#GAO – Federal Financial Analytics

20 03, 2023

DAILY032023

Eliza Allen2023-03-20T17:07:20-04:00March 20th, 2023|2- Daily Briefing|

HFSC Sets Plan For Crisis Review

In what may be an effort to buy some time as the banking crisis hopefully eases and tempers cool, HFSC Chairman McHenry (R-NC) and Ranking Member Waters (D-CA) late Friday asked GAO to conduct an immediate review of recent bank failures, insider actions, and related policy actions such as the March 12 systemic rescue and new Fed facility.

Warren Piles On To Powell With New IG Study

Sen. Warren (D-MA) in a letter Saturday applied even more pressure on the banking agencies by urging the Fed’s, FDIC’s, and Treasury’s IGs to conduct independent investigations of the bank as well as “regulatory and supervisory problems” leading to failures, renewing claims that Chair Powell is especially culpable.

McHenry, Scott Take Gloves Off For Fed, FDIC Investigation

HFSC Chairman McHenry (R-NC) and Ranking Senate Banking Member Scott (R-SC) today sent letters to Chair Powell and Chair Gruenberg, making it clear that – for all Mr. McHenry’s more conciliatory statements – Republicans are launching an investigation premised on potential missteps by the Fed and/or FDIC warranting rapid remediation.

House GOP Conservatives Oppose Liberalized FDIC-Coverage Ceiling

Countering demands for an end to FDIC insurance ceilings not only from Sen. Warren (D-MA), but also from their GOP peers, the very conservative House Freedom Caucus today released a statement demanding an end to what it calls “big government bailouts.”

Daily032023.pdf…

16 03, 2023

DAILY031623

Eliza Allen2023-03-16T17:11:59-04:00March 16th, 2023|2- Daily Briefing|

FedFin Assessment: One CS Consequence – LISCC Reinstatement For All Large Foreign GSIBs

In the wake of CS’s distress, we draw client attention to a 2021 exchange sure to factor heavily in the political response.

Brown Presses For In-Depth SVB, Signature Review

As anticipated (see Client Report RESOLVE49), Senate Banking Chairman Brown (D-OH) today called on all the banking agencies and Treasury quickly to undertake a review of SVB and Signatures failures.

Warren Heaps Still More Blame On Powell

In another letter today, Sen. Warren (D-MA) once again lambasted Chair Powell for what she claimed was his direct contribution to the collapse of Signature Bank and SVB as well as a “a culture of corruption” at the Fed.

Senate GOP Blames Fed, California re SVB

Senate Banking Republicans today tweeted a series of comments citing articles going back to last year identifying SVB risk and suggesting strongly that the Fed and California state supervisors are at fault for missing clear warning signs.

Bipartisan Senators Push Better Beneficial-Ownership Data Access

Senate Budget Committee Chairman Whitehouse (D-RI) was joined by Sens. Wyden (D-OR), Warren (D-MA), Grassley (R-IA), and Rubio (R-FL) late yesterday in submitting a comment letter to FinCEN taking serious issue with its proposed implementation of the Corporate Transparency Act (CTA) (see FSM Report AML135).

Senate Finance Hearing Deepens SVB Divide

At a heated Senate Finance hearing with Treasury Secretary Yellen, Members were quick to deviate from the hearing’s budget-focused agenda to address who should bear the …

8 03, 2023

DAILY030823

Eliza Allen2023-03-08T17:06:14-05:00March 8th, 2023|2- Daily Briefing|

HFSC Plans Broad Attack, Limited Legislation to Rewrite Administration Crypto Standards

The HFSC staff memo makes it clear that the Digital Asset Subcommittee hearing on Thursday will be a strong general GOP attack on Biden Administration crypto policy and specific campaign against the SEC’s enforcement-focused strategy.

HFSC Plans to Blast CFPB, Press Limited Change

Thursday’s HFSC Monetary Policy Subcommittee hearing on the CFPB is sure to be a raucous, partisan affair judging by the staff memo describing it. Republicans have strongly objected to the Bureau before its inception, with concerns sharply heightened by a series of recent actions under Director Chopra.

CFPB Slams Fees, Promises Mercy

Ahead of a meeting later today between senior White House officials, Director Chopra, and hundreds of state legislators concerning the President’s “junk fee” agenda, the CFPB today released Supervisory Highlights focusing on recent instances of what it deems unlawful junk fees in deposit accounts, auto loan servicing, mortgage servicing, payday lending, and student loan servicing.

GAO Doubts Fintech’s Inclusion Advantage

The GAO today released a report finding that fintech may enhance inclusion, but that this inclusion comes at risk due to the patchwork of rules governing firms offering products – e.g., wage advances – that may put vulnerable households at risk.

HFSC Republicans Scrutinize SEC Rulemaking, Fed Climate Policy

As anticipated, today’s HFSC Subcommittee Hearing with the inspectors-general for the FRB, CFPB, Treasury, and SEC focused on GOP attacks on the SEC’s IG vacancy and the CFPB’s funding mechanism.

Brown, Others Demand ABA …

2 02, 2023

DAILY020223

Eliza Allen2023-02-02T17:01:46-05:00February 2nd, 2023|2- Daily Briefing|

Scott Seeks Innovation, Competitiveness, Responsibility, Administrative Neutrality

Announcing his priorities for this Congress, Senate Banking Ranking Member Tim Scott (R-SC) struck the guarded stance in favor of bipartisan cooperation expressed yesterday by HFSC Chairman McHenry (R-NC). His top priority is increasing credit availability, with a mention of global competitiveness suggesting perhaps some interest in the Basel proposals as well as the need to advance fintech expressly mentioned in his release. Like Rep. McHenry, Sen. Scott also highlights regulatory accountability; unlike the HFSC chairman, he cannot call hearings to achieve this although he can of course ask committee witnesses pointed questions.

GAO Presses Need For MMF Reform

As required by the CARES Act, the GAO today issued a study on the March 2020 MMF runs that led the SEC to propose reforms last February (see FSM Report MMF19). It finds that the SEC’s current MMF liquid assets rules (see FSM Report MMF13) not only failed to prevent MMF runs during the pandemic, but also may have contributed to them by encouraging preemptive MMF share redemption. It also finds that, even though no MMF imposed a fee or gate in March 2020, their possibility likely contributed to redemption incentives.

Daily020223.pdf…

18 11, 2022

DAILY111822

Eliza Allen2022-11-18T16:59:14-05:00November 18th, 2022|2- Daily Briefing|

GAO Study Hikes Pressure on SEC Process

Adding to the Chairman Gensler’s woes, the GAO today released a report finding that the SEC Division of Enforcement did not document its work reviewing staff procedure assessments, hindering future internal reviews. Republicans have been harshly critical of SEC procedures and processes, as well as of the Commission’s enforcement-focused approach to cryptoassets. The GAO’s finding adds fuel to a campaign sure to gain force next year, recommending as it does that the Division Director ensure that information is collected and reported in its memorandum as required by Dodd-Frank.

Fed Study Endorses Bank Supervision

A new Fed staff study uses their unique access to bank examination reports from banks with less than $10 billion in assets to evaluate the extent to which supervisory reports and associated CAMELS ratings predict bank outcomes. Looking at reports from 2004 through 2016 and thus capturing the great financial crisis, the study concludes that ratings for capital, assets, management, and earnings are effective even after controlling for factors including the ratings themselves. Ratings are also associated with bank improvement in areas censured in earlier supervisory reports. The analytical method is textual – i.e., based on a reading of supervisory reports then run through various models to determine impact.

Daily111822.pdf…

14 11, 2022

DAILY111422

Eliza Allen2022-11-14T17:00:05-05:00November 14th, 2022|2- Daily Briefing|

FSB Thinks 2020 Reg Relief Could Go, Stay – It All Depends

In conjunction with the G20 summit, the FSB has released a policy paper assessing the extent to which various pandemic-related regulatory forbearances should be continued.

FSB Reiterates Climate, Crypto, NBFI Plans

The FSB head’s letter to the G20 today reiterates all of the priorities expressed in its October letter to G20 finance ministers.

Regulatory Hearings to Address Last-Gasp 2022 Agenda, Position Panels for a Busy New Year

With GOP House and Democratic Senate control largely assured, this week’s hearings with Messrs. Barr, Gruenberg, Harper, and Hsu will illuminate not only current priorities – most notably what’s next for federal crypto law and rule – but also the very different priorities HFSC and Senate Banking will advance in the next Congress.

FRB-NY Staff: Big U.S. Banks Remain Extremely Resilient

In its latest assessment of the vulnerability of the fifty largest U.S. BHCs, Federal Reserve Bank of New York staff confirmed the overall rosy assessment of bank resilience in the Board’s latest financial-stability report (see Client Report SYSTEMIC94).

OCC Ramps Up Fair-Lending Enforcement

In remarks delivered for Acting Comptroller Hsu, Senior Deputy Comptroller for Bank Supervision Policy Grovetta Gardineer reiterated that ensuring fairness is a top OCC priority.

Gruenberg Finally Gets the Nod

Knowing now that he has secured Democratic Senate control into next year, President Biden today finally and formally nominated Acting FDIC Chairman Gruenberg to assume the chairmanship.

Daily111422.pdf…

26 08, 2022

DAILY082622

Eliza Allen2023-01-04T10:29:58-05:00August 26th, 2022|2- Daily Briefing|

GAO Presses for Better Data on SAR Value Add

Reflecting longstanding industry hopes for analysis of the actual law-enforcement value of complex and costly SAR findings, GAO yesterday issued recommendations to the DoJ that it improve its BSA data-collection and annual reports. GAO also concludes that FinCEN is limited in its ability to support law enforcement and provide feedback to financial institutions due to the DoJ failing to collect and share BSA report data.

SEC Expands Whistleblower Awards to Actions Brought by Banking Agencies

The SEC today announced new whistleblower incentives that may encourage whistleblowing also on offenses subject to banking-agency enforcement. The SEC’s amended rule allows the Commission to pay awards to whistleblower actions brought by appropriate agencies other than the Commission, which are defined not only as the U.S. Department of Justice and state AGs, but also as the OCC, the Fed, and the FDIC.

Daily082622.pdf…

12 07, 2022

DAILY071222

Eliza Allen2023-01-06T15:21:46-05:00July 12th, 2022|2- Daily Briefing|

FRB-NY Staff Target Consumer-Welfare Problems with Numeric Scores

A new post from Federal Reserve Bank of New York staff concurs with a recent GAO study and Senate Democratic concerns about consumer risks resulting from numeric scores for purposes other than credit reporting. GAO called for consumers to have the same transparency and error-correction rights related to scores such as those judging purchasing power or deposit activity as mandated under the FCRA for credit scores.

Treasury Reposts Crypto RFI

As Treasury for some reason today reposted its request for comment on digital assets. The release is the same as last week’s which we analyzed in today’s in-depth report (see FSM Report CRYPTO30).

OFR Report Finds CBDC Reduces Run-Risk

The Office of Financial Research today released a report concluding that – counter to many fears – a CBDC could reduce banking system run-risk. This is because a CBDC during normal times is said to lead to less maturity transformation (i.e., less intermediation), as well as the government resolving weak banks more quickly due to greater information signaling of a run evident in CBDC flows.

Daily071222.pdf…

21 06, 2022

DAILY062122

Eliza Allen2023-01-26T11:42:57-05:00June 21st, 2022|2- Daily Briefing|

Deadline Set for CFPB Inquiry into Customer Service
The Federal Register today includes the CFPB’s RFI on how big banks serve their customers (see FSM Report CONSUMER43), now seeking a comment deadline of July 21.

BIS Presses Hard for Fast-Acting CBDCs, Payment Systems, Crypto Standards
The BIS today issued an ambitious report outlining what it calls a “new monetary order.”

SEC Finally Nabs a CRA for Conflicts of Interest
The SEC today announced an unusual enforcement case against a credit rating agency, acting on demands recently expressed by HFSC Democrats.

FDIC Proposes DIF Rate Hike, Possible Assessment-Standard Realignment
Taking action after two years, the FDIC today proposed to increase bank DIF premiums by two basis points.

HFSC Highlights Fed Policy Twists Ahead of Powell Hearing
The Democratic staff memo ahead of HFSC’s Thursday hearing with Chairman Powell provides a detailed discussion of recent monetary-policy moves and the extent to which the Fed has been surprised by macroeconomic events.

Spurred by GAO, OCC to Ramp Up Redlining-Exam Procedures
The GAO today recommended that the OCC update its redlining examination procedures and improve its data collection related to small banks in this area.

Daily062122.pdf…

15 06, 2022

CRYPTO28

Eliza Allen2023-01-26T15:43:09-05:00June 15th, 2022|1- Financial Services Management|

U.S. Digital-Asset Framework

After protracted negotiations and much public attention, bipartisan senators have introduced a far-reaching bill designed to encourage digital-asset use without undue risk to consumers, investors, or the financial system. The bill decides most, if not all, of the outstanding regulatory barriers to digital-asset use in favor of digital assets and their providers. Provisions in many cases go farther than public discussion has so far noted – for example, the measure not only expands the ability of digital-asset providers to reach retail and wholesale customers, but also gives them access to FDIC resolution without the cost of paying insurance premiums or coming under many of the rules that govern insured depositories. Digital-asset providers could also make loans without the disclosures designed to be transparent to less well-informed consumers or the other consumer-protection standards administered by the CFPB.

CRYPTO28.pdf …