6
02, 2023
22
08, 2022
GSE-082222
Forbear to Forget
A new Federal Reserve Bank of Cleveland study validates forbearance as a mortgage-market buffer, reinforcing the likelihood that policymakers and servicers will turn quickly to it if current mortgage-market conditions turn ugly under the combined stress of higher rates and slow to no growth. If bank regulators also reinstate regulatory forbearance on forborne loans, the regulatory-capital cost of higher-risk loans gets a nice counter-cyclical boost, perhaps encouraging banks to tread softly back into at least some of this sector if parallel calculations under the all-powerful stress capital buffer prove propitious.
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16
08, 2022
DAILY081622
FRB-Cleveland Study: Banks are Better Small-Business Lenders Than Fintechs
Using data from the 2021 Small Business Credit Survey, a new Federal Reserve Bank of Cleveland study concludes that small businesses that made use of online lenders were less satisfied with their experiences and more likely to report high rates and unfavorable repayment options than those that used banks. The study also found that online lenders were less likely than banks to approve the full extent of financing, noting that this was not the case prior to the pandemic.
Fed Gives Guarded Guidance re Crypto Activities
The Federal Reserve Board today released a supervisory letter requiring state member banks to obtain prior approval before commencing cryptoasset-related activities and to ensure that appropriate internal controls are in place in order to do so. This letter comes a day after the board announced its new payment-system access policy and is likely intended to make it clear that activities in or out of FDIC-insured banks related to cryptoassets will not get the free pass some fear.
Toomey Presses for FDIC-Authorized Crypto Activity
Sen. Toomey (R-PA) sent a letter today to acting Chairman Gruenberg alleging that the FDIC has instructed FDIC regional offices to send letters to multiple banks requesting that they refrain from expanding relationships with crypto firms without any legal basis, citing multiple whistleblower complaints. He asks that Mr. Gruenberg provide any communications that the Washington office has had with FDIC regional offices on the subject by August 30.
29
06, 2022
DAILY062922
FRB-Cleveland Study: Small-Business Finance Availability Shows Continuing Disparate Impact
The Federal Reserve Bank of Cleveland today published the results of the Small Business Credit Survey, finding that small businesses owned by people of color were far less likely to have recovered to pre-pandemic levels than their white counterparts, due in part to continuing gaps in financial access.
GOP Renews Demand for Reserve Bank Reform
Picking up on the GOP’s serious concern about Federal Reserve Bank governance expressed when Chairman Powell came before them last week (see Client Report FEDERALRESERVE70), Senate Banking Republicans today sharply criticized the head of the Kansas City Fed for what they call her unresponsiveness and even untruthfulness related to how Reserve Trust achieved payment-system access.
CFPB Report: Credit Line Reductions Harm Vulnerable Borrowers
Continuing the CFPB’s assessment of credit-card finance, Bureau staff today issued a report about the adverse impact that credit line reductions or withdrawals have on consumers, especially those under stress.
HFSC Homeownership Session Fans Partisan Flames
Today’s HFSC hearing on homeownership and inequality was a largely partisan session where each side repeated policy and macroeconomic arguments along party lines about the best ways to govern the nation’s housing market.
IMF Calls for Improvements to Capital Market Regulation
The IMF issued a report today on capital-markets regulation calling for new market liquidity backstops, strengthened CCP risk management, and greater attention to emerging risks to strengthen the regulatory perimeter focus.
Waters Renews Demands to Break Up Big Bad Banks
Following the hearing …
3
06, 2022
DAILY060322
Agency Heads Stress Need for CRA Reform
Acting Comptroller Hsu, Fed Vice Chair Brainard, and Acting FDIC Chairman Gruenberg today took questions on the controversial, far-reaching inter-agency CRA regulatory rewrite (see FSM Report CRA32).
FRB-Cleveland Study: Small-Business Lending Continues Race/Ethnic Disparities
A new paper published by the Federal Reserve Bank of Cleveland finds evidence that race-based lending disparities persisted through the pandemic, concluding that Black business owners in particular struggled to receive loans compared to whites, fintechs have not overcome credit disparities, and minority-owned businesses were less likely to receive the PPP amounts for which they applied.
Waller Seeks Balance in Crypto Rules
FRB Gov. Waller today described the advantages of innovative, unregulated markets such as that created by cryptography at its outset.
FinCEN Takes Baby Step to No-Action Letters
Reflecting demands from Congress in recent AML law (see FSM Report AML133), FinCEN today issued an advance notice of proposed rulemaking outlining how a no-action letter process might work.
27
05, 2022
Daily052722
KC Fed: Advanced Nations Struggling to Find a CBDC Rationale
In concert with Vice Chair Brainard’s testimony yesterday (see Client Report CBDC13), the Kansas City Fed released a brief assessing the reason advanced economies have so far been considerably more hesitant than emerging ones to craft retail focused CBDCs. By laying out how many advanced economies are at best lukewarm to CBDC, the brief’s review illuminates reasons why the FRB is hesitant without directly addressing the U.S. The post looks at numerous CBDC rationales (e.g., financial inclusion, Payment-system speed) and differentiates them by major nations.
FRB-Cleveland: Post-1994 Bank Restructuring Improved LMI Inclusion
A new study from the Federal Reserve Bank of Cleveland offers perhaps the first literature survey of financial inclusion. It largely summarizes outstanding work, but notes that interstate banking following the Riegle-Neal Act of 1994 correlates with increased bank-branch density correlated in turn with a four percent increase in LMI household financial inclusion. This conclusion is interesting in light of the significant increase following the Act also in bank consolidation in light of continuing concern about “banking deserts” said to be due to M&A (see FSM Report MERGER9).
3
01, 2022
GSE-010322
Home, Risky Home?
New economic commentary from the Federal Reserve Bank of Cleveland assesses several recent studies on homeownership from an investment perspective. Contradicting the traditional political narrative about the importance of homeownership to wealth accumulation, it concludes that homeownership is fine if you’ve got some wealth, but may well be risky for lower-income and -wealth homeowners.