#Gruenberg – Page 2 – Federal Financial Analytics

3 04, 2023

REFORM219

Eliza Allen2023-04-03T11:07:12-04:00April 3rd, 2023|5- Client Report|

FedFin Forecast: Probable Changes to Bank Supervision, Regulation, Law

With Thursday’s White House announcement, we know that the Administration will do its best to support Fed and FDIC efforts to color recent events as a failure of Republican-led rulemaking, not also one of agency supervisory acumen, speed, and even competence. So far, key Democrats are instead pursuing a two-track strategy: complaining mightily about Trump-era rules but also joining with Republicans to cite an array of supervisory lapses they want quickly remediated by new standards, new rules, and – if need be – also by new law. Indeed, on Friday, Democrats made it clear that they want considerably more from the Administration than the fixes on which the agencies prefer to focus. Given how much is in motion and how much could advance, this report details FedFin’s forecast for near-term action in each of these arenas, focusing on matters with broad industry impact rather than specific SVB/Signature- enforcement issues. We thus provide forecast for immediate supervisory actions, those Congress will demand, new rules (tailoring and beyond), and the few legislative initiatives we believe have a reasonable chance of passage and Presidential approval.

REFORM219.pdf…

30 03, 2023

DAILY033023

Eliza Allen2023-03-30T17:27:30-04:00March 30th, 2023|2- Daily Briefing|

Yellen Calls for Bank, Nonbank Regulatory Rewrite

Implicitly confirming press reports that the White House will soon press for tougher bank rules, Treasury Secretary Yellen today said that, as beneficial as the rules imposed since the great financial crisis have been, more stringent standards are necessary.

Hsu Sets Dual OCC Mission: Safety, Fairness

In remarks today, Acting Comptroller Hsu emphatically echoed statements of other top regulators that the banking system is safe and sound, emphasizing that the OCC is monitoring the market and is prepared to use its tools to protect the system.

Basel Updates Global Liquidity, Operational Standards

Although the U.S. has still not even proposed the Basel IV “end-game” standards, the Basel Committee continues to refine them and today issued its latest set of FAQs.

White House Sets Reg-Reform Agenda

As anticipated early this morning, the White House has issued a statement calling on federal banking agencies to roll back rules the President describes as weakening “common-sense bank safety and supervision.”

Senate Dems Press Agencies to Strengthen Capital Rules

Following this week’s hearings (see Client Report REFORM218), Sens. Warren (D-MA), Blumenthal (D-CT), and Duckworth (D-IL) sent a letter to Vice Chair Barr, Chairman Gruenberg, and Acting Comptroller Hsu urging them to strengthen large-bank capital requirements.

CFPB Stands By Its Small-Business Reporting Rules

Despite strong industry and GOP opposition, the CFPB today finalized its small business data collection rulemaking in a sweeping final rule the Bureau says will increase transparency in small business lending, promote economic …

29 03, 2023

REFORM218

Max Camateros-Mann2023-03-29T17:27:51-04:00March 29th, 2023|5- Client Report|

HFSC Focuses on Supervision, Clawbacks, Process, New Resolution and Run-Risk Options

Today’s HFSC hearing on recent bank failures was more partisan than yesterday’s Senate Banking session (see Client Report REFORM217). Still, there were significant areas of agreement evidenced not only through the marathon hearing, but also at its end, when Chairman McHenry (R-NC) and Ranking Member Waters (D-CA) agreed that they are frustrated with the regulators’ testimony, want more supervisory accountability, and will demand reforms once promised internal investigations are concluded. Several new issues were brought out today, including why the FedWire closing times precluded liquidity support that might have sustained SVB liquidity, whether TLAC should be required at banks of all sizes, tactics to quell viral runs, and whether tough new rules will cover mid-sized banks and/or community institutions.

REFORM218.pdf…

29 03, 2023

DAILY032923

Eliza Allen2023-03-29T17:30:21-04:00March 29th, 2023|2- Daily Briefing|

Barr Keeps CRA Hope Alive

Ahead of what is certainly going to be a trying HFSC hearing later today, FRB Vice Chairman Barr told an audience that pending CRA rules (see FSM Report CRA32) are still in the works, declining to provide any completion timeline.

Chopra Expands Post-SVB Policy Action Items

In remarks posted after a panel discussion yesterday, CFPB director and FDIC board member Rohit Chopra reaffirmed Chairman Gruenberg’s comments that changes are likely to capital and liquidity rules, but added action related to interest-rate risk management, resolution planning and stress-testing to the to-do list.

Senate Finance Dems Demand Tougher Penalties, Enforcement to Prevent Swiss Tax-Evasion Activities

Senate Finance Democrats today released a damning investigative report accusing Credit Suisse of persistently and often criminally enabling U.S. tax evasion despite a 2014 plea agreement with the U.S. Chairman Wyden (D-OR) presses for additional civil and criminal actions, noting that the UBS acquisition does not “wipe the slate clean.”

Bipartisan Senate Clawback Bill Reaches to BHC Investors, Creditors

Preempting Chairman Brown’s plans to introduce clawback legislation (see Client Report REFORM217), Sens. Warren (D-MA), Cortez Masto (D-NV), Hawley (R-MO), and Braun (R-IN) today introduced their own bill to do so.

CFPB Sets Comment Deadline For Controversial Credit Card Proposal

The Federal Register today includes the CFPB’s proposed rule on Credit Card Penalty Fees.

Daily032923.pdf…

28 03, 2023

REFORM217

William Cross2023-03-28T16:28:44-04:00March 28th, 2023|5- Client Report|

Senate Banking Demands Supervisory Accountability, Transparency, Reform

Today’s Senate Banking hearing was extremely well-attended by Senators on both sides of the aisle clearly looking first to understand what precipitated recent bank failures, who is to blame, and what should be done next. Republicans argued that current law gives the Fed considerable discretion without the need for statutory change. Although FRB Vice Chairman Barr initially sought to emphasize the need for new rules without blaming old ones, he ultimately admitted that the Fed indeed could and can govern risky banking organizations regardless of size.

REFORM217.pdf…

28 03, 2023

FedFin on: Senate Banking Demands Supervisory Accountability, Transparency, Reform

Arezou Rafikian2023-04-03T12:47:49-04:00March 28th, 2023|The Vault|

Today’s Senate Banking hearing was extremely well-attended by senators on both sides of the aisle clearly looking first to understand what precipitated recent bank failures, who is to blame, and what should be done next. Republicans argued that current law gives the Fed considerable discretion without the need for statutory change. Although FRB Vice Chairman Barr initially sought to emphasize the need for new rules without blaming old ones, he ultimately admitted that the Fed indeed could and can govern risky banking organizations regardless of size….

The full report is available to retainer clients. To find out how you can sign up for the service, click here and here.…

28 03, 2023

FedFin Assessment: Policy Implications of FDIC-Resolution Innovations

Arezou Rafikian2023-04-03T12:48:36-04:00March 28th, 2023|The Vault|

As noted yesterday, the FDIC’s recent rescues have had several unusual features with implications not only for future policy, but also for pending special assessments to replenish the DIF for the $22.5 billion estimated costs to the Deposit Insurance Fund. Analyzed here, new tools – e.g., voluntary liquidation, equity-appreciation rights, lines of credit – have determine the extent to which this estimate holds, how FHLB advances are treated in future resolutions, and the role the FDIC may play in companies that acquire failed IDIs….

The full report is available to retainer clients. To find out how you can sign up for the service, click here and here.…

28 03, 2023

RESOLVE50

Eliza Allen2023-03-28T11:42:40-04:00March 28th, 2023|5- Client Report|

FedFin Assessment: Policy Implications of FDIC-Resolution Innovations

As noted yesterday, the FDIC’s recent rescues have had several unusual features with implications not only for future policy, but also for pending special assessments to replenish the DIF for the $22.5 billion estimated costs to the Deposit Insurance Fund. Analyzed here, new tools – e.g., voluntary liquidation, equity-appreciation rights, lines of credit – have determine the extent to which this estimate holds, how FHLB advances are treated in future resolutions, and the role the FDIC may play in companies that acquire failed IDIs. A forthcoming FedFin report will assess another issue sure to come up at Congressional hearings: why the FDIC and other agencies used these options in concert with a systemic designation protecting uninsured depositors rather than their OLA powers designed to prevent both uninsured-depositor protection and the most recent of the Fed’s facilities backing the banking system.

RESOLVE50.pdf…

27 03, 2023

DAILY032723

Eliza Allen2023-03-27T17:00:51-04:00March 27th, 2023|2- Daily Briefing|

FDIC Adopts New IDI-Resolution Policy

The FDIC’s announcement late yesterday that it had sold portions of SVB to First-Citizens indicate that a provision also in its Signature bridge-bank sale reflect a new FDIC resolution policy: a willingness to take warrants.

Global Authorities Press FX Payment Redesign

The BIS Committee on Payments and Market Infrastructures (CPMI) today issued a final report offering a number of recommendations to central banks to facilitate the adoption of PvP systems. To mitigate regulatory barriers, the report recommends that central banks strengthen regulatory incentives for FX market participants to use PvP arrangements, improve settlement risk exposure reporting, and enact robust settlement finality protection.

Barr Defends Fed, Promises Review

Ahead of what is sure to be two raucous days of Congressional hearings, FRB Vice Chairman Barr’s testimony emphasizes that the Federal Reserve will use “all its tools” to protect banks of all sizes and that all deposits at all banks are safe.

Gruenberg Mounts Vigorous FDIC Defense, Presses For Significant Rule, Premium-Assessment Rewrite

FDIC Chairman Gruenberg’s testimony ahead of Congressional hearings describes the Signature and SVB actions, rebutting bailout assertions on grounds that the banks in fact failed and banks – not taxpayers – will make up any FDIC losses. He also indicates that the FDIC can and will investigate insiders to determine responsibility and pursue penalties if appropriate.

Daily032723.pdf…

23 03, 2023

DAILY032323

Eliza Allen2023-03-23T17:09:59-04:00March 23rd, 2023|2- Daily Briefing|

OFR Study Predicts Household Gains, Banking Instability From Digital Currencies

A new OFR working paper concludes that full integration of digital currencies into the economy would reduce financial-system volatility and improve household welfare, but also increase the probability of a banking crisis.

HFSC Poses Still Tougher SVB/SBNY Resolution Questions

Following tough GOP letters to the Fed and FDIC earlier this week, HFSC Chairman McHenry (R-NC) and Subcommittee Chair Hill (R-AR) last night sent even sterner missives to Chairman Gruenberg and Secretary Yellen.

Bipartisan Push Begins For CEO Clawbacks

Ahead of its first of many hearings on the collapse of SVB and SBNY, Senate Banking Chairman Brown (D-OH) and Ranking Member Scott (R-SC) today sent letters to the former CEOs of the banks demanding that they answer for the bank failures, noting also that they will be expected to testify before the Committee if they are unable to do so next week.

OFR Blog: CRE, Residential Markets Pose Little Systemic Risk

Despite growing concerns about CRE and even potential systemic risk, an OFR blog post today concludes that neither the residential nor commercial real estate market poses a significant threat to the financial system.

Basel Stands By Its Rules, Contemplates New Supervisory Standards

The Basel Committee’s release following its March 14 meeting unsurprisingly notes the bank failures preceding it just days before, but attributes them principally to poor risk management in the face of rising rates.

GSEs Seek Public Comment on Credit Score Model Transition

The FHFA today announced…