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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

5 08, 2022

DAILY080522

2023-01-04T13:22:18-05:00August 5th, 2022|2- Daily Briefing|

Senate Dems Demand Answers from Equifax re Inaccurate Credit Scores

In a letter today to Equifax’s CEO, Sens. Warren (D-MA), Warner (D-VA), and Krishnamoorthi (D-IL) demanded answers about erroneous credit scores, asking why the company failed to notify affected borrowers and waited several weeks to notify lenders.  The Senators claim that Equifax’s response in an environment of rising interest rates forced some borrowers to pay higher rates or rejection and ask Equifax to explain the cause and scope of the error, compensation plans, and whether all affected parties or any relevant regulatory authorities have been notified.

Brown Targets Life-Insurance Systemic Risk

Senate Banking Chairman Brown (D-OH) today announced that he plans a hearing questioning the role of private-equity companies in the life-insurance sector.  In letters to FIO and the NAIC, he cites Federal Reserve statements regarding insurance-industry leverage (see Client Report SYSTEMIC93), indicating that he believes this poses systemic challenges akin to those in the banking sector before 2008.  FIO is asked to target analysis of offshore reinsurance sector risk-taking across the life-insurance sector; NAIC is asked to work with the FIO on issues raised in its prior letter to the chairman.

Daily080522.pdf

28 07, 2022

DAILY072822

2023-01-04T15:35:02-05:00July 28th, 2022|2- Daily Briefing|

End-August Deadline Set for LIBOR Comments

The Federal Register today includes the Fed’s proposal to implement the LIBOR Act.  Comments are due by August 29.  As we noted (see FSM Report LIBOR8), a smooth transition from LIBOR by its effective end date in June 2023 appears unlikely, with the Fed leaving several questions unresolved in its NPR in favor of meeting this deadline.

HFSC Votes in On Key Bills

Turning to recorded votes from yesterday’s markup, the HFSC today approved several bills including reforms to overdraft fees and credit reporting.  The overdraft bill, H. R. 4277 (Maloney, D-NY), passed 27-22.  Also voted on were H.R. 8485 (Williams, D-GA), and H.R. 8478 (Pressley, D-MA).  Both passed the Committee 28-23.

FSOC Agency Heads Report Climate-Risk Progress

At today’s FSOC open meeting, member agency heads reported their climate-risk progress following the President’s executive order.  Chairman Powell reiterated that the Fed is updating work on climate risk assessments without providing timing or details.  SEC Chairman Gensler mentioned the SEC’s proposed climate disclosure proposal, stating that hundreds of issuers already disclose climate-related information.

Daily072822.pdf

27 07, 2022

DAILY072722

2023-01-04T15:37:13-05:00July 27th, 2022|2- Daily Briefing|

Waters: Stablecoin Bill Would Authorize CBDC

At the opening of today’s HFSC markup, Chairwoman Waters (D-CA) and Ranking Member McHenry (R-NC) announced that they were close to a bipartisan draft of stablecoin legislation and hope to complete one by the August recess.  Chairwoman Waters said the bill would include authorization for CBDC to ensure U.S. global competitiveness.  We would expect this to follow the outline of the draft Rep. Himes (D-CT) released this spring.

Revised Overdrafts, Credit Data Bills Advance

The HFSC today, although postponing recorded votes, lightly approved H.R. 4277, Rep. Maloney’s (D-NY) overdraft protection bill.  The bill would limit overdraft fees banks can charge customers to no more than one per month or six per year, allowing the CFPB to raise that limit; require the fees to be reasonable and proportional to the amount overdrawn and the cost of providing coverage for the overcharge; prevent institutions from posting transactions in an order that would maximize overdraft fees; and require banks to let customers decide if they want coverage.  It appears that the bill will not have the option for the CFPB to impose a 24-month moratorium included in the legislation when it last came before the Committee, but we will review the bill as reported to determine if that is the case.

Daily072722.pdf

12 07, 2022

DAILY071222

2023-01-06T15:21:46-05:00July 12th, 2022|2- Daily Briefing|

FRB-NY Staff Target Consumer-Welfare Problems with Numeric Scores

A new post from Federal Reserve Bank of New York staff concurs with a recent GAO study and Senate Democratic concerns about consumer risks resulting from numeric scores for purposes other than credit reporting.  GAO called for consumers to have the same transparency and error-correction rights related to scores such as those judging purchasing power or deposit activity as mandated under the FCRA for credit scores.

Treasury Reposts Crypto RFI

As Treasury for some reason today reposted its request for comment on digital assets.  The release is the same as last week’s which we analyzed in today’s in-depth report (see FSM Report CRYPTO30).

OFR Report Finds CBDC Reduces Run-Risk

The Office of Financial Research today released a report concluding that – counter to many fears – a CBDC could reduce banking system run-risk.  This is because a CBDC during normal times is said to lead to less maturity transformation (i.e., less intermediation), as well as the government resolving weak banks more quickly due to greater information signaling of a run evident in CBDC flows.

Daily071222.pdf

7 07, 2022

DAILY070722

2023-01-24T15:30:00-05:00July 7th, 2022|2- Daily Briefing|

IOSCO Releases 2022-2023 Crypto Roadmap

IOSCO today released its Crypto-Asset Roadmap for 2022-2023, outlining two work plans on crypto- and digital assets on DeFi.

Basel Reaffirms Proportionate Policy

The Basel Committee today released high-level “considerations” on proportionality – i.e., how to apply its standards taking account of a bank’s size and complexity.

CFPB Demands Tighter Reporting-Data Controls

Using another advisory to issue what some may consider a rulemaking, the CFPB today threatened to pursue criminal penalties if credit-report data are not used for permissible purposes (i.e., for credit, housing, employment or insurance decisions).

FSB Report Promotes LEI Adoption for Cross-Border Payments

The FSB today issued a report recommending that G20 members promote Legal Entity Identifier (LEI) adoption, aiming particularly at cross-border payments.

Treasury Releases International Crypto Engagement Framework

As demanded by President Biden’s digital asset executive order (see Client Report CRYPTO26), Treasury in consultation with the State Department, Commerce, and USAID today released a framework for international engagement on digital assets.

Democratic Senators Demand More from Zelle on High-Profile Fraud Allegations

Sens. Menendez (D-NJ), Warren (D-MA), Reed (D-RI) and five Democratic colleagues today ramped up their attack on the extent to which Zelle properly handles payment fraud.

Daily070722.pdf

21 06, 2022

DAILY062122

2023-01-26T11:42:57-05:00June 21st, 2022|2- Daily Briefing|

Deadline Set for CFPB Inquiry into Customer Service
The Federal Register today includes the CFPB’s RFI on how big banks serve their customers (see FSM Report CONSUMER43), now seeking a comment deadline of July 21.

BIS Presses Hard for Fast-Acting CBDCs, Payment Systems, Crypto Standards
The BIS today issued an ambitious report outlining what it calls a “new monetary order.”

SEC Finally Nabs a CRA for Conflicts of Interest
The SEC today announced an unusual enforcement case against a credit rating agency, acting on demands recently expressed by HFSC Democrats.

FDIC Proposes DIF Rate Hike, Possible Assessment-Standard Realignment
Taking action after two years, the FDIC today proposed to increase bank DIF premiums by two basis points.

HFSC Highlights Fed Policy Twists Ahead of Powell Hearing
The Democratic staff memo ahead of HFSC’s Thursday hearing with Chairman Powell provides a detailed discussion of recent monetary-policy moves and the extent to which the Fed has been surprised by macroeconomic events.

Spurred by GAO, OCC to Ramp Up Redlining-Exam Procedures
The GAO today recommended that the OCC update its redlining examination procedures and improve its data collection related to small banks in this area.

Daily062122.pdf

15 06, 2022

DAILY061522

2023-01-26T13:40:01-05:00June 15th, 2022|2- Daily Briefing|

Thompson FHFA Sticks with Utilities for GSE Future Charters
The FHFA today issued its annual report to Congress.  Although the first under now-confirmed Director Thompson, it follows the agency’s practice of reporting to Congress largely on past actions.

CFPB Demands Better BNPL Data, Improved Credit Reporting
Although the CFPB has taken no official action on buy-now/pay-later finance since its January RFI, it today issued a staff report on the sector containing a new statement of CFPB policy.

Basel Battens Down First Climate-Risk Hatch
The Basel Committee today issued a final version of its 2021 proposed set of high-level principles for managing climate risk (see FSM Report CLIMATE12).  We will shortly provide clients with an in-depth assessment of this new global framework, which is also the starting gun for final action on OCC and FDIC risk-management guidance (see FSM Report GREEN12).

TD Merger Draws Democratic Fire
Reflecting continuing opposition to large-bank mergers, Sen. Elizabeth Warren (D-MA) along with Reps. Katie Porter (D-CA), Chuy García (D-IL), and Al Green (D-TX) today sent a letter to Acting Comptroller Hsu demanding that TD’s proposed acquisition of First Horizon Bank be denied unless or until the bank is held accountable for what the Members describe as flagrant consumer abuses.

Daily061522.pdf

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