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2 11, 2022

DAILY110222

2022-11-02T16:14:20-04:00November 2nd, 2022|2- Daily Briefing|

SEC Turns to Swing Pricing, Structural OEF Redesign

As anticipated, the SEC today voted 3-2 to advance swing pricing and other structural changes to open-end funds (OEFs).  Key to this proposal is to the Commission’s controversial MMF draft (see FSM Report MMF19) is swing pricing, with Chairman Gensler laying out how he believes swing pricing would end first-mover advantage and thus improve fund stability.  The proposal also imposes stiff new liquidity standards, with Commissioner Uyeda dissenting from this and the rest of the proposal on grounds that only bank-loan funds have proven to be demonstrably illiquid under stress.

BIS Announces DeFi Foreign Exchange Pilot for CBDCs

Continuing its CBDC pilots, the BIS today announced the launch of Project Mariana, a system seeking to use DeFi protocols to automate CBDC foreign-exchange settlements.  Project Mariana will operate in Switzerland, France, and Singapore, exchanging wholesale CBDCs.  The BIS is interested in exploring the application and design of automated market markers in wholesale CBDC exchanges, the effectiveness of a supra-regional network for cross-border settlement, and potential governance models of wholesale CBDCs.

Daily110222.pdf

20 10, 2022

DAILY102022

2022-10-20T17:36:06-04:00October 20th, 2022|2- Daily Briefing|

Fed Staff Study: Climate Risk-Based Capital Impossible for Foreseeable Future

FRB staff released a stylized study of one critical climate-risk policy question:  the extent to which banks should hold capital against it.  Members of Congress have suggested this over recent years (see FSM Report GREEN9) and the BIS at the outset of its thinking recommended both “brown-penalty” and “green-incentive” capital charges (see Client Report GREEN).

FSB Presses for MMF, Open-End Rules; Government-Bond CCPs

Continuing its NBFI focus (see Client Report NBFI), the FSB today issued new recommendations to address government-security market illiquidity.

Gruenberg Gives No Clue as to Timing, Content of Inter-Agency Crypto Guidance

In remarks today, Acting Chairman Gruenberg reiterated the risks laid out in the FSOC digital asset report (see Client Report CRYPTO33), repeated warnings against misrepresenting FDIC deposit insurance, and announced forthcoming interagency crypto guidance without providing any details or timeline.

Bipartisan Senators Press Secondary Sanctions for Enactment

Sens. Toomey (R-PA) and Van Hollen (D-MD) released a readout of a conversation with the Ukrainian Ambassador on the upcoming G7 Russian oil price cap, positioning their oil sanctions amendment for inclusion in the National Defense Authorization Act (NDAA) in light of the Ambassador’s support for it.

Warren Calls for Stronger, More Transparent CFPB Remittance Rule

Joined by four Senate Democrats, Sen. Warren (D-MA) today sent a letter to CFPB Director Chopra asking that the agency strengthen its remittance rule to ensure greater transparency for exchange rates and fees it …

22 09, 2022

DAILY092222

2022-09-26T15:10:10-04:00September 22nd, 2022|2- Daily Briefing|

CFPB Starts Mandatory Refi, Loan-Mod Redesign Project

Expanding its actions to increase consumer-finance innovation and competition, the CFPB today began an effort to increase refi accessibility as well as provide for automatic loan modifications.  The release reiterates Director Chopra’s assertions that rules prior to the Bureau’s new approach were unduly favorable to industry, especially when innovation is authorized only via no-objection letters, sandboxes, or similar agency actions.

Treasury Presses Open-End Bond Fund Rules

In remarks today on Treasury-market stability, Under-Secretary Liang focused on open-end corporate-bond funds.  Noting that these funds use Treasury securities for liquidity but lack stress resilience and thus caused the “cash for cash,” Ms. Liang strongly supported the SEC’s focus on open-end fund liquidity, pricing and resilience.

House Republicans Take New Tack to Constrain the CFPB

Joined by Republicans on the House Oversight Committee, HFSC’s GOP today continued its campaign against Rohit Chopra, giving the CFPB director only a week to provide them with an explanation of how many recent actions comply with the Supreme Court’s recent restrictions on administrative action.

Daily092222.pdf

15 09, 2022

INVESTOR20

2022-10-13T11:52:44-04:00September 15th, 2022|5- Client Report|

After Senate Banking Session, SEC Stays on Course

The Senate Banking hearing with Chairman Gensler today went as expected:  Democrats generally praised his work while Republicans strongly opposed it on both substantive and procedural grounds.  As a result, we expect the chairman to continue as he has in the wake of prior, comparable hearings – pretty much as he pleases and as the rest of the commission will support.  This will clearly change if Republicans gain control of both Houses of Congress after the midterm. Unless or until it does, the SEC will continue its enforcement-focused approach to cryptoasset regulation and climate disclosures.  Chairman Brown (D-OH) also confirmed our forecast:  he will defend not only his jurisdiction, but also a much more stringent approach to crypto regulation than contemplated  by the Senate Agriculture Committee’s bipartisan legislation.

INVESTOR20.pdf

14 09, 2022

DAILY091422

2022-10-13T11:57:25-04:00September 14th, 2022|2- Daily Briefing|

Pressure Mounts for Basel Finales

The Basel Committee’s oversight body of central bankers and top supervisors has pressed nations quickly to finalize the Basel III “end-game” rules referenced not only in FRB Vice Chairman Barr’s maiden speech, but also in a statement shortly before this meeting by all of the U.S. banking agencies.

FSB Continues Work on FMI Resolvability

The FSB today announced a survey to gather feedback on its FMI Intermediary information framework to judge how to best ensure resolvability, seeking views from FMI service providers, firms subject to resolution planning, and bank resolution authorities.

CFPB, FTC Press for Furnisher Accountability

The CFPB today joined the FTC in filing an amicus brief taking strong issue with the position that furnishers of credit information have legal discretion over their investigations of indirect credit disputes (i.e., those with debt collectors acting on the furnisher’s behalf).

SEC Proposes Treasury-Market Conversion to Central Clearing

Moving to adopt its preferred solution to Treasury-market fragility, the SEC today voted 5-0 to issue a proposal requiring that market clearinghouses – i.e., FICC, require their members (generally clearing banks) to submit certain secondary-market transactions for clearing along with the small percentage now already centrally-cleared.

Gensler Stands by Tough Crypto, MMF, Climate Policy

Ahead of testimony tomorrow before the Senate Banking Committee, SEC Chairman Gensler’s testimony reaffirmed the chairman’s strong stand on its crypto jurisdiction, reiterating that crypto markets should be subject to like-kind capital rules and that registration is necessary for most crypto tokens …

9 09, 2022

Al091222

2022-10-24T11:55:52-04:00September 9th, 2022|3- This Week|

The Crypto Kid

As we noted last week, SEC Chairman Gensler has made it even clearer that he’s giving no crypto ground to the CFTC or indeed to anyone who doesn’t agree that the Commission has the statutory authority to govern anything crypto token or intermediary that the Commission believes engages in securities offering, settlement, or transactions.  This follows the “same-risk, same-rules” framework most recently affirmed for bank digital standards in Michael Barr’s maiden speech, but Mr. Gensler takes it to a different level.  Unlike his banking-agency colleagues, he doesn’t have to reach inter-agency consensus to get what he wants unless or until Congress or the courts tell him otherwise.  To be sure, some members of Congress will try just this later in the week.  The Senate Agriculture Committee’s hearing will stand by the CFTC and Senate Banking Republicans will excoriate Mr. Gensler on Thursday for his strong stand on crypto along with much else.  As always, we’ll be watching, analyzing, and reporting, but let us know if you’ve any questions in the interim.

Al091222.pdf

8 09, 2022

DAILY090822

2022-11-09T13:00:10-05:00September 8th, 2022|2- Daily Briefing|

Gensler Stands Crypto Ground

In remarks today, SEC Chairman Gensler stood firm: almost all crypto tokens are securities because they are investment contracts under the “Howey Test.”  Further guidance is unnecessary, he said, because the Commission has been clear and crypto companies request it only because they do not like this conclusion, not because they fail to understand it.

GOP Demands Answers On CBDC Authorization, Construct

Ranking Member McHenry (R-NC) and all of the HFSC’s Republicans today sent a letter to Vice Chair Brainard demanding that she clarify several issues germane to U.S. CBDC issuance.  These most notably include the extent to which the “support” from the Administration and Congress she said was needed (see Client Report CBDC13) means express statutory change and Administration order.

Toomey Demands Greater CRA Transparency, Updated Regulations

Ranking Member Toomey (R-PA) today sent a letter to Vice Chair Brainard, Acting Comptroller Hsu, and Director Gruenberg sharply criticizing what he calls a lack of transparency of CRA-derived community benefit plans (CBPs).  Describing these as an “egregious” circumvention of congressional intent, he demands that the banking regulators update regulations implementing GLBA’s CRA sunshine provision, specifically urging them to establish a public database containing all CRA-related agreements in full.

Daily090822.pdf

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