#custody – Federal Financial Analytics

26 03, 2024

DAILY032624

Eliza Allen2024-03-26T16:39:52-04:00March 26th, 2024|2- Daily Briefing|

CBO Flags Long-Term Fiscal Risk to Financial Stability

CBO’s latest long-term fiscal forecast now includes a financial-stability warning absent from the Fed’s recent analysis (see Client Report SYSTEMIC97) and FSOC’s annual report (see Client Report FSOC29): the rising U.S. debt burden.

Chopra Expands CFPB Attack to Card Rewards

Undaunted by a CBA audience suing him on many actions, CFPB Director Chopra today gave a rousing defense of his agency’s credit-card late fee rule (see FSM Report CREDITCARD37), making clear he will vigorously defend it in the courts.

CFPB/FTC Press for More Tech-Finance Enforcement

Building on the Bureau’s recent efforts to limit AI use in comparison-shopping and other consumer-finance applications (see FSM Report CONSUMER56), the CFPB joined the FTC today in issuing a statement coordinating federal and state enforcement efforts against generative AI in particular and digital consumer-finance products more generally.

HFSC, AG Republicans Press SEC on Crypto-Custody Standards

HFSC Chair McHenry (R-NC) and House Ag Chair Thompson (R-PA), alongside 46 Republican members today sent a letter to SEC Chair Gensler calling for clarification the position on special purpose broker dealer’s (SPBD) ability to custody non-security digital assets, the agency’s willingness to address SPBD non-compliance, the regulatory classification of ETH, and the SEC’s position regarding Prometheum’s custody services announcement.

Daily032624.pdf…

29 02, 2024

DAILY022924

Eliza Allen2024-02-29T16:41:41-05:00February 29th, 2024|2- Daily Briefing|

FSB Says Swiss Standards, Not Its Own, Led to CS Chaos

The FSB today released the review of Swiss GSIB regulation announced after Credit Suisse’s failure.

Basel Tackles Private Credit, GSIB Window-Dressing

The Basel Committee today again pressed nations – clearly here focusing on the U.S. – to finalize the end-game rules as quickly as possible.

FinCEN Releases New AML/CFT Hit List

FinCEN today emphasized that the new FATF report has revised countries where strategic AML and CFT measures are deficient, warning U.S. banks to take this into account – i.e., to ensure appropriate de-risking.

CFPB Targets Bank Comparison-Shopping Posts

The CFPB today loosed another attack on bank marketing practices, arguing that key facts are omitted from credit-card and financial-product descriptions obscuring back-end fees.

Bipartisan HFSC Votes to Repeal SAB 121

At today’s abbreviated markup, HFSC took up H.J. Res. 109, which would repeal the SEC’s Staff Accounting Bulletin 121 requiring banks to keep custody cryptoassets on balance sheet (see FSM Report CUSTODY5).

HFSC Approves Secret Service Cybercrime Bill

As HFSC’s markup continued today, the committee turned to Rep. Fitzgerald’s (R-WI) bipartisan H.R. 7156 expanding Secret Service investigative authorities over cybercrime.

FSB Head Ratchets Up Stablecoin Systemic Worries

In remarks today, FSB Chair Klaas Knot discussed market developments in cryptoassets, suggesting that renewed market interest in stablecoins by bigtechs and financial institutions could have systemic implications.

Daily022924.pdf…

1 02, 2024

Daily020124

Arezou Rafikian2024-02-01T16:56:10-05:00February 1st, 2024|2- Daily Briefing|

CRA Rules Finally Go Live

The Federal Register today contains the OCC, FDIC, and FRB’s CRA final rule over three months after it was approved last October. The effective date of April 1 is unchanged and the regulation is now official; anyone contemplating litigation can begin formal proceedings.

Congress Takes on SEC Crypto-Custody Accounting

As anticipated, Sen. Lummis (R-WY) has today introduced a resolution to overturn the SEC’s staff accounting bulletin (SAB) 121 via the Congressional Review Act (see FSM Report CUSTODY5). Reps. Nickel (D-NC) and Flood (R-NE) have introduced an identical resolution in the House, with HFSC Chairman McHenry (R-NC) already making clear that he intends to support the measure.

Daily020124.pdf…

16 11, 2023

DAILY111623

Eliza Allen2023-11-16T16:40:39-05:00November 16th, 2023|2- Daily Briefing|

Global Supervisors Press Direct, Indirect CSP Oversight

Global financial supervisors today highlighted cloud-service provider systemic risk, pointing to an issue also of longstanding FSOC concern.

Barr Takes Surprising AOCI Turn

In remarks today focused on Treasury-market risk, FRB Vice Chair Barr also surprisingly said that “most banks” do not need to report unrealized securities gains and losses in capital although supervisors are stepping up surveillance in this area.

McHenry Escalates FDIC Revelations to Official Probe

Following bipartisan outrage regarding the FDIC’s harassment scandal at Senate Banking and HFSC hearings this week, HFSC Chairman McHenry (R-NC) today announced that his Committee will investigate the FDIC as well as Chairman Gruenberg for alleged misconduct.

Global Regulators Set Crypto Custody Standards

IOSCO today issued final standards for cryptoassets in securities markets, codifying its prior stand that protections such as those against conflicts of interest and embedded vertical-integration risks should be managed for cryptoassets in the same manner regulators and supervisors address them in fiat-asset transactions.

Daily111623.pdf…

15 11, 2023

REFORM230

Eliza Allen2023-11-15T15:58:45-05:00November 15th, 2023|5- Client Report|

Bipartisan Capital Bashing Continues in the House

Following yesterday’s Senate Banking hearing (see Client Report REFORM229), today’s HFSC session with top bank regulators again highlighted growing bipartisan consternation over the unintended consequences of the agencies’ capital proposal (see FSM Report CAPITAL230). Although Ranking Member Waters (D-CA) echoed Chairman Brown’s defense, Democratic criticism today went beyond concerns about mortgages and green bonds also to address credit availability, new trading and derivatives standards, capital recognition of securities losses, and insufficient review of the proposal’s quantitative impacts. Republicans continued to bash the proposal for what they said is insufficient economic analysis. Unlike yesterday, attention to the FDIC’s harassment scandal most notably came from Democrats’ side of the aisle, with Ranking Member Waters using all of her questioning time to criticize the FDIC and request a report from each agency describing how they will review sexual-harassment. Reiterating concerns he and Subcommittee on Financial Institutions Chairman Barr (R-KY) recently raised regarding regulators’ interactions with international standard-setters, Chairman McHenry grilled Vice Chair Barr and Acting Comptroller Hsu about staff compensation and agency documentation practices at international events. Mr. Barr emphasized that all Board and staff member compensation comes from the Fed, while Mr. Hsu only said that his agency tracks participation in these bodies to ensure mission alignment. We continue to expect GOP pressure on the international-agency front but no action until GAO completes its report. Chair Gruenberg noted broad alignment with a new incentive-compensation proposal, but revised the initial timeline …

1 11, 2023

DAILY110123

Eliza Allen2023-11-01T16:52:56-04:00November 1st, 2023|2- Daily Briefing|

Vance, GOP Seek to Reverse New Immigration Credit Ruling

Following a joint CFPB-DOJ statement asserting that financial institutions’ “unnecessary or overbroad reliance” on immigration status in a credit decision may violate the ECOA, Sen. Vance (R-OH) along with all Republican members of the Senate Banking Committee today sent a scathing letter to CFPB Director Chopra and DOJ AG Garland urging the regulators to retract it on legal and financial stability grounds.

Congress Takes on SEC Custody Construct

Members of Congress are mobilizing against the SEC’s custody proposal (see FSM Report CUSTODY5) following yesterday’s block-buster GAO ruling against the SEC’s SAB 121 ruling, a ruling with considerable impact also in the broader custody rewrite. Republicans responded to the GAO with anticipated demands for rapid Congressional Review Act repeal.

Powell Pledges Fed Capital Consensus

In the midst of much monetary-policy discussion today, Chair Powell now said more publicly that the Fed will work towards consensus on controversial capital rules. Rep. Barr (R-KY) previously said Mr. Powell assured him that the final rule will reflect the Board of Governors as a whole, encouraging Rep. Barr and others that Vice Chair Barr will need to modulate some of the proposal’s most controversial provisions.

Daily110123.pdf…

27 09, 2023

DAILY092723

Eliza Allen2023-09-27T16:36:21-04:00September 27th, 2023|2- Daily Briefing|

FinCEN Bows to BOI Pressure

Responding to bipartisan concerns, FinCEN today issued an NPR to extend the beneficial ownership information (BOI) report filing deadline from thirty to ninety days for companies created or registered in 2024.

Chopra Considering Refi, Point Rules

The CFPB today released its annual report on residential mortgage lending, finding that mortgage applications, originations, and affordability declined significantly in 2022 while costs, loan denials, HELOC originations, and the percentage of cash-out refinances all increased.

HFSC GOP Presses Gensler on Banking-Reg Cumulative Impact

During Chairman Gensler’s as-always contentious HFSC hearing today, Rep. Barr (R-KY) asked if the SEC is in consultation with the Federal Reserve regarding the combined CRE effects of recent SEC proposals and the Basel III endgame standards (see Client Report CAPITAL234).

Carstens Says Law Must Catch Up To CBDC

BIS General Manager Agustín Carstens today emphatically called for rapid development of clear CBDC legal frameworks based on defined rights and obligations for privacy, AML compliance, and user choice.

Daily092723.pdf…

12 09, 2023

DAILY091223

Eliza Allen2023-09-12T17:19:22-04:00September 12th, 2023|2- Daily Briefing|

GHOS Presses Basel Action on Lessons Learned

Basel’s group of Governors and Heads of Supervision (GHOS) met yesterday, listing strong bank risk management and governance arrangements, effective supervision, and the need for a robust regulatory framework as the primary lessons it learned from this year’s banking turmoil. GHOS also pressed its members to finalize their Basel III reforms, noting that most plan to implement them by the end of 2024.

Gensler Takes Swing-Pricing, AI Fire

At today’s Senate Banking hearing with SEC Chairman Gensler, Democrats largely defended the pace and scope of recent SEC work while Republicans criticized the agency for rulemakings they said were ideologically driven and inadequately analyzed. Chairman Brown (D-OH) applauded the SEC’s crypto enforcement actions and encouraged it to examine broker and investment adviser use of AI. Ranking Member Scott (R-SC) and several other Republicans sharply criticized Mr. Gensler for what they said was his lack of transparency and responsiveness to congressional inquiries.

Daily091223.pdf…

25 07, 2023

DAILY072523

Eliza Allen2023-07-25T17:18:26-04:00July 25th, 2023|2- Daily Briefing|

Key Democrat Takes On Fed Rate Hikes

Ahead of today’s FOMC meeting, Joint Economic Committee Chair Heinrich (D-NV) yesterday sent a letter to Fed Chair Powell cautioning against additional policy tightening.

Second HFSC Markup Targets Stablecoins, Regulatory Restrictions, ESG

Thursday’s HFSC has now added another day to its mark-up calendar this week, moving the stablecoin and ESG bills to Thursday doubtless in order to avoid an endurance contest before the August recess and still meet Chairman McHenry’s (R-NC) commitments.

Senate GOP Tries to Block Capital Rewrite

Just days before the banking agencies take up new capital rules, Senate Banking Ranking Member Scott (R-SC) and ten other committee Republicans sent a letter to Chairman Powell demanding greater transparency and prior consultation.

Waters Presses FHFA for FHLB Reform

Following FHFA listening sessions and in anticipation of a final report this September on the FHLB system, HFSC Ranking Member Waters (D-CA) late yesterday sent a letter to FHFA Director Thompson laying out a series of recommendations to significantly reform the system.

Ag Committees Slam SEC Custody Proposal

In a letter to SEC Chairman Gensler released today, Senate Agriculture Committee Ranking Member Boozman (R-AR) and Chairwoman Stabenow (D-MI) along with House Ag. Committee Chairman Thompson (R-PA) and Ranking Member Scott (D-GA) raised strong objections to what they called serious flaws in the SEC’s proposed custody rule (see FSM Report CUSTODY5).

Warren, Scott Renew Fed-Ethics Campaign

Continuing their bipartisan campaign against the Fed, Sens. Warren (D-MA) and Scott (R-FL) yesterday sent a letter…

2 06, 2023

DAILY060223

Eliza Allen2023-06-02T17:01:47-04:00June 2nd, 2023|2- Daily Briefing|

HFSC Looks To Next Debt-Ceiling Fight

Following the near-death experience of a Treasury default, the HFSC Financial Institutions Subcommittee on Wednesday will hold a hearing on U.S. fiscal management. The memo lists the draft legislation to be considered, with the panel advancing substantive measures with at least some chances of bipartisan agreement. These include bills to require Treasury via the FSOC to make official contingency plans for Treasury-bond default.

GOP Crypto-Jurisdiction Bill Slams SEC

Ahead of a hearing next week, House Financial Services and Agriculture Republicans today released a draft bill allocating digital-asset jurisdiction largely to the CFTC. This was previewed at the joint panel’s last hearing (see Client Report CRYPTO43), where Democrats strongly objected to this approach. Press indicate that the draft has not been shared with Democrats and our read of the measure makes it clear that little has been done to mollify them. The bill would give the SEC jurisdiction over certain securities-related crypto activities and entities, but in several cases expressly prohibits it from preventing trading-platform operation or contesting CFTC jurisdiction.

Daily060223.pdf…