Extra Equitable?
FHFA, Fannie, and Freddie yesterday updated the sometimes-controversial equitable-finance plans FHFA approved last year. Notably, Fannie’s new plan no longer focuses exclusively on Black households, a feature that garnered vitriolic Wall Street Journal criticism and negative Republican reactions. Freddie’s plan delays and may even back away from efforts to set MI and title insurance pricing.
In this report, we build on FedFin’s in-depth reports about recent bank failures to detail new risks for all of the innocent bystanders in the U.S. mortgage market along with a not so-innocent bystander: the Federal Home Loan Banks. We note also some take-aways FHFA may draw from the crisis with regard to GSE regulation, resolution, and supervision. In short, things will be different assuming they don’t get worse and then still more of a paradigm shift.
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The Collateral Damage Of The Banking Crisis
In this report, we build on FedFin’s in-depth reports about recent bank failures to detail new risks for all of the innocent bystanders in the U.S. mortgage market along with a not so-innocent bystander: the Federal Home Loan Banks. We note also some take-aways FHFA may draw from the crisis with regard to GSE regulation, resolution, and supervision. In short, things will be different assuming they don’t get worse and then still more of a paradigm shift.
Waters Reiterates ICE/BKI Opposition
HFSC Ranking Member Waters (D-CA) released a statement today applauding the FTC’s move to block Intercontinental Exchange from acquiring the mortgage software company Black Knight.
Progressives Press For Tailoring Redo
Cementing prior denouncements of 2018 Dodd-Frank “rollbacks” into legislative action, 17 Democratic senators and 31 House Members today took direct aim at Trump-era banking policy by introducing legislation that would repeal Title IV of the Economic Growth, Regulatory Relief, and Consumer Protection Act.
Bowman Presses Small-Bank Mergers, Climate Caution, Third-Party Guardrails
In remarks today, FRB Governor Bowman noted that delays in merger reviews cause significant operational and reputational risks and suggested considering all competitors when evaluating a small bank merger’s competitive effect to reduce delays.
New CFPB RFI Brings Data Brokers Under Scrutiny
Ahead of a planned rulemaking, the CFPB today released an RFI seeking comments on the business practices of data brokers, focusing on new business models to determine if certain practices fall under the scope of FCRA.
Warren, Blumenthal Call on DOJ, SEC to Investigate SVB
Although media reports indicate that an investigation is already under way, Sens. Warren (D-MA) and Blumenthal (D-CT) sent a letter today to Attorney General Garland and SEC Chairman Gensler urging them to investigate senior SVB officials if they are not already doing so.
FHFA Delays New DTI-Based Upfront Fee
Following an announcement this January that FHFA would implement changes to Fannie and Freddie’s single-family pricing framework, Director Thompson today announced that the Agency will delay the effective …
Biden Promises Regulatory Revamp
In an effort to restore confidence in the banking system, President Biden announced that he will ask Congress and the banking regulators to strengthen regulations that were rolled back by the Trump administration.
Political Battle Lines Take Shape
In the wake of yesterday’s decision to protect all SVB depositors, Members of Congress are now positioning themselves for future action.
Biden Presses Stability in Wake of SVB, Signature Rescues
Reflecting ongoing uncertainties and political fallout, President Biden later this morning reiterated comments from earlier today noted in our prior alert.
Comment Deadline Set for GSE Capital Proposal
The Federal Register today includes the FHFA’s proposal to refine Fannie and Freddie’s capital construct.
Fed Tries to Get Ahead of SVB Storm
Even as Sen. Hagerty (R-TN) led calls to review Fed supervision, the Fed today announced that Vice Chair Barr will lead a review of SVB’s supervision and regulation.
Agencies Strengthen Defenses vs. Crypto-Related Funding
As FedFin forecast when significant bank crypto-related deposit exposures came to light (see Client Report CRYPTO38), the banking agencies today issued guidance telling banks to monitor and mitigate risks related to resulting liquidity risk.
FSB Sets Out Key Cross-Border Payments Action Items
The Financial Stability Board today released a list of actions for implementing the G20’s Roadmap for Enhancing Cross-border Payments, including three priorities. These are payment system interoperability and extension; legal, regulatory and supervisory finalizing frameworks; and cross-border data exchange and message standards.
IMF Presses CBDC, New “Unified Ledger”
A new IMF blog post advocates for public sector implementation of new payment technologies including tokenization, encryption, and programmability to improve cross-border payments, limit counterparty risk, and facilitate AML and other compliance.
FHFA Proposes GSE-Capital Revamp
FHFA today sought comment on several significant revisions to the regulatory-capital rules governing Fannie and Freddie. As we will detail in a forthcoming in-depth report, several of these changes concede to comments rejected as the current rules were finalized.
House GOP Slams Beneficial-Ownership Database
Reiterating longstanding concerns, HFSC Chairman McHenry (R-NC) and National Security, Illicit Finance, and International Financial Institutions Subcommittee Chairman Luetkemeyer (R-MO) submitted a comment letter today strongly opposing FinCEN’s latest beneficial ownership NPR.
House GOP Decries SEC Crypto-Custody Construct
Reflecting GOP concerns about the SEC’s new custody proposal as well as broad GOP objections to much of what Chairman Gensler does, HFSC Republicans today tweeted that the proposal will not ensure sufficient investor safeguards in part because restrictions on bank custody services remain.
Biden Order Reasserts Racial-Equity Agenda
Reiterating much of his last racial-equity executive order, President Biden today issued an order directing federal agencies to establish equity teams and comprehensive strategies to implement the order’s new equity initiatives.
FSB Pledges Further Work on DeFi Financial-Stability Risks
The FSB today released a report finding that DeFi’s financial stability risks are limited but may grow should linkages increase to traditional finance.
CFPB: Unfair Credit-Card Competition Evident Via Data Suppression
Following strongly-worded letters to six credit card lenders last May, the CFPB today concluded that these companies have suppressed payment data for competitive purposes.
FHFA Floats Single-Family ESG Bonds
Building on its equitable-finance initiative, FHFA today released a request for input on the benefits and risks of Fannie and Freddie single family social bonds.
CFPB Set To Quash Credit-Card Late Fees
Taking action as anticipated following its June ANPR (see FSM Report CREDITCARD35), the CFPB today released an NPR that would curtail credit card late fees the Bureau calls “excessive,” moving ahead also with one aspect of the White House competition agenda.
Comment Deadline Set For CFPB Contract Registry Proposal
The Federal Register today includes the CFPB’s form-contract registry proposal. As noted (see FSM Report CONSUMER48), the Bureau’s NPR would establish a public registry requiring nonbanks to post contract provisions which the agency believes threaten consumer legal or free-speech rights.
Brown, Democrats Press Thompson On Enterprise Loan Sale Programs
Ahead of a housing hearing as soon as next week, Senate Banking Chairman Brown (D-OH) and four other Democrats today sent a letter to FHFA Director Thompson requesting a review of Fannie and Freddie’s nonperforming and reperforming loan-sales programs.
McHenry Confirms Privacy, Crypto Priorities; Rewrites HFSC Rules
At an HFSC organizational meeting, Chairman McHenry (R-NC) today emphasized that he wants to work with Democrats, but much of what he said is unlikely to facilitate this. For example, he noted with regard to crypto legislation that he wants to end the SEC’s enforcement-focused policy; as previously noted, any crypto legislation curtailing the SEC will run afoul of Democratic views in both the House and Senate.
Legacy-Contract LIBOR Replacement Benchmarks
Shortly before its statutory year-end deadline, the Federal Reserve finalized its proposal defining legacy-contract benchmarks when there is no clear, practicable contractual fallback rate.
We’re Starting to See SIFIs
As came out into the open last week, FSOC will finally turn to rewriting the Trump era rewrite of the Obama Administration’s FSOC protocols regarding systemic financial institutions and activities. Could the SIFI reaper be coming for Fannie and Freddie? We doubt it, but then again…