#Durbin – Federal Financial Analytics

13 02, 2024

DAILY021324

Eliza Allen2024-02-13T17:42:19-05:00February 13th, 2024|2- Daily Briefing|

Durbin Tries Another Approach to Advance Card-Fee Limits

After trying various ways to bring his credit-card fee bill to the floor, Senate Judiciary Committee Chair and Majority Leader Durbin (D-IL) has scheduled a hearing on this controversial bipartisan measure (see FSM Report INTERCHANGE10).

FinCEN Reaches SEC Agreement to Bring Investment Advisers Under AML/CFT Standards

As it has repeatedly promised, FinCEN today revised a 2015 proposal and issued a new one to subject investment advisers to AML and CFT requirements similar to, but still less restrictive than, those that have long governed banks.

HFSC Rallies to Crypto AML/CFT Defense

The HFSC staff memo on Thursday’s Digital-Assets Subcommittee hearing makes it clear that cryptoasset entities will be given a strong platform from which to resist calls in the Senate to subject cryptoasset transactions to AML and sanctions law.

Gensler Reinforces AI Concerns

In remarks today, SEC Chair Gensler acknowledged AI’s benefits in a manner consistent with the President’s executive order (see Client Report AI3), but then launched into a sharp critique of its risks in line with the agency’s pending rule in this arena.

Bowman Takes Fed Accountability, Transparency to Task

In an essay today, FRB Gov. Bowman emphasized that regulatory accountability does not undermine the independence also essential to a sound, innovative banking system.

Gensler Turns to Bank/Hedge-Fund Interconnection

In addition to his speech on AI earlier today, SEC Chair Gensler today engaged in a wide-ranging discussion of key financial policy questions.

Daily021324.pdf…

15 12, 2023

DAILY121523

Eliza Allen2023-12-15T17:31:25-05:00December 15th, 2023|2- Daily Briefing|

Crypto Measures Await Next Session

As anticipated, HFSC Chair McHenry (R-NC) was able to fend off concerted efforts by Sens. Brown (D-OH) and Warren (D-MA) to add the Warren-Marshall crypto bill to the National Defense Authorization Act.

FSOC to Target Hedge Funds, Nonbank Mortgage Companies

The readout from Treasury on yesterday’s FSOC meeting provides insight into the Council’s executive session suggesting significant near-term systemic action regarding hedge funds.

FSB Plans Broad Rewrite of Public Backstops, GSIFI Resolvability, Operational Readiness

The FSB’s 2023 Resolution Report today advises banks and public sector authorities to be prepared to access public sector funding in resolution, with the Board planning to review whether existing public sector backstops are adequate to meet potential failure scenarios.

Brown Renews Bipartisan Quest to Constrain Nonbank Banks

Advancing the big-tech concerns he most recently voiced before GSIB CEOs (see Client Report GSIB23), Senate Banking Chairman Brown (D-OH) has introduced S. 3538, bipartisan legislation to impose bank regulation on non-bank parent companies of insured depository institutions.

DOJ Targets Fraudulent Microtransactions

Cracking down on unauthorized bank account charges, the DOJ today announced multiple actions against “sham” companies alleged to have used misrepresentations or unauthorized charges to steal money from consumers’ financial accounts.

CRS Warns Credit Card Act Could Result In Risky Retailer Payment Networks

The CRS this week issued a report analyzing the Durbin-Marshall Credit Card Competition Act, S.1838 (see FSM Report INTERCHANGE10), projecting that fee caps will have a greater impact on transaction fees than competition, with …

14 09, 2023

DAILY091423

Eliza Allen2023-09-14T16:47:09-04:00September 14th, 2023|2- Daily Briefing|

IOSCO Proposes Leveraged Loan, CLO Best Practices

IOSCO today released a consultation report proposing best practices for leveraged loans and CLOs that address origination and refinancing, EBITDA and documentation transparency, aligning interests from loan origination to end investors, managing conflicts of interest throughout the intermediation chain, and disclosures.

Durbin, Marshall Press Credit-Card Interchange Bill

Reiterating concerns expressed last month and comments yesterday on the Senate floor, Senate Whip and Judiciary Chairman Durbin (D-IL) and Sen. Marshall (R-KS) were joined this time by Sen. Welch (D-VT) and four House Members calling on Visa and Mastercard to reverse planned fee hikes.

GAO Presses for FSOC Power to Regulate, Not Just Designate

The GAO today issued a report recommending that Congress consider legislation allowing FSOC to compel regulatory action, arguing that this would better accomplish the Council’s mission because FSOC currently has limited power to respond to systemic risk.

HFSC GOP Highlight CBDC Privacy Concerns

As anticipated, HFSC Digital Assets GOP Members continued their staunch opposition to a U.S. CBDC, with Subcommittee Chairman Hill (R-AR) and Majority Whip Emmer (R-MN) asserting that private innovation can modernize payments without the risk of government surveillance.

Brown Doubles Down on Opposition to House Crypto Bill

Making it still more clear that he is not supportive of pending House cryptoasset legislation, Senate Banking Chairman Brown (D-OH) today sent a letter to Treasury Secretary Yellen, SEC Chairman Gensler, and CFTC Chairman Benham asking for views on where new authority may be needed.

Daily091423.pdf…

7 09, 2023

DAILY090723

Eliza Allen2023-09-07T16:43:25-04:00September 7th, 2023|2- Daily Briefing|

FSB-IMF Report Lays Out Crypto-Policy Roadmap

The FSB and IMF today published a joint report synthesizing their policy and regulatory recommendations for cryptoassets, laying out a policy roadmap that breaks no new ground.

Senate Dems Try Again to End State Usury Ceilings

Senate Majority Whip Durbin (D-IL) yesterday introduced another effort (S. 2730) to impose a federal usury ceiling.

NGFS Warns Ecological Risk Could Be Systemic

The Network for Greening the Financial System (NGFS) today released a report on nature-related financial risk concluding that ecological risk transmission could cause contagion leading to systemic risk.

CFPB Soon to Advance Its Open-Banking Construct

CFPB Director Chopra today announced that the CFPB will be issuing proposed rules next month to reactivate its DFA consumer data rights powers (see FSM Report DATA3).

Global Securities Regulators Craft DeFi Standards

IOSCO today released a DeFi consultation report proposing nine policy recommendations intended to support heightened regulatory consistency and oversight.

Waters Presses Agencies to Change SSN Collection Requirements

HFSC Ranking Member Waters (D-CA) today wrote to the leadership of the banking agencies, Treasury, and FinCEN asking them to consider allowing financial institutions only to collect a SSN’s last four digits to minimize cybersecurity risks.

Fed Staff Suggest Solution to CBDC Privacy Problem

Addressing one of the biggest CBDC challenges in the U.S., Fed staff today published a report arguing that the use of privacy-enhancing technologies preserves digital asset user confidentiality while maintaining enough visibility for official audits in order to prevent illicit finance.

Daily090723.pdf…

1 09, 2023

DAILY090123

Eliza Allen2023-09-01T12:18:22-04:00September 1st, 2023|2- Daily Briefing|

Durbin, Marshall Reinforce Demand for Card-Fee Cuts

Pressing their bill to limit credit-card interchange fees (see FSM Report INTERCHANGE10), Senate Whip and Judiciary Chairman Durbin (D-IL) and Sen. Marshall (R-KS) this week called on Visa and Mastercard to reverse planned fee hikes. Sen. Durbin is pressing hard to attach the bill to a must-pass vehicle later this month; as noted, it would extend routing-system requirements to credit cards and could lead to significant reductions in card-fee income for banks.

GSIB Surcharge Revisions in Register

The Federal Register today includes the Federal Reserve’s proposal to revise how systemic risk scores that lead to GSIB designation are calculated. As noted (see FSM Report GSIB22), while the Board estimates that the overall impacts of the changes to the surcharge are small, our analysis concludes that the scoring changes could result in higher capital requirements for large regional banks and certain IHCs.

Daily090123.pdf…

7 06, 2023

DAILY060723

Eliza Allen2023-06-07T16:50:58-04:00June 7th, 2023|2- Daily Briefing|

Basel Advances Supervisory Rewrite, Wants Quick End To End-Game

The Basel Committee’s release today of its latest meeting confirms that global regulators plan to revise 2012’s core supervisory principles (see FSM Report REFORM92) in light of recent events, releasing a consultation next month. Work is also under way to update the 2022 crypto standards (see FSM Report CRYPTO37) to address permissionless blockchains and stablecoins.

HFSC Urges Careful Use of China Sanctions

At today’s HFSC National Security Subcommittee hearing on maintaining the dollar’s global dominance, Subcommittee Chairman Luetkemeyer (R-MO) and Reps. Petterson (D-CO) and Kim (R-CA) argued that the sanctions that would follow an invasion of Taiwan need to be used carefully to avoid unintended harm to the dollar’s global status.

Durbin Leads Renewed Charge For Credit-Card Network Choice

As anticipated, Senate Judiciary Committee Chairman Durbin (D-IL) along with Sens. Welch (D-VT), Marshall (R-KS), and Vance (R-OH) today reintroduced legislation to extend routing-system requirements to credit cards. The bill, which has also been reintroduced in the House by Reps. Gooden (R-TX) and Lofgren (D-CA), slightly revises last year’s measure (see FSM Report INTERCHANGE10) by addressing security and operational risks associated with unaffiliated network routing requirements.

Daily060723.pdf…

26 01, 2023

DAILY012623

Eliza Allen2023-01-26T16:44:02-05:00January 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.

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23 12, 2022

DAILY122322

Eliza Allen2022-12-23T12:16:11-05:00December 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…

17 11, 2022

DAILY111722

Eliza Allen2022-11-17T17:18:13-05:00November 17th, 2022|2- Daily Briefing|

Warren, Durbin Demand Answers about FTX Collapse

Following FTX’s collapse, Majority Whip Durbin (D-IL) and Sen. Warren (D-MA) sent a letter today to FTX founder Sam Bankman-Fried demanding a detailed accounting of the company’s decisions and business practices. We doubt they will get an answer anytime soon, with this letter joining a flood of Congressional inquiries and likely hearings (see Client Report REFORM215).

Jefferson Supports Limited Fed Mandate

In remarks today, FRB Gov. Phillip Jefferson disputes those – including many progressive Democrats – who believe that racial equity and economic equality are an intrinsic part of the Fed’s mission. Specifically, he states that, while consumer protection, community development, and financial stability can promote inclusive growth, monetary policy cannot directly address it or why low-income households are more acutely affected by inflation.

Fed CBDC Survey Suggests Possible CBDC Upside

A new Fed literature review evaluating the macroeconomic implications of CBDC focuses on the financial inclusion and payment system impacts CBDC would have in the U.S. and advanced economies. As is usually the case with surveys, it reaches cautious conclusions, including that CBDC could increase financial inclusion for the unbanked. It might also reduce financial frictions in deposit markets, enhance retail payment-system efficiency, facilitate international transactions, and spur private-sector banking and payments innovation.

Daily111722.pdf…

11 08, 2022

INTERCHANGE10

Arezou Rafikian2023-01-04T12:45:54-05:00August 11th, 2022|1- Financial Services Management|

Credit-Card Networks

Two senators have reopened questions about the manner in which card-related payments are handled, tackling those applicable to credit cards with a bill mandating that merchants must be given a network choice that is not either Visa or Mastercard in order to, the sponsors argue, increase competition and lower credit-card transaction costs. Although the multi-network requirement would apply only to banks with assets over $100 billion, it would likely have the effect of lowering swipe fees across the sector because exempt banks would be compelled by market forces to find lower-cost networks. The extent to which these lower-cost networks are also sound and resilient under stress is uncertain as no safety-and-soundness or operational requirements directly apply to card-processing networks.

INTERCHANGE10.pdf…