

With no let-up for the holidays, the FTC today charged that MasterCard violated both the Durbin Amendment and FRB rules (see FSM Report INTERCHANGE11) mandating that merchants be given the choice of competing debit-card networks and that no efforts be made to block them from doing so.  The order applies to the competing ecommerce network by virtue of Mastercard’s tokenizing practices, which the FTC concluded impeded merchant access in numerous improper ways.  The consent order requires MasterCard to give competing networks the customer information necessary to process the debit-card transaction and bans Mastercard from barring use of other tokens.

Daily122322.pdf

1 09, 2022

DAILY090122

2022-12-20T16:17:52-05:00September 1st, 2022|2- Daily Briefing|

FTC Tackles Credit-Card Digital Marketing

In an action with implications for all credit-card issuers, the FTC today ordered Credit Karma to pay $3 million to consumers allegedly harmed by the company’s marketing misrepresentations.  The Commission’s complaint claims that Credit Karma’s use of digital dark patterns – user interfaces designed to steer consumers to choices in a company’s, rather than their own, interest – enticed consumers into applying for credit cards for which they did not qualify.

Hsu Presses for Responsible Innovation

In remarks today generally focused on community banks, Acting Comptroller Hsu also focused on ways to ensure that small banks safely enter digital finance.  The OCC is reinvigorating a 2015 effort to encourage partnerships among community banks that pool resources and expertise – what we would call a new approach to bankers’ banks focused here on technology innovation.

IMF Stakes Out New Stablecoin Standards

The IMF today released a flurry of articles outlining the benefits and risks of DeFi and digital assets, with one article warning against regulating stablecoins like banks.

Daily090122.pdf

19 08, 2022

DAILY081922

2023-01-04T11:13:22-05:00August 19th, 2022|2- Daily Briefing|

Payment-System Decision Process May Begin Today

Today’s Federal Register includes the Fed’s final payment-system access guidance (see FSM Report PAYMENT25).  The guidelines are thus effective immediately.  As noted, the final three-tier process for Reserve Bank deliberations sets out a process for streamlined, “intermediate,” and additional scrutiny based on an applicant’s charter, regulation, risk-profile, and numerous other, possibly discretionary factors.

CFPB Plans New Credit-Card Fee Disclosure Requirements

Following its ANPR on credit-card fees (see FSM Report CREDITCARD35), the CFPB today published a rationale for its campaign to control them and – despite the early stage of its rulemaking – a plan to do so via a data-collection proposal published yesterday in the Federal Register.  Comments on the proposal are due by October 17 and the details now provided on the Bureau’s plans suggest it will get more than a few.  The post argues that APR transparency would spur competition and empower consumers.

FDIC Goes After Crypto Companies for False Advertising

Based on its earlier warning and recent rule re advertising FDIC insurance, the FDIC today issued cease-and-desist orders against five cryptocurrency companies it claims are advertising that several of their crypto-related products are FDIC-insured.  The order expressly instructs these companies to remove any reference that suggests products carry FDIC coverage within fifteen days and makes clear that a failure to comply will result in further FDIC action, the nature of which is not specified.

Daily081922.pdf

18 08, 2022

DAILY081822

2023-01-04T11:25:52-05:00August 18th, 2022|2- Daily Briefing|

CFPB Plans to Change Credit-Card Filings

The CFPB is seeking comments on revisions to reports it receives on credit-card terms and those related to certain cobranding agreements.  Although the new data are not described, the Bureau is likely planning to gather more information supporting its campaign to limit “junk fees, (see FSM Report CONSUMER38), govern credit-card late fees (see FSM Report CREDITCARD35), and otherwise restructure this sector.

IMF Blog: Climate Finance Should Blend Public/Private Sectors

An IMF blog post today by its managing director Kristalina Georgieva and Tobias Adrian advocates for blending public and private sector finance as a way of de-risking climate finance.  Advocating options that pose challenges under both U.S. law and longstanding-policy tradition, the Fund recommends public-sector equity investments and credit enhancements, highlighting additional financing practices it says would reduce impediments to private capital such as public-private partnerships, multi-sovereign guarantees, and separate underwriting for risks such as political instability.

FDIC Takes Concrete Anti-Overdraft Action

Although the CFPB has blasted overdraft fees and Acting Comptroller Hsu has suggested that they may pose supervisory concerns, the FDIC today took concrete action against them.  In a new supervisory edict, it announced that state nonmember banks receiving multiple NSF fees for the same transaction risks supervisory sanction because such fees are unsafe and unsound.

Daily081822.pdf

12 08, 2022

Al081522

2023-01-04T12:15:50-05:00August 12th, 2022|3- This Week|

Quiet But ….

With passage last Friday of the Administration’s Inflation Reduction Act, political focus will be still more monomaniacally fixed on what the economy actually does between now and November.  The White House is reveling in lower gas prices, Republicans are pointing to higher prices for pretty much everything else, and markets have turned from their obsession with each Powell pronouncement to what we think is a rather unhealthy fixation on the mountain mutterings throughout Jackson Hole later this month.  Still, there’s some business as sort-of usual.

Al081522.pdf

12 08, 2022

DAILY081222

2023-01-04T12:21:38-05:00August 12th, 2022|2- Daily Briefing|

CFPB Plans Inquiry into Credit-Card Rates, Rewards, Competition

blog post today from the CFPB examining credit-card interest rates concludes that these are set in ways that provide “outsized profits.”  As a result, the Bureau plans to add this issue to the assault currently under way against late fees (see FSM Report CREDITCARD35) by evaluating whether trends like increasing rewards and high switching costs explain high interest rates and if anti-competitive practices are also at work putting profits above cardholders’ best interests.  The study finds that credit-card pricing appears to be less responsive to macroeconomic trends such as changes in the cost of funds and that mismatches between card interest rates and lending risk may drive undue profitability.

Daily081222.pdf

11 08, 2022

INTERCHANGE10

2023-01-04T12:45:54-05:00August 11th, 2022|1- Financial Services Management|

Credit-Card Networks

Two senators have reopened questions about the manner in which card-related payments are handled, tackling those applicable to credit cards with a bill mandating that merchants must be given a network choice that is not either Visa or Mastercard in order to, the sponsors argue, increase competition and lower credit-card transaction costs.  Although the multi-network requirement would apply only to banks with assets over $100 billion, it would likely have the effect of lowering swipe fees across the sector because exempt banks would be compelled by market forces to find lower-cost networks.  The extent to which these lower-cost networks are also sound and resilient under stress is uncertain as no safety-and-soundness or operational requirements directly apply to card-processing networks.

INTERCHANGE10.pdf

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