#debit cards

23 01, 2024

OVERDRAFT12

2024-01-23T12:13:12-05:00January 23rd, 2024|1- Financial Services Management|

Overdraft Fees

Building on a bulletin and circular from late 2022 warning banks about certain overdraft practices, the CFPB has now proposed a rule that would sharply and expressly limit fees for extensions of credit related to overdrawn transaction accounts unless the account comes under an array of consumer-protection requirements.  Part of the Administration’s campaign against “junk fees,” the proposal sets a “break-even threshold based on a bank’s costs” and provides for an alternative break-even benchmark CFPB-set fee that would allow a lender to avoid costly additional regulatory requirements, expanding the Bureau’s recent focus on mandating industry pricing evident in its controversial proposal on credit-card late fees.  Lines of credit and ready access to credit-card credit associated with overdrafts would also come under new limits and come under additional consumer-protection standards.

OVERDRAFT12.pdf

22 01, 2024

DAILY012224

2024-01-22T16:57:16-05:00January 22nd, 2024|2- Daily Briefing|

FRB Reconsiders Interchange-Fee Cuts

Bowing to critics in the banking industry and on the Board, the Federal Reserve today extended the comment period on its debit-card interchange fee proposal (see FSM report INTERCHANGE12) by a surprisingly-long ninety days to May 12.  The extension is in part due to the Board’s decision to publish additional interchange fee cap data which may have persuaded the Board that the initial data analysis supporting a mandatory pricing reduction was incorrect.

OIG Finds Reserve-Bank Trades Legal, But Problematic

The Federal Reserve’s Office of the Inspector General (OIG) today released long-awaited reviews of personal trades by former Dallas and Boston Reserve Bank Presidents two years ago that raised numerous and often vociferous assertions of conflicts of interest.  Indeed, Sen. Warren (D-MA) stated that she believed these epitomized a “culture of corruption” at the Fed, introducing bipartisan legislation to force considerably more transparency at the Reserve Banks.

FSB Plans Global Run-Risk Buffers

The head of the Financial Stability Board, Secretary General John Schindler, today briefed media on the global regulator’s plans to brief the G20 in October about viral-run risk and the standards needed to avert it.  Mr. Schindler said little about what the FSB is likely to propose although the Basel Committee is now considering rewrites to global LCR and NSFR standards likely to be reflected in the FSB’s recommendations.

Daily012224.pdf

14 11, 2023

DAILY111423

2023-11-14T16:51:55-05:00November 14th, 2023|2- Daily Briefing|

Comment Deadline Set for Debit-Card Interchange Fee Cap

The Federal Register today includes the Federal Reserve’s proposed sharp reduction in the cap for debit-card interchange fees.  As previously noted (see FSM Report INTERCHANGE12), the reduction is premised on the Fed’s finding of lowered debit-card costs, but its methodology is largely unchanged and thus may not reflect current and prospective costs such as those associated with pending deposit-insurance, capital, liquidity, CRA, and open-banking standards.

FSB Hones in on Insurance Company Risk, Resolvability

At its plenary meeting over the last two days, the FSB reviewed its longstanding priorities in areas such as NBFIs, climate risk, and cryptoassets.  The most notable change in priorities comes with renewed focus on insurance-company systemic risk due to challenging resolution.

Daily111423.pdf

1 11, 2023

DAILY110123

2023-11-01T16:52:56-04:00November 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 10, 2023

Al103023

2023-10-27T17:00:24-04:00October 27th, 2023|3- This Week|

Take a Deep Breath

But don’t relax too much as newly-minted Speaker Johnson (R-LA) figures out what he’s going to do with the gavel now that he’s got it.  The House has barely three weeks to see if unanimity holds and a shutdown is avoided in favor of yet another can-kicking continuing resolution.  Regardless, with HFSC Chairman McHenry (R-NC) happily freed of his Speaker Pro Tem assignment, HFSC will this week (see below) return to the high-impact hearing schedule if was forced to cancel during the speakership battle, move a raft of bills through mark-up, and work hard to put Mr. McHenry’s plans to realign crypto jurisdiction into must-pass legislation if the House agrees (likely) and the Senate doesn’t object (far less certain).  Among the bills to be marked up and those on the Senate’s agenda will surely be measures reviewed at last week’s Senate Banking hearing to ensure Treasury is super-tough when it comes to Iran and Hamas.  Secondary sanctions are in the works, putting any financial institution doing business in the U.S. on notice that offshore activities so far out of law-enforcement’s reach are about to come in range.  And, if that’s not enough, then there’s all the regulatory action.

Al103023.pdf

30 05, 2023

Daily053023

2023-05-30T17:13:13-04:00May 30th, 2023|2- Daily Briefing|

Fed Study Validates Bank/Shadow-Bank Interconnections, Systemic Risk

A new study by staff from the Federal Reserve Banks of Boston and New York evaluates the banking-sector impact of fire sales across multiple NBFI segments, finding numerous bank vulnerabilities to nonbanks not only through direct exposures, but also through complex, indirect channels.

McHenry Protests U.S. Outbound-Investment Constraints

HFSC Chairman McHenry (R-NC) sent a letter to Secretary Yellen late Friday demanding information about a potential executive order that would enable CFIUS to prohibit or require notification of outbound investments into China, stating that the Administration’s interest in capital controls necessitates Congressional oversight.

IMF Article Calls SVB Resolution “Riskless Capitalism”

An article in the IMF’s forthcoming Finance and Development magazine issue argues that SVB’s uninsured depositors enjoyed “riskless capitalism,” concluding that high moral hazard-risks will persist without incentives for depositor due diligence.

FTC Demands Greater Debit-Card Data Access

The FTC today finalized a consent order requiring Mastercard to provide competing card networks with the customer account information necessary to process debit payments, alleging that the company illegally withheld that information to prevent merchants from using its competitors or Mastercard-branded debit cards saved in e-wallets outside of traditional networks.

Daily053023.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

13 07, 2022

DAILY071322

2023-01-06T15:18:57-05:00July 13th, 2022|2- Daily Briefing|

Small Business Committee Urges Fintech Transparency, New CFPB Role in Fintech Lending

Today’s Small Business Subcommittee on Oversight, Investigations, and Regulations hearing on fintech transparency focused on financial practices that may harm small businesses’ access to credit.

HFSC Party Lines Form on CRA Rewrite

As anticipated, the Subcommittee on Consumer Protection and Financial Institutions today held a hearing examining the banking agencies’ proposed rule to modernize the CRA (see FSM Report CRA32).

Fed Proposes Debit-Card, Payment-System Data Collections

Although the Fed has yet to finalize a controversial proposal related to debit-interchange fees (see FSM Report INTERCHANGE8), it has proposed changes to how it collects debit-card information essential to implementing changes to network selection and, should it come to do so, fee calculations.

FSB Chair Reiterates Need for Crypto Regulation, Highlights Progress on Climate Roadmap

FSB Chair Klaas Knot’s letter today to the G20 ministerial reiterated all the points regarding COVID exit strategies, regulation of cryptoassets, and executing FSB’s climate roadmap outlined after June’s plenary meeting.

Senate Democrats Demand More Stringent, Binding Fed Ethics Standards

Senate Banking Committee Chairman Sherrod Brown (D-OH) joined by four other Democrats today sent a letter to Chairman Powell again calling for more stringent, enforceable Fed ethics standards, and reminded Mr. Powell in strongly-written arguments about the need to do so via binding regulation or by the kind of statutory change they have already introduced.

Global Regulators Press for Global Stablecoin Payment-Risk Standards

Doubtless spurred by FSB requests and market …

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