#de Cos – Federal Financial Analytics

17 04, 2024

DAILY041724

Eliza Allen2024-04-17T17:36:07-04:00April 17th, 2024|2- Daily Briefing|

Global Regulators Tackle NBFI Margining, Collateral Transformation

As it has long promised, the FSB today issued a consultation on standards designed to buttress derivatives, commodity, and securities-financing markets under stress through more stringent margining and collateral requirements.

Basel Head Says Go Slow re AI Risk, Supervisory Models

Basel’s Secretary General, Pablo Hernández de Cos, today focused on AI’s risk-reward profile in the banking sector, concluding that it raises a series of profound questions global regulators must work cooperatively to address.

Lummis, Gillibrand Begin Senate Stablecoin Debate

As long anticipated, Sens. Lummis (R-WY) and Gillibrand (D-NY) today introduced a significantly revised version of their 2022 Bill (see FSM Report CRYPTO28) laying out U.S. stablecoin standards.

FIO Subpoena Power Faces Rollback

At HFSC’s mark-up today, the committee began with Rep. Fitzgerald’s (R-WI) Insurance Data Protection Act, H.R. 5335, which would repeal the Federal Insurance Office’s authority to subpoena insurance companies for data collection.

HFSC Likely to Pass RegTech Bill

At HFSC’s extended mark-up today, the committee turned to H.R. 7437, a bipartisan bill that would require federal banking regulators to regularly review and report to Congress on their use of technology to ensure they’re equipped to address threats to the financial system.

HFSC Set to Pass AOCI Recognition, Systemic-Risk Designation Study Measures

Continuing our coverage of today’s mark-up, HFSC was generally supportive of the two bills on the agenda from Democrats, H.R. 4206 from Rep. Sherman (D-CA) requiring large banks with available for sale securities to mark to market …

18 01, 2024

DAILY011824

Eliza Allen2024-01-18T16:58:16-05:00January 18th, 2024|2- Daily Briefing|

Basel Head Backs U.S. End-Game

In an FT interview today, the Basel Committee’s chair, Pablo Hernández de Cos, unsurprisingly endorsed the U.S. end-game proposal, indirectly but firmly rebutting assertions that it is at variance with global norms.

The Shape of Liquidity Rules to Come

Previewing the construct of what may soon be the anticipated inter-agency proposal addressing liquidity-risk lessons-learned, Acting Comptroller Hsu today argued that the liquidity coverage ratio’s treatment of retail depositors (see FSM Report LIQUIDITY17) does not address likely depositor herding as they run for the exit.

Rounds, Sinema Press for SIFI-Designation Rollback

Senate Banking Committee Member Rounds (R-SD) alongside Sen. Sinema (I-AZ) introduced S.3601, legislation to codify 2019 standards (see FSM report SIFI35) adding significantly more obstacles to systemic designation compared to FSOC’s new approach (see FSM report SIFI36).

Steele’s Good-Bye Presses for More Tough Standards

In his last speech in office, Assistant Secretary for Financial Institutions Graham Steele today called for reassessment of the treatment of unrealized gains or losses not just under the capital rules, but also in the liquidity standards (where they are in fact to some degree now captured).

House Democrats Damn Capital Proposal With Faint Praise

In this report, we begin our assessment of Congressional end-game comment letters.

Senate Letters Slam Capital Proposal’s Tax-Equity Risk Weight Changes

Here, we turn to several Senate letters on the end-game proposal.

Daily011824.pdf…

13 04, 2023

FedFin Assessment: Implications Of An IRR Capital Charge, New Liquidity Rules

Arezou Rafikian2023-04-13T14:02:25-04:00April 13th, 2023|The Vault|

As we noted yesterday, the head of the Basel Committee has targeted two capital and liquidity compromises included in the current Basel III construct not addressed in the end-game rules to which the U.S. plans shortly to turn. Actions whether by Basel or, even without it, the U.S. to return to Basel’s initial proposals have significant strategic consequence. Thus, this report assesses these options and how the U.S. might act on them. We conclude that the U.S. will quickly impose a de facto interest-rate risk (IRR) capital charge and tighten LCR assumptions related to uninsured deposits.

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

13 04, 2023

IRR8

Eliza Allen2023-04-13T11:27:21-04:00April 13th, 2023|5- Client Report|

FedFin Assessment: Implications Of An IRR Capital Charge, New Liquidity Rules

As we noted yesterday, the head of the Basel Committee has targeted two capital and liquidity compromises included in the current Basel III construct not addressed in the end-game rules to which the U.S. plans shortly to turn. Actions whether by Basel or, even without it, the U.S. to return to Basel’s initial proposals have significant strategic consequence. Thus, this report assesses these options and how the U.S. might act on them. We conclude that the U.S. will quickly impose a de facto interest-rate risk (IRR) capital charge and tighten LCR assumptions related to uninsured deposits.

IRR8.pdf…

12 04, 2023

DAILY041223

Eliza Allen2023-04-12T17:20:45-04:00April 12th, 2023|2- Daily Briefing|

Hill Charts Different FDIC Course

In remarks today, newly-confirmed Republican FDIC Vice Chairman Travis Hill for the first time lays out his thinking ahead of a raft of FDIC decisions in SVB’s wake.

CFPB UDAAP Policy Now Effective

The Federal Register today includes the CFPB’s policy statement expanding the scope of the Bureau’s UDAAP framework, which is now effective upon this publication.

Scott Lays Out Housing Plan

In conjunction with advancing his Presidential campaign, Senate Banking Ranking Member Scott (R-SC) late yesterday announced his new federal housing framework via planned legislation, the Renewing Opportunity in the American Dream (ROAD) to Housing Act.

Basel Turns to Capital, LCR Revamp

The Basel Committee’s head, Pablo Hernández de Cos, today spoke out strongly against regulatory liberalization, implicitly criticizing the U.S. tailoring rules and urging jurisdictions to adhere tightly to Basel’s “multi-metric” standards given their proven value in the recent crisis.

Daily041223.pdf…

9 09, 2022

DAILY090922

Eliza Allen2022-10-24T12:01:09-04:00September 9th, 2022|2- Daily Briefing|

White House Reaffirms Anti-Algo Stand

The White House late yesterday announced core bigtech policy principles. These are extremely general and do not go as far in areas such as antitrust that progressives sought.

U.S. Announces Start of Work on Basel “End Game”

Ahead of what might otherwise have been a fractious Basel Committee meeting, the Fed, OCC, and FDIC today reaffirmed the U.S. commitment to finalize what FRB Vice Chair Barr Wednesday called the Basel III “end-game.”

Basel Chair Announces Preliminary AI Priorities

Pablo Hernández de Cos, Chair of the Basel Committee, announced today the work that regulators plan on AI and algorithmic decision-making.

OFR Details Climate Data-Sharing Efforts

Acting OFR Director James Martin today addressed the need for integrated climate-related financial data and challenges to forecasting and modeling climate risk.

Liang Stresses Climate-Resiliency

Treasury Under Secretary Liang today reiterated an array of agency and Administration climate-risk priorities, emphasizing ongoing Treasury and FSOC climate resiliency efforts and underscoring Treasury’s commitment to a net-zero economy.

Treasury To Issue Price-Cap Sanction Guidance

Deputy Treasury Secretary Wally Adeyemo today made it clear that enforcement of the anti-Russia oil-price caps will depend not only on restricting shipping insurance, but also doing so for financial and payment services.

Daily090922.pdf…

11 07, 2022

DAILY071122

Eliza Allen2023-01-24T15:11:32-05:00July 11th, 2022|2- Daily Briefing|

FSB Highlights Crypto, Stablecoin Risk

The FSB today issued an unusual statement warning of cryptoasset risk. Rejecting the BIS’s more sanguine view that stablecoins and other digital assets have yet to prove, the FSB warns that inter-connectivity with the financial system already poses grave hazard.

HFSC to Consider CRA Reform, Rewrite

As noted, the HFSC Consumer Protection and Financial Institutions Subcommittee on Wednesday will consider the inter-agency CRA rule (see FSM Report CRA32).

Basel Committee Will Be Slow to Advance Climate-Risk Capital, Disclosure Standards

The head of the Basel Committee, Pablo Hernández de Cos, today reiterated that global bank regulators are dedicated to a cautious but determined set of climate-risk standards.

BIS Group Charts Course to Cross-Border CBDC

As part of the G20 cross-border payments roadmap, the BIS, IMF, and World Bank released a joint report today urging governments working on a CBDC to coordinate their designs and account for cross-border functionality early in their process.

FRB Atlanta Blog Refutes Dem’s Zelle Allegations

Coming in the wake of a letter sent by Senate Democrats alleging Zelle of mishandling fraud, FRB Atlanta today published a blog post defending the payments industry in cases where customers willingly authorize a fraudulent payment.

Chopra Promises to Promote Fierce Competition

CFPB director Chopra today reasserted his agency’s authority over ensuring financial-market competitiveness, describing recent actions against credit-card companies (see FSM Report CREDITCARD35), bigtech, and “junk fees” (see FSM Report CONSUMER38).

Daily071122.pdf…

12 05, 2022

DAILY051222

Eliza Allen2023-02-21T15:21:53-05:00May 12th, 2022|2- Daily Briefing|

Basel Heading Towards Tough New Crypto Standards

In remarks today, Basel Committee Director Pablo Hernández de Cos reiterated that Basel’s latest cryptoasset consultation will be out in “coming months,” going on to say that while global negotiations have yet to resolve various controversies raised in the consultation (see FSM Report CRYPTO19), he emphasized that he is not persuaded by comments urging lenient capital treatment to prevent crypto activity from migrating outside banking.

House Codifies Sanctions for Subsidiaries

The House yesterday passed H.R. 7066, legislation sponsored by Rep. Sherman (D-CA) to tighten secondary sanctions against Russia and its allies. Approved on a 418-2 vote, the bill stands high odds of inclusion in the omnibus Ukraine and sanctions legislation wending its way through Congress.

GOP Takes on Hsu, Merger Policy

Republicans today made it clear that the blame they directed for what they called the “FDIC coup”, so far directed only to CFPB Director Chopra, has now ensnared Acting Comptroller Hsu.

Daily051222.pdf…

11 05, 2022

DAILY051122

Eliza Allen2023-02-21T15:33:13-05:00May 11th, 2022|2- Daily Briefing|

HFSC re FSOC: SIFIs, Climate, Stablecoins, Lots More

Looking ahead to tomorrow’s HFSC hearing with Secretary Yellen, the Democratic staff memo suggests that this session will track much of what occurred yesterday at Senate Banking (see Client Report FSOC26): i.e., discussion of the need for stablecoin legislation, the role of SIFI designation, and the overall risks presented by higher inflation, Russia, China, and climate change.

Basel Plans Wholesale Review of Post-GFC Regulatory Regime

The head of the Basel Committee, Pablo Hernández de Cos, today announced a full-scale evaluation of the Basel III construct set for release later this year. The report will evaluate complexity, regulatory interactions and systemic-risk dynamics, focusing on capital, liquidity, leverage, and macroprudential elements of the Basel III reforms. The report will also evaluate resilience and financial-activity behavioral incentives.

FSB Plans Commodity, Climate, Crypto Agenda

In remarks today, FSB head Klaas Knot reiterated ongoing concern about commodity markets and continuing financial-market resilience despite stress absorption since Russia first invaded Ukraine. Mr. Knot is also concerned that some banks are generally over-leveraged and those with prime brokers may be at particular risk.

Daily051122.pdf…

26 04, 2022

DAILY042622

Eliza Allen2023-03-01T15:49:34-05:00April 26th, 2022|2- Daily Briefing|

Dems Demand Answers re Zelle Fraud Risk

Although not yet publicly circulated, a letter sent by Sens. Warren (D-MA) and Menendez (D-NJ) takes sharp issue with Zelle and banks that own the payment service regarding consumer fraud risk.

Basel Tries Again on Crypto Prudential Standards

The Chair of the Basel Committee on Banking Supervision, Pablo Hernández de Cos, today confirmed that Basel is working on a second consultation addressing crypto assets to succeed the tough proposal (see FSM Report CRYPTO19) that led to stiff criticism in 2021, with this release due out in the next “couple of months.”

FSB, SEC Turn Focus on Open-End Funds

Reflecting the systemic risks highlighted during the IMF meeting, the FSB today issued a report on emerging-market economy (EME) exposures in USD-funding markets. Going beyond analysis showing the scope of this highly interconnected risk and its growing scope as the dollar’s value and U.S. rates rise, the report also accelerates FSB work on open-end funds.

Daily042622.pdf…