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22 09, 2022

FedFin on: The Cryptoverse Has A Big Black Hole

2022-09-30T12:03:14-04:00September 22nd, 2022|The Vault|

In this report, we follow our earlier analysis of Treasury’s CBDC recommendations and housing finance  with an analysis of another Treasury report in response the President’s executive order focused on the overall construct of cryptoassets in the U.S.  Treasury here makes its views even clearer than it did when favoring a CBDC.  It simply sees no “natural use case” for…

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22 09, 2022

GSE-092222

2022-09-26T08:43:50-04:00September 22nd, 2022|4- GSE Activity Report|

The Cryptoverse Has A Big Black Hole

In this report, we follow our earlier analysis of Treasury’s CBDC recommendations and housing finance  with an analysis of another Treasury report in response the President’s executive order focused on the overall construct of cryptoassets in the U.S.  Treasury here makes its views even clearer than it did when favoring a CBDC.  It simply sees no “natural use case” for cryptoassets or cryptocurrency beyond speculation in the lending and investment arenas where, it states, very stringent rules should quickly spoil the funding.  This isn’t to say that Treasury disses digital assets – quite the contrary – but its views on cryptoassets make clear that crypto-mortgages are a long, long way away if they are anywhere at all.

GSE-092222.pdf

15 09, 2022

DAILY091522

2022-10-13T11:49:04-04:00September 15th, 2022|2- Daily Briefing|

Financial Transactions to Get More Stringent CFIUS Scrutiny

The President today issued an executive order (EO) redefining key criteria used by the Committee on Foreign Investment in the U.S. (CFIUS).

BNPL Faces DOA Consumer Standards

In conjunction with issuing a lengthy report, CFPB Director Chopra today announced that he has directed staff to work on new interpretive rules or guidance for the BNPL sector.

Basel Battles On

Acting as anticipated following instructions from on-high, the Basel Committee today “exchanged views” on pending crypto regulation (see FSM Report CRYPTO29) – terminology suggesting the committee has yet to reach agreement on this controversial consultation despite a request by central bankers and supervisory heads to finalize standards by year end.

Fed Joins Agencies with CRE Workout Policy

After a delay doubtless reflecting the need to run policies by Michael Barr, the FRB today proposed the same CRE-workout policies released for comment in early August by the OCC, FDIC, and NCUA.

Waters Tries Late-Game CRA Tackle

Chairwoman Waters (D-CA) today announced that she has introduced legislation to update the CRA, making the standards tougher for banks but – as far as known so far – failing to extend the law’s reach to nonbanks as urged by CFPB Director Chopra and Sen. Warren (D-CA), among others.

Daily091522.pdf

21 03, 2022

m032122

2023-04-03T13:18:30-04:00March 21st, 2022|6- Client Memo|

How to Set Course to a Digital Future

Last week, we laid out the macrofinancial implications of the Ukraine crisis – i.e., its impact on the global financial-and-regulatory order.  Some of this analysis is founded on President Biden’s digital-asset executive order, which also has profound and immediate impact on critical macroprudential issues at the border of innovation and regulation to which we now turn.  To forecast how digitalization will come upon us, the digital-asset order must be read in the Administration’s broader context in which high-impact political issues, such as racial equity, weigh at least as heavily as the complexities of CBDC or even the benefit of a future financial crises foregone.

m032122.pdf

21 03, 2022

Karen Petrou: How to Set Course to a Digital Future

2023-04-03T13:18:42-04:00March 21st, 2022|The Vault|

Last week, we laid out the macrofinancial implications of the Ukraine crisis – i.e., its impact on the global financial-and-regulatory order.  Some of this analysis is founded on President Biden’s digital-asset executive order, which also has profound and immediate impact on critical macroprudential issues at the border of innovation and regulation to which we now turn.  To forecast how digitalization will come upon us, the digital-asset order must be read in the Administration’s broader context in which high-impact political issues, such as racial equity, weigh at least as heavily as the complexities of CBDC or even the benefit of a future financial crises foregone.

Administration policy based on Democratic politics is set not only by the digital-asset order, but also by other White House directives that will define the boundaries of what Treasury and the agencies – the Fed included at least to a point – will do.  To forecast digital-asset policy, one must thus also divine the outcome of two other executive orders.

First, there’s the President’s competition directive.  Every critical consumer-protection question under the CFPB’s purview is now considered first and foremost in terms of competition, with the agency’s director making it manifestly clear that almost anything done by any big bank is a target for structural reform.  Director Chopra doesn’t like fintech or biotech much better than most banks do, but his approach to digital assets is likely only to squelch big banks as much as he can and thus to drive cryptoassets further into …

14 03, 2022

Al031422

2023-04-03T15:12:45-04:00March 14th, 2022|3- This Week|

A FULL-FORCE CRYPTO CRACKDOWN

Spurred in part by the critical role cryptocurrency is playing in the Ukraine crisis, the Biden Administration last week finalized a long awaited “whole-of-government policy construct (see Client Report CRYPTO26) with far-reaching, immediate implications not only for the Executive-Branch agencies that must now do as they are told, but also the more-or-less independent banking agencies that will try to make the White House as happy as possible.  Touching on another key question — who has payment-system access — the Fed last week revised its 2021 proposal with a replacement request for comment (see FSM Report PAYMENT24) that now opines just a bit more on which companies will get the most scrutiny if they seek Reserve Bank master accounts and services.

Al031422.pdf

11 03, 2022

DAILY031122

2023-04-03T15:14:45-04:00March 11th, 2022|2- Daily Briefing|

US, G7 Fragment Global Financial Construct to Sanction Russia

Heightening sanctions to a still more unprecedented level, the President has issued a new set of Russian sanctions and the U.S., along with the rest of the G7, announced today that both the World Bank and IMF will be pressed to deny Russia borrowing privileges, which are rarely – if ever – denied for overtly political reasons.

Daily031122.pdf

9 03, 2022

CRYPTO26

2023-04-04T10:50:56-04:00March 9th, 2022|5- Client Report|

Biden Administration Decides Crypto Here to Stay, Seeks CBDC

We follow our initial client alert here with an in-depth analysis of President Biden’s long-awaited executive order laying down steps intended quickly to construct a U.S. digital-asset policy construct. Although sparked in part by virtual currency’s role in the Ukraine crisis, the executive order (EO) is a watershed event establishing for the first time that the U.S. views digital assets as a fixture of future finance warranting a rapid, far-reaching, and stringent set of governance, law-enforcement, equity, inclusion, and technology policy intervention. In general, the EO establishes a U.S. principle akin to that set by global regulators in this area: same-business same rules. Nothing in the order thus threatens SEC Chairman Gensler’s assertion that current law addresses many investor-protection challenges (see Client Report INVESTOR19) indeed, the EO strengthens the SEC’s hand by validating the chairman’s concerns.

CRYPTO26.pdf

9 03, 2022

Daily030922

2023-04-04T12:16:52-04:00March 9th, 2022|2- Daily Briefing|

President Presses Crypto, CBDC Buttons
We will shortly provide clients with an in-depth analysis of President Biden’s executive order setting the stage for substantive U.S. action across the digital-asset sector.  We note at the outset that, according to the fact sheet, the order comes as close to demanding a CBDC as the President’s authority over the Fed and Secretary Yellen’s reservations doubtless allowed.  The Fed is told to “place urgency” on its research, a demand likely to motivate the Fed to accelerate the very leisurely pace towards some sort of CBDC decision described in last month’s discussion draft (see FSM Report CBDC10).

Long-Awaited LIBOR-Certainty Bill Set for Enactment
Sen. John Tester (D-MN) today to ABA indicated that the Senate version of House-passed LIBOR-transition legislation is in the omnibus spending bill set to pass by the end of this week in order to keep the government open.

CFPB Targets Employer Financial Products, Data
The CFPB today detailed its agenda following meetings on the extent to which U.S. workers are placed at financial risk by their employers.

Daily030922.pdf

8 03, 2022

DAILY030822

2023-04-04T12:19:56-04:00March 8th, 2022|2- Daily Briefing|

Congress Prepares Gold-Related Sanctions vs. Russia

Sens. Cornyn (R-TX), Hassan (D-NH), and bipartisan colleagues have added to the Congressional proposals to sanction Russia with S. 3771, legislation to impose secondary sanctions related to American entities that knowingly engage in gold sales or transport involving the Russian central bank.

Mandatory-Arb Bill Gets Low-Priority, Partisan Reception

As we anticipated, today’s Senate Banking hearing on mandatory arbitration in financial products was partisan and provided little in the way of an actionable agenda.  The hearing was also poorly attended due to higher-priority concerns, with Chairman Brown (D-OH) and Democrats supporting the legislation they recently introduced to ban mandatory arbitration and class-action waivers.

Energy Financing Now Under Sanctions Gun

As anticipated, President Biden’s executive order today barring oil and related energy imports also extends the sanctions regime to financing, approving, guaranteeing or facilitating sanctioned imports and any energy-related investments.

FedFin Advisory: Commodity Risk Would Renew Political Challenge

A key question we hear from large-bank investors is the extent to which the Ukraine crisis may lead to significant commodity-related losses at the largest U.S. banks due not only to their own exposures, but also to Archegos-like risk positions in these often opaque markets.

Daily030822.pdf

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