#FSB

14 11, 2023

DAILY111423

2023-11-14T16:51:55-05:00November 14th, 2023|2- Daily Briefing|

Comment Deadline Set for Debit-Card Interchange Fee Cap

The Federal Register today includes the Federal Reserve’s proposed sharp reduction in the cap for debit-card interchange fees.  As previously noted (see FSM Report INTERCHANGE12), the reduction is premised on the Fed’s finding of lowered debit-card costs, but its methodology is largely unchanged and thus may not reflect current and prospective costs such as those associated with pending deposit-insurance, capital, liquidity, CRA, and open-banking standards.

FSB Hones in on Insurance Company Risk, Resolvability

At its plenary meeting over the last two days, the FSB reviewed its longstanding priorities in areas such as NBFIs, climate risk, and cryptoassets.  The most notable change in priorities comes with renewed focus on insurance-company systemic risk due to challenging resolution.

Daily111423.pdf

19 10, 2023

DAILY101923

2023-10-19T16:30:42-04:00October 19th, 2023|2- Daily Briefing|

OIG Blasts FDIC’s Crypto-Policy Delay

Late yesterday, the FDIC’s Office of Inspector General (OIG) issued a report critical of the FDIC’s supervisory crypto policy.

Fed May Signal Possible Compromise as GOP Barr Demands Capital Answers

Amid press reports that Chair Powell has implicitly promised capital-rule compromise, HFSC Financial Institutions Chair Barr (R-KY) released a letter today pressing Vice Chair Barr still harder on the cost-benefit analytical (CBA) and cumulative-impact issues raised at the September hearing at which Karen Petrou testified.

Fed Data Show Increases in Household Financial Resilience, Profound Home-Affordability Gap

The Federal Reserve yesterday released its triennial Survey of Consumer Finances (SCF).  As always, we here highlight data with financial-policy implications; Petrou blogs and other releases will update economic-equality indicators.

BIS Head Calls for Review of Large Bank Supervision

BIS General Manager Agustin Carstens today said that the mid-March failures show the need for nations to review how they supervise larger banks, specifically highlighting liquidity risk and setting frameworks for emergency liquidity assistance.

OCC Analysis Shows Broad IRR Resilience With Startling Risk Pockets

Showing some pockets of severe risk but overall resilience, the OCC today released a statistical analysis of interest rate risk based on projected changes in twelve-month net interest income as well as the economic value of equity in parallel interest rate shock scenarios ranging from -200 basis points to +400 bps.

CFPB Thinks Big on Open Banking

As anticipated, the CFPB today advanced from a review of consumer data rights (see FSM Report

12 10, 2023

DAILY101223

2023-10-12T17:09:17-04:00October 12th, 2023|2- Daily Briefing|

FSB Calls for More Private Climate Disclosures

Expressing considerable satisfaction with climate-risk disclosure progress, the FSB today released a report finding that all member jurisdictions either have or plan climate disclosure regimes, but there still needs to be greater private-sector self-reporting.

Pressure Builds for Heightened Iran, China Sanctions

Ahead of the hearing we anticipated earlier this week, HFSC Republicans have introduced several bills designed to increase financial pressures on Iran to punish it for the Hamas attack.

EU Regulators Add ESG Considerations to Regulatory, Supervisory Standards

In a bit of gold plating for what it believes to be the public good, the European Banking Authority today issued a report pressing for Pillar 1 capital charges for activities posing ESG risks with particular attention to climate.

OMB Redesigns Federal Rulemaking to Consider, Increase Competition

Acting under the President’s competition executive order (see Client Report MERGER6), OMB’s Office of Information and Regulatory Affairs yesterday issued new guidance governing federal rulemaking stipulating express assessment of the impact of new or prospective rules to enhance market competition.

CFPB, DoJ Issue Immigration Discrimination Warning

Taking action that may in some cases put lenders in conflict with state law, the CFPB and DoJ stated today that “unnecessary or overbroad reliance” on immigration status in a credit decision may violate the ECOA.

Daily101223.pdf

11 10, 2023

DAILY101123

2023-10-11T16:47:36-04:00October 11th, 2023|2- Daily Briefing|

Bowman Targets U.S. Leverage Ratio, NBFIs

In remarks during the Morocco IMF/Bank meeting today, FRB Gov. Bowman contrasted U.S. bank resilience with the IMF’s findings yesterday on potential vulnerabilities as rates rise and macroeconomic conditions soften.

FSB Reiterates Stability Concerns

The FSB’s latest work plan reiterates all it most recently said to the G20.

CFPB Barrels Down on “Basic” Banking Fees

In conjunction with a new White-House junk-fee initiative, the CFPB today issued “guidance” – i.e., essentially a final rule – banning large banks and credit unions from collecting “unreasonable” fees for what the Bureau considers reasonable and “basic” account information.

SEC Throws Wrench into TLAC Standards

As we noted yesterday, the FSB’s assessment of the global resolution framework’s effectiveness found significant glitches it urges national regulators quickly to address via standards such as those now pending in the U.S. to bring smaller banking organizations into the resolution-planning regime (see FSM Report LIVINGWILL23).

OFR Study: Short-Selling Does Not Harm Financial Stability

OFR today released a model-based study that finds no evidence that short-selling adversely affects financial stability.

Daily101123.pdf

10 10, 2023

DAILY101023

2023-10-10T16:46:21-04:00October 10th, 2023|2- Daily Briefing|

Barr Stands Firm on Capital Rewrite

In remarks yesterday, Vice Chair Barr made it clear that, no matter all the industry and Republican pressure, the Fed believes the pending capital rewrite has no material problematic consequences and is necessitated by recent events.

FSB Calls for Continued Improvements in Cross-Border Payments

Following its cross-border payments roadmap, the FSB today released two progress reports finding that further work is needed in ensuring payment system interoperability, establishing common data standards for payments messages, developing tools needed for APIs, and providing a vehicle for the investigation of legal, regulatory and supervisory frameworks.

FSB Presses for Better Smaller-Bank, GSIB Resolvability

Following Basel’s review late last week on the 2023 crash (see Client Report REFORM228), the FSB today released its assessment of implications for GSIB resolution.  Basel’s report acknowledged challenges in this area, but largely focused on what we call Basel V.

Fed Finalizes DIHC Insurance-Capital Construct

As promised in the bank-capital proposals (see FSM Report CAPITAL230), the FRB Friday voted 6-0 to finalize long-pending standards for insurance-focused depository institution holding companies.

GOP Hikes Pressure on Iran Payment, Sanctions

Presaging likely HFSC hearings and delays in regular committee action, Ranking Member Scott (R-SC) today called for Secretary Yellen to testify in front of Senate Banking to explain why $6 billion is being released to Iran and to identify any sanctions gaps.

Bowman Pursues Barr, Array of Recent Fed Actions

Continuing her opposition to much of what Vice Chair Barr is doing, …

5 10, 2023

DAILY100523

2023-10-05T16:36:40-04:00October 5th, 2023|2- Daily Briefing|

Kanter, Khan Mount Stout Defense of Draft Merger Guidelines

FTC Chair Khan and DOJ Assistant AG Kanter today defended the agencies’ draft merger guidelines (see FSM Report MERGER12) on grounds that they are faithful to congressional intent, reflect core legal principles, are more accessible and easier to apply, and better reflect the modern competitive landscape.

Basel Plans NBFI Ops-Risk Supervisory Standards, Continuing Review of Bank Supervision, New Disclosures

The Basel Committee today released its long-awaited report on 2023 vulnerabilities, deciding based on it to prioritize new supervisory approaches and additional analytical tools.

Bipartisan Bill Provides Transaction Account Deposit Insurance

Following Chairman Gruenberg’s remarks yesterday highlighting targeted deposit insurance reform, Sens. Manchin (D-WV), Braun (R-SD), and Hickenlooper (D-CO) yesterday introduced legislation to reinstate the Transaction Account Guarantee (TAG) program, expanding deposit insurance to non-interest bearing transaction accounts up to $10 million.

FDIC Proposes Public-Good Policy for IDI Corporate Governance

The FDIC today announced the Board’s 3-2 approval of an NPR establishing guidelines on corporate governance and risk management for FDIC-supervised IDIs with over $10 billion in assets.

Daily100523.pdf

29 09, 2023

DAILY092923

2023-09-29T16:49:25-04:00September 29th, 2023|2- Daily Briefing|

FSB Head Signals Limits on – Not Just Look at – NBFI Leverage

As the FSOC finalizes a new U.S. systemic framework, FSB chair Klaas Knot today told the FT that the Board along with international standard-setters is conducting a review of nonbank leverage in an effort to improve bank-NBFI interconnections and ultimately limit nonbank borrowing.  The express focus on specific leverage constraints goes beyond the FSB’s more general statements to date.  Mr. Knot also highlighted imposing tougher collateral requirements for investment fund borrowing against higher-risk securities.

OIG: FDIC Inability to Deploy OLA Acute, Could Hike Systemic Risk

The FDIC’s OIG today released a polite, but still withering criticism of the FDIC’s inability to use OLA over a decade after Dodd-Frank gave it sweeping powers to address systemic-risk resolutions without resorting to bailouts.  Specifically, the OIG found that, while the FDIC has made some progress readying OLA-readiness since 2010, it failed to establish key elements needed to use this authority under stress, especially if this stress occurred in an entity other than a U.S. GSIB holding company.  However, the FDIC is not operationally ready to resolve a GSIB HC under OLA, nor does it have policies, procedures, or the operational capacity to do so for other entities or in scenarios where multiple systemic-risk failures are possible.

Daily092923.pdf

19 09, 2023

DAILY091923

2023-09-19T18:11:29-04:00September 19th, 2023|2- Daily Briefing|

FSB Finally Takes Concrete CCP-Resolution Action

Following longstanding announcements that it would advance CCP resolvability, the FSB today released a consultative report recommending a toolbox approach to CCP resolution providing sufficient loss absorption and liquidity that is readily available and mitigates adverse effects on financial stability.

Treasury Advances Climate-Risk Principles, Not Mandates

Cautiously advancing the President’s climate-risk order (see FSM Report GREEN8), Treasury today released nine nonbinding principles for net-zero financing and investment encouraging financial institutions to focus on limiting scope 3 emissions by implementing robust net-zero transition plans.

CFPB Expands AI Crackdown

Expanding on last year’s adverse action guidance (see FSM Report FAIRLEND11), the CFPB today issued a circular stating that lenders – especially those using AI – cannot use CFPB sample adverse actions forms and checklists to deny consumers credit if the samples do not accurately portray the reasoning behind the denial.

HFSC Republicans Expand Attack From Capital to LTD Rules

Today’s HFSC Financial Institutions Subcommittee hearing on the economic consequences of the banking agencies’ slate of recent proposals showcased strong Republican concerns.

Daily091923.pdf

7 09, 2023

DAILY090723

2023-09-07T16:43:25-04:00September 7th, 2023|2- Daily Briefing|

FSB-IMF Report Lays Out Crypto-Policy Roadmap

The FSB and IMF today published a joint report synthesizing their policy and regulatory recommendations for cryptoassets, laying out a policy roadmap that breaks no new ground.

Senate Dems Try Again to End State Usury Ceilings

Senate Majority Whip Durbin (D-IL) yesterday introduced another effort (S. 2730) to impose a federal usury ceiling.

NGFS Warns Ecological Risk Could Be Systemic

The Network for Greening the Financial System (NGFS) today released a report on nature-related financial risk concluding that ecological risk transmission could cause contagion leading to systemic risk.

CFPB Soon to Advance Its Open-Banking Construct

CFPB Director Chopra today announced that the CFPB will be issuing proposed rules next month to reactivate its DFA consumer data rights powers (see FSM Report DATA3).

Global Securities Regulators Craft DeFi Standards

IOSCO today released a DeFi consultation report proposing nine policy recommendations intended to support heightened regulatory consistency and oversight.

Waters Presses Agencies to Change SSN Collection Requirements

HFSC Ranking Member Waters (D-CA) today wrote to the leadership of the banking agencies, Treasury, and FinCEN asking them to consider allowing financial institutions only to collect a SSN’s last four digits to minimize cybersecurity risks.

Fed Staff Suggest Solution to CBDC Privacy Problem

Addressing one of the biggest CBDC challenges in the U.S., Fed staff today published a report arguing that the use of privacy-enhancing technologies preserves digital asset user confidentiality while maintaining enough visibility for official audits in order to prevent illicit finance.

Daily090723.pdf

6 09, 2023

Daily090623

2023-09-07T09:07:08-04:00September 6th, 2023|2- Daily Briefing|

FSB Focuses on NBFI Liquidity, Leverage with Few Concrete Actions

Following its report recommending resolution-policy review, the FSB today continued its G20 reports with two focusing on NBFIs.  The most substantive of these addresses sector liquidity.  Recommendations here include adoption of pending OEF standards, continuing review of margining and work to determine if NBFI systemic-risk standards are warranted.

Fed Study: Big Bank Branches May Better Serve Customers

Fed staff have issued a report suggesting that new large bank branches tend to grow faster than new ones at small banks because large bank branches are favored by customers seeking lower prices or greater value.

IMF Outlines Post-SVB Supervision Standards

In an opaque but nonetheless stinging rebuke to U.S. bank supervision, the IMF today released a working paper emphasizing the importance of supervisors having the will and ability to act on effective supervision, recommending that supervisors are given strong operational independence and accountability, clarity regarding the primacy of their safety-and-soundness mandate, adequate resources, and legal protection.

Daily090623.pdf

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