#FHC – Federal Financial Analytics

20 12, 2022

FedFin on: CFPB Crafts New-Style, High-Impact Enforcement Construct

Arezou Rafikian2022-12-20T17:22:32-05:00December 20th, 2022|The Vault|

In this report, we provide an in-depth assessment of the CFPB’s unprecedented $3.7 billion settlement earlier today with Wells Fargo (WFC). In its release, the Bureau notes that it worked with the FRB and OCC to craft this consent agreement; in his remarks, Director Chopra makes it clear that, settled or not, he wants to penalize a “corporate recidivist” by retaining or even tightening the Fed’s 2018 asset-cap (see Client Report CORPGOV26) and doing the same with the OCC’s 2021 mortgage-servicing settlement….

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

20 12, 2022

CONSUMER46

Eliza Allen2022-12-20T15:28:41-05:00December 20th, 2022|5- Client Report|

CFPB Crafts New-Style, High-Impact Enforcement Construct

In this report, we provide an in-depth assessment of the CFPB’s unprecedented $3.7 billion settlement earlier today with Wells Fargo (WFC). In its release, the Bureau notes that it worked with the FRB and OCC to craft this consent agreement; in his remarks, Director Chopra makes it clear that, settled or not, he wants to penalize a “corporate recidivist” by retaining or even tightening the Fed’s 2018 asset-cap (see Client Report CORPGOV26) and doing the same with the OCC’s 2021 mortgage-servicing settlement. The case has also reopened calls to revoke WFC’s status as a financial holding company, action authorized in Dodd-Frank (see FSM Report FHC19) that would sharply constrain the company’s non-traditional securities and insurance activities and establish precedent for this penalty in other large-BHC consumer actions. Although WFC does not admit or deny the Bureau’s charges beyond accepting those specific to its jurisdiction, the Bureau has mandated agreement to several provisions that heighten the settlement’s cost to the bank.

CONSUMER46.pdf…

22 09, 2021

Daily092221

Arezou Rafikian2023-08-03T11:26:28-04:00September 22nd, 2021|2- Daily Briefing|

FDIC Prods Banks to Assist Innovators
Seeking further engagement and collaboration with innovators, the FDIC today sought comment on ways to expand information access within its innovation pilot program.

HUD, FHFA Start Fair-Housing Campaign with Soft Touch
Following their memorandum of understanding (MOU) last month and a newly-sharp focus on fair housing, HUD and FHFA today “clarified” that Freddie Mac will purchase mortgages secured by group homes.

HFSC Considers Transferring Fed’s Macro-Stabilization Function to New Agency
Ahead of the HFSC Subcommittee hearing tomorrow on the Fed’s emergency lending powers, the majority staff memo indicates that Members will consider draft legislation to establish a National Investment Authority (NIA).

Powell Avoids Specifics on FRB Trading, Quarles, Wells Fargo
Although the Powell press conference today focused as always on the FOMC statement, the Fed chairman faced skeptical questions about recent personal trading by two Reserve Bank Presidents.

Daily092221.pdf …

20 09, 2021

M092021

Arezou Rafikian2023-08-03T14:35:41-04:00September 20th, 2021|6- Client Memo|

Choosing Between Evisceration, Amputation, or Decapitation to Punish Big Banks

One can pretty much count on senior Democrats to demand summary execution when Wells Fargo stumbles on its troubled path to exoneration from the Fed’s scorching 2018 enforcement order. So, when the OCC last week embarrassed the bank with renewed sanctions, Sen. Warren didn’t miss a beat; as we noted, she promptly sent Jay Powell a letter demanding that the bank be disemboweled. However, if Sen. Warren really wants to ensure that accident-prone banks mend their ways, she would do better by pressing remedies that might really work for the consumers she wants to protect.

M092021.pdf…

20 09, 2021

Karen Petrou: Choosing Between Evisceration, Amputation, or Decapitation to Punish Big Banks

Arezou Rafikian2023-08-03T14:36:09-04:00September 20th, 2021|The Vault|

One can pretty much count on senior Democrats to demand summary execution when Wells Fargo stumbles on its troubled path to exoneration from the Fed’s scorching 2018 enforcement order. So, when the OCC last week embarrassed the bank with renewed sanctions, Sen. Warren didn’t miss a beat; as we noted, she promptly sent Jay Powell a letter demanding that the bank be disemboweled. However, if Sen. Warren really wants to ensure that accident-prone banks mend their ways, she would do better by pressing remedies that might really work for the consumers she wants to protect.

Disembowelment via Sen. Warren would come via regulatory resurrection of the Glass-Steagall Act along her preferred lines. As she explains this in her letter, the Fed would use the authority she believes it has to revoke Wells Fargo’s charter as a financial holding company (FHC), thereby ending the holding company’s ability to engage in both consumer banking and securities activities.

Sen. Warren considers the mix of consumer and capital-markets activities fraught with contagion for vulnerable consumers, but none of the violations that sparked enforcement orders has anything to do with wholesale finance and could well have occurred in the most consumer-pristine of retail banks. For example, the OCC’s latest order punishes what are said to be severe lapses in mortgage servicing. IPO offerings, brokerage services, and even junk-bond sales have diddly to do with mortgage servicing or the cross-selling scandal that brought all this down on the bank in the first place. Thus, divesting capital-markets …

17 09, 2021

PUSH-OUT14

Arezou Rafikian2023-08-03T14:42:33-04:00September 17th, 2021|5- Client Report|

Is the SEC Planning a Push-Out Pull Back?
As we noted, SEC Chairman Gensler’s written Senate Banking testimony included a short – but very significant – statement prioritizing Commission review of key fixed-income market sectors. This did not come up at the hearing (see Client Report INVESTOR18), which focused on hot partisan issues such as climate risk and cryptoassets. However, the extent to which the SEC renews efforts to govern fixed-income activities it now thinks too far outside its reach has significant strategic implications, most immediately for large banks that might find key underwriting and capital-markets activities under additional standards and greater enforcement risk. In this report, we assess what Mr. Gensler contemplates for the corporate, muni, and asset-backed securities (ABS) markets, revisiting the “push-out” battles the Commission largely lost over a decade ago to evaluate whether the Fed could or would defend banks again from demands that key activities register with the SEC.

PUSH-OUT14.pdf…