#FRB Chicago – Federal Financial Analytics

30 08, 2023

Daily083023

William Cross2023-08-31T07:41:42-04:00August 30th, 2023|2- Daily Briefing|

FRB Chicago Study Finds Nonbanks Act as Global Shock Absorbers

A new empirical FRB Chicago study finds that nonbanks act as global shock absorbers during times of stress because tightening US monetary policy is associated with increased nonbank syndicated dollar lending compared to banks. This of course frustrates monetary-policy transmission in the U.S., but the paper focuses on EMEs where the principal risk is macroeconomic and financial shock.

Comment Period Reopened on Controversial Custody Proposal

The SEC today reopened the comment period on its controversial investment-advisor asset custody NPR. As noted (see FSM Report CUSTODY5), this thorough rewrite would redefine qualified custodians to exclude most crypto firms, as well as foreign firms and other entities the Commission does not believe ensures sufficient safeguards.

FSB Seeks Comment On Securitization Reforms

The FSB today announced that it will evaluate the impact of G20 securitization reforms (see FSM Report ABS37) on its financial-stability objectives as well as on securitization markets. The evaluation will focus on regulatory capital regulation governing securitization exposures and RMBS and CDO/CLO market segments, although the FSB will also consider including other segments.

Warren Blasts Powell, Alleging Capital-Reg Delay, Concessions

Expanding on her longstanding criticism of Chair Powell, Sen. Warren (D-MA) sent him a letter today chastising him for what she views as undue deference to big-bank lobbying and demanding that he press for the rapid completion of tough new capital rules.

Daily083023.pdf…

24 04, 2023

DAILY042423

Eliza Allen2023-04-24T17:07:25-04:00April 24th, 2023|2- Daily Briefing|

HFSC Mark-Up Renews CFPB Partisan Scuffle

Wednesday’s HFSC markup features only one bill pertaining to financial policy, rather than to capital formation: a bill yet to be introduced by Rep. Barr (R-KY) imposing longstanding Republican demands on the CFPB. It would change the Bureau’s leadership to a five-member commission, create an independent Inspector General, and require the Bureau to consider how all proposed rules impact small businesses.

FRB-Chicago Sees Green for LMI Households, Branch Deserts for Blacks

Addressing the contentious question of urban bank-branch deserts, a recent Federal Reserve Bank of Chicago paper finds that LMI households have lower demand for branch services and thus use them less. However, Black households have poor branch access even after controlling for income, with inaccessibility said to completely explain lower branch use compared to white households. Neither LMI nor Black households use mobile or online banking in ways that offset the study’s findings, which are based on newly available geolocational data judged by complex models and data methodologies.

Daily042423.pdf…

10 03, 2023

DAILY031023

Eliza Allen2023-03-10T16:57:08-05:00March 10th, 2023|2- Daily Briefing|

Anti-Woke Is Worse Than Woke When It Comes To Financial Distortion

A new study released by the Federal Reserve Bank of Chicago concludes that anti-woke policies distort financial outcomes by looking at 2021 Texas law prohibiting municipalities from conducting certain businesses with financial institutions that violated the law’s anti-woke criteria.

CFPB Opens Mortgage Servicing to Regulatory Rewrite

The CFPB today published an RFI seeking the effect of TILA mortgage loan originator rules on small businesses as part of a regular ten-year review.

FedFin Assessment: SVB’s Failure And Its Aftermath

As clients will recall, we predicted Silvergate’s failure, but not its contagion risk for Silicon Valley Bank, which failed earlier this morning following the combination of a run and capital shortfall.

SVB Rumors Stoke Treasury Response

Following the sudden failure of Silicon Valley Bank, Treasury Secretary Yellen today convened the heads of the Fed, FDIC, and OCC to discuss its ramifications.

Congress Begins SVB Inquiry

In the first of a series of statements sure to come from Congress, HFSC Ranking Member Waters (D-CA) today said that she was alarmed by the collapse of SVB and that she is monitoring and convening Committee members with regulators.

Daily031023.pdf…

2 12, 2022

DAILY120222

Eliza Allen2022-12-02T16:51:39-05:00December 2nd, 2022|2- Daily Briefing|

Menendez Blasts FRB-Chicago Choice

Continuing his campaign for increased diversity and transparency at the Federal Reserve, Sen. Bob Menendez (D-NJ) issued a fiery statement criticizing the Federal Reserve Bank of Chicago’s decision to name a non-Latino president.

Fed Revises PSR to Prepare for FedNow

The FRB today finalized changes to its Policy on Payment System Risk (PSR) to expand access to collateralized intraday credit. These reduce the administrative steps associated with requesting collateralized capacity, action the Fed says would improve intraday liquidity management and payment flows while also assisting the Reserve Banks managing intraday credit risk.

GOP Expands CBDC Attack to Project Hamilton

Readying an inquiry intended to block CBDC when the GOP takes over the house next year, Ranking Member McHenry (R-NC) and six other HFSC Republicans sent a letter to FRB Boston President Susan Collins demanding answers to allegations that private companies are abusing their work on Project Hamilton to position themselves for product sales to financial companies once a CBDC begins.

Fed Finally Outs Climate-Risk Principles

As long anticipated and likely late on Friday in hopes of avoiding critical GOP scrutiny, the Federal Reserve Board today released proposed climate-risk principles. These are “high-level” as is also the case for global edicts in this contentious arena (see FSM Report CLIMATE14), also tracking the OCC’s longstanding like-kind proposal (see FSM Report GREEN12).

Daily120222.pdf…

3 10, 2022

DAILY100322

Eliza Allen2022-10-05T10:29:43-04:00October 3rd, 2022|2- Daily Briefing|

Gruenberg Commits to Climate-Risk Standards, Cautious on Premium Hike

Acting FDIC Chairman Gruenberg today strongly defended banking-agency action addressing climate risk, indicating that the FDIC will advance pending risk-management principles akin to those pending from the OCC (see FSM Report GREEN12) along with working with the Fed.

FRB-Chicago Study: Big U.S. Banks are Oligopolists

A new Federal Reserve Bank of Chicago working paper finds that U.S. banking has become increasingly concentrated judged by the top-five bank’s market share and a standard market-power index, concluding that this “oligopolistic” sector is thus able to charge undue fees to weaker corporate customers.

Warren Zelle Report Finds “Rampant” Fraud, Slams Banks

Following the hearing with large-bank CEOs (see Client Report REFORM213), Sen. Warren (D-MA) released a scathing report concluding that Zelle is plagued by “rampant and increasing fraud.”

Board Defies Critics, Demands Two Networks for Online Debit Transactions

Ahead of possible Congressional action on legislation to restrict credit-card interchange fees (see FSM Report INTERCHANGE10), the FRB today voted 6-1 to finalize its controversial proposal (see FSM Report INTERCHANGE8) requiring debit-card issuers to enable at least two unaffiliated payment-card networks, including with regard to “card not present” transactions.

FSOC Presses New Law, Rule, Supervisory Standards to Tackle Crypto Systemic Risk

As anticipated, the FSOC today approved a sweeping report on cryptoasset financial stability, finding that interconnectedness between this sector and the financial system poses significant risk that warrants structural action.

Daily100322.pdf…