#FSI

13 09, 2023

DAILY091323

2023-09-13T16:46:21-04:00September 13th, 2023|2- Daily Briefing|

GOP Plans Still More Nails in CBDC Congressional Coffin

The memo for tomorrow’s HFSC CBDC hearing leaves no doubt as to continuing staunch GOP opposition, with Majority Whip Emmer (R-MN) reintroducing legislation barring the Fed from issuing a CBDC to individuals or using it to implement monetary policy.

FSI: Contingent Capital Fails as TLAC

Reinforcing the decision by U.S. agencies not to allow CoCo to serve as TLAC (see FSM Report TLAC9), a new BIS staff brief concludes that the current regulatory framework for Additional Tier 1 (AT1) bonds may not be fit for purpose, encouraging regulators to rethink CoCo as well as to consider heightening disclosure standards.

Gensler Emphasizes Prime Broker, Crypto, AI Risks

SEC Chairman Gensler today highlighted his ongoing worries about prime brokers, reiterating leverage and systemic-risk concerns.

Chopra Suggests Bank Merger Rewrite in Works

CFPB Director Chopra today reiterated the Bureau’s priorities, stating that the current bank merger review process lacks analytical rigor which will soon be addressed in ways he did not specify.

Daily091223.pdf

31 08, 2023

DAILY083123

2023-08-31T16:04:01-04:00August 31st, 2023|2- Daily Briefing|

BIS Report: Big Tech in Insurance Poses Financial Stability Risks

The BIS Financial Stability Institute (FSI) released a report today highlighting the financial stability risks associated with big tech’s entry into insurance, noting that a big tech specific regulatory approach may be warranted.  The report finds big tech has a significant footprint in the insurance industry as a service provider but its activities as risk carriers or intermediaries are limited.  Thus, financial stability concerns stem from the concentration of technology services and linkages between financial institutions and commercial activities.

Fed Study: Fintech Partnerships Arbitrage National-Bank Preemption Power

A new study by Federal Reserve staff finds that strategic bank-fintech partnerships heavily and profitably target near- and low-prime consumers in states with restrictive interest rate ceilings.  Thus, fintech partnerships – termed “rent-a-bank” arrangements by critics – in fact arbitrage national-bank preemption powers in states with strict usury ceilings.  This is said to be due in large part to mainstream-bank and non-fintech aversion to higher-risk customers at lower interest rates.

Daily083123.pdf

25 08, 2022

DAILY082522

2023-01-04T10:34:26-05:00August 25th, 2022|2- Daily Briefing|

KC-Fed: Data Aggregation Requires Rules Before Mass Adoption

The Kansas City Fed yesterday released a briefing on data aggregators concluding that they can improve the efficiency and quality of consumer financial services if proper regulation protecting data security and privacy is enacted.

SEC Prioritizes Enforcement, Disclosure, Working-Families and Systemic Risk

The SEC’s new strategic plan through 2026 speaks to Chairman Gensler’s focus on fairness, economic opportunity, and enforcement.  Specifics are sparse, but the plan puts the agency’s enforcement policy in the context of protecting “working families” especially when it comes to enforcement in areas such as cryptoassets.

FSI Report: Bigtech, Third Party Vendors Pose Operational Risk

The BIS Financial Stability Institute today released a study examining operational resiliency through a macroprudential lens, offering recommendations on how to address systemic risks presented by critical third-party service providers and bigtech.

Daily082522.pdf

5 07, 2022

DAILY070522

2023-01-24T15:42:23-05:00July 5th, 2022|2- Daily Briefing|

Fed Develops a Measure of Operational-Risk Exposures

In a research note late last week, Federal Reserve staff proposed a new approach to quantifying a bank’s operational-risk exposure, a timely contribution to the debate sure to rage when the U.S. advances Basel’s proposed rewrite of operational-risk-based capital requirements (see FSM Report OPSRISK18).

FHLB Banks Said to Pose Grave Risks, Require Reform

A new paper from Fed staff and former Gov. Dan Tarullo argues that the Federal Home Loan Banks pose structural problems to federal bank regulation and systemic stability by virtue of their hybrid status and the absence of clear purpose under contemporary market circumstances.

FRB-New York: Digital Currencies Could Strengthen the USD

Contrary to Congressional fears (see Client Report CBDC13), a new blog post from the Federal Reserve Bank of New York projects that digital currencies might bode well for the continued international dominance of the dollar.

Liang Calls for New-Age CCyBs, Open-End Fund Reform, Digital-Asset Macropru

In remarks today, Treasury Under-Secretary Liang concludes that post-2008 macroprudential standards strengthened the financial system as evidenced by its ability to support the real economy in 2020.

Global Regulators Find Risky Connectivity Between Banks, BigTech

The BIS Financial Stability Institute today released a report investigating what it calls the regulatory blind spot of bigtech inter-dependency, recommending that regulators develop an entity-based regulatory framework for bigtech operations in the financial sector and, while they work on this longstanding goal, use an new, indirect approach.

Daily070522.pdf

22 10, 2021

Daily102221

2023-06-05T15:18:13-04:00October 22nd, 2021|2- Daily Briefing|

BIS Official Presses Climate Risk Go-Slow
In remarks today, Fernando Restoy, head of the BIS’s Financial Stability Institute, reinforced the complexities climate risk presents for financial regulation emphasized also in last night’s FSOC report (see Client Report GREEN11).

Agencies Announce Anti-Redlining Priorities, Target Nonbank Lenders
In concert with a landmark anti-redlining enforcement action, the Department of Justice today announced a new anti-redlining initiative. This will not only prioritize cases such as the one settled with Trustmark National Bank, but also pursue redlining at nonbank mortgage lenders.

Senior Republicans Slam Postal-Banking Pilot, Postmaster General
HFSC Ranking Member McHenry (R-NC) and Oversight Ranking Member Comer (R-KY) today blasted USPS’s postal banking pilot, accusing the Postal Service of implementing the pilot “in secret” and without Congressional notification.

Daily102221.pdf

29 09, 2021

Daily092921

2023-07-31T15:54:12-04:00September 29th, 2021|2- Daily Briefing|

HFSC Yellen, Powell Hearing Sure to be More than Lively
Although the HFSC Democratic staff memo suggests tomorrow’s hearing with Chair Powell and Secretary Yellen will focus on pandemic-relief programs, we expect it instead to devolve to the kind of heated debate evident at yesterday’s Senate Banking session (see Client Report REFORM208).

Global Supervisors Renew Demand for Bigtech Standards
The BIS’s Financial Supervisory Institute (FSI) today issued its latest bigtech assessment. Largely a survey of global actions, it concludes that competition (i.e., antitrust) policy is the focus of recent efforts in most surveyed nations.

Basel Capital, Liquidity Compliance Gaps Grew in 2020
In its latest monitoring report, the Basel Committee finds a significant jump to 2.9 percent from 1.8 percent in the amount of capital the largest banks need to comply with the final Basel III/IV framework. This is, Basel says, attributable to some significant outlier banks along with capital relief during the 2020 pandemic.

Daily092921.pdf

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