#credit scores

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

3 06, 2022

DAILY060322

2023-02-10T16:02:13-05:00June 3rd, 2022|2- Daily Briefing|

Agency Heads Stress Need for CRA Reform

Acting Comptroller Hsu, Fed Vice Chair Brainard, and Acting FDIC Chairman Gruenberg today took questions on the controversial, far-reaching inter-agency CRA regulatory rewrite (see FSM Report CRA32).

FRB-Cleveland Study: Small-Business Lending Continues Race/Ethnic Disparities

A new paper published by the Federal Reserve Bank of Cleveland finds evidence that race-based lending disparities persisted through the pandemic, concluding that Black business owners in particular struggled to receive loans compared to whites, fintechs have not overcome credit disparities, and minority-owned businesses were less likely to receive the PPP amounts for which they applied.

Waller Seeks Balance in Crypto Rules 

FRB Gov. Waller today described the advantages of innovative, unregulated markets such as that created by cryptography at its outset.

FinCEN Takes Baby Step to No-Action Letters

Reflecting demands from Congress in recent AML law (see FSM Report AML133), FinCEN today issued an advance notice of proposed rulemaking outlining how a no-action letter process might work.

Daily060322.pdf

2 06, 2022

DAILY060222

2023-02-10T16:10:34-05:00June 2nd, 2022|2- Daily Briefing|

Fed Study Outlines Fixes to Make Retail CBDC Functional

A new Federal Reserve paper assesses the interplay between a U.S. retail CBDC and monetary policy transmission if whatever the Fed comes to offer is widely adopted for both payment and investment purposes.

Black Crypto Investments Reflect Wealth Gap Born of Financial System Distrust

A new article by the Kansas City Fed investigates the popularity of cryptoassets among Black investors and explains what may attract them and how this is a symptom of the racial wealth gap.  The study found that Black investors are both more likely than whites to own crypto instead of safer assets such as stocks and mutual funds and more likely to expect high returns (i.e., 27 percent for Blacks versus 15 for whites) from crypto.

Fed Study Finds Enforcement Actions Increase Minority Lending

study today released by the Fed found that, since 1997, banks subject to an enforcement action increased their mortgage lending to minorities and decreased minority denial likelihood, even if the action was not issued for violation of the fair-lending laws.

FIO Prioritizes Biden Climate-Risk Goals

The meeting today of FIO’s Federal Advisory Committee on Insurance focused on FIO’s work to meet the goals set out for it in the President’s climate-risk executive order (see FSM Report GREEN8).

Daily060222.pdf

26 05, 2022

DAILY052622

2023-02-21T13:36:10-05:00May 26th, 2022|2- Daily Briefing|

CFPB Demands Adverse-Action Notices No Matter AI Opacity

Targeting AI’s fair-lending implications, the CFPB today issued its third circular laying out new policy without public notice or comment.  As with the previous circular (see FSM Report DEPOSITINSURANCE113), the new one expressly establishes CFPB enforcement policy and, by inference, thereby sets new standards.   The Bureau now lays out lender fair-lending obligations for any “black-box” models used for credit underwriting and a requirement for adverse-action notices stipulating the reason for credit denial.

Numeric Scores Join Credit Scores on Hot Seat

The GAO today released a report calling on Congress to give consumers protections for numerical scores affecting business decisions similar to those mandated for credit scores.  Although the thrust of GAO’s study is targeted marketing that leads to discounts or other advantageous product offerings, the scores banks used to evaluate depositor risk might well fall under this new framework, as more clearly would any cross-selling decisions.  Risks of concern to GAO include bias, unduly high costs, restricted product offerings, and opacity that puts consumers at greater risk in light of difficulties correcting any problematic conclusions.

Daily052622.pdf

31 03, 2022

DAILY033122

2023-03-27T14:51:11-04:00March 31st, 2022|2- Daily Briefing|

FSB Stays Its Course

The FSB today officially published its 2022 work plan, making only one change in terms of topics and timing from the plan detailed in a February letter to G20 finance ministers and central bankers.

HFSC Democrats Don’t Like Overdrafts, But No Action Imminent

As anticipated, today’s HFSC Consumer Protection Subcommittee hearing reviewed Democratic complaints about overdraft fees and a general Republican defense of the importance of the private sector in setting consumer-finance charges.

Sanctions Now Reach Sectors

Treasury’s OFAC today sharply expanded U.S. sanctions against the Russian Federation.

Gensler Tackles Climate Disclosures, Crypto

Noting that the SEC is focused on disclosures, not the “merit” of what issuers may do, SEC Chairman Gensler today defended the controversial Scope 3 climate-risk disclosures, calling them “layered” because mandatory upstream and downstream disclosures would only be required if exposures are material or if a company had made a risk-reduction commitment.

GOP Bill Would Ban CBDC

Clearly still laying out the CBDC political divide, Sens. Cruz (R-TX), Braun (R-IN), and Grassley (R-IA) have introduced S. 3954, legislation essentially barring a retail-focused CBDC if it serves – as the senators expect – as a “financial surveillance tool.”

Thompson Open to FHLB Inquiry, New Mortgage Product

In the wake of another op-ed questioning the purpose of the home loan bank system, acting FHFA director Thompson said today that the creation of an advisory committee to review the system is a “great idea” to which she is open, saying also …

17 12, 2021

Daily121721

2023-05-22T15:52:04-04:00December 17th, 2021|2- Daily Briefing|

Partisan Battle to Have Lasting FDIC Impact– HFSC Chairwoman Waters (D-CA) reiterated her opposition to FDIC Chair McWilliams’ decision to quash the merger RFI circulated by FDIC Board Democrats (see FSM Report MERGER9), highlighting her recent letter to bank regulators calling for a moratorium on all bank mergers over $100 billion and saying again that these threaten community banks, small businesses, and consumers.

FSOC: Systemic Risk Elevated, Much Work in Progress
FSOC met to consider its annual stability report, which strikingly differs with the Fed’s more sanguine view of systemic risk (see Client Report SYSTEMIC92).

DOJ Redefines M&A Outlook
Even as partisan warfare continues over the Democratic merger RFI (see FSM Report MERGER9), the Department of Justice has irrevocably altered the M&A outlook by reopening its 2020 request for comment (see Client Report MERGER5).

GAO: Alternative Data’s Potential Stymied by Risks, Uncertainties
The GAO issued a report on the potential for alternative data to expand mortgage access for borrowers with minimal credit histories, concluding that current uncertainties and risks limit fair and effective use.

Daily121721.pdf

17 11, 2021

GSE-111721a

2023-05-26T10:49:00-04:00November 17th, 2021|4- GSE Activity Report|

Score One for Sandra

FHFA’s new scoring system for the GSEs and CSS is a startling, if unsurprising, mission rewrite.  Although Obama and even Trump FHFA directors acknowledged the GSEs’ affordable housing mission, they also emphasized market liquidity and credit availability.  These goals are noted again, but the agency’s prioritization has turned the metrics upside-down, not only heightening the importance of equitable finance to further Director Thompson’s new framework, but also making still more CRT an even greater priority than the pending capital rewrite would have it.

GSE-111721a.pdf

12 11, 2021

Daily111221

2023-06-01T13:53:40-04:00November 12th, 2021|2- Daily Briefing|

FRB-NY Staff: Big-Bank Market Power Argues for Tougher Liquidity Rules, Antitrust Action
In a timely post given ongoing discussions about U.S. competition (see Client Report MERGER6), a recent Federal Reserve Bank of New York staff note evaluates fire-sale risk in light of financial-sector concentration. As the post points out, virtually all recent work on post-2008 capital and liquidity regulation posits friction-free competition which is an artifact of model convenience, not of market reality. Models thus assume that fire-sale considerations result in externalities such as undue leverage.

Senate Democrats Turn to CFPB for Credit-Reporting Reform
Senior Senate Democrats have now upped their demands of credit-reporting agencies and the financial institutions that provide key data, calling on the CFPB to ramp up an array of requirements they believe would enhance financial inclusion.

Basel Implements Promised Market-Risk Disclosures, Backs Down on Sovereign Weightings
As presaged on Tuesday, the Basel Committee today released new market-risk and voluntary sovereign-debt disclosures.

Daily111221.pdf

27 10, 2021

COMSUMER37

2023-06-05T12:19:43-04:00October 27th, 2021|6- Client Memo|

Chopra Reorienting CFPB’s Focus to Competition, Tech, Large Institutions

As anticipated, HFSC’s hearing today with CFPB Director Chopra skidded over a wide range of policy issues.  Chairwoman Waters (D-CA) again lauded Mr. Chopra, urging him to prioritize foreclosure protection, consumer-data ownership, fair lending, and bigtech.  In unsurprisingly sharp contrast, Ranking Member McHenry (R-NC) castigated the agency’s design, leadership, and agenda.  However, the hearing was generally non-confrontational even though Director Chopra announced several significant policy initiatives.  These include prioritizing enforcement actions for the largest providers and taking a hard look not only at competitiveness when it comes to bigtech, but also in other arenas.  Although he did not indicate any specific initiatives, Mr. Chopra argued that retail-finance interest rates do not appear competitive; if this question is pursued, the Bureau could intervene across an array of disclosure, M&A, and product arenas.

CONSUMER37.pdf

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