#holistic capital

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18 11, 2022

Al112122

2022-11-18T16:46:22-05:00November 18th, 2022|3- This Week|

Things To Come

Last week, banking-agency supervisory heads found themselves before Congressional Committees that – at least in the House – will look very different in the next Congress.  As Karen Petrou’s remarks last week made clear, only some legislation will be enacted into law, but many inquiries and investigations will put the Fed, OCC, and FDIC on very hot seats.  The heat will be hottest on the right when it comes to HFSC and around the circumference of the seat in the Senate, where only the little bit that’s left of the middle is likely to view many banking-agency actions with the deference that was once the norm for all but the highest-profile or most-disastrous calls.

Al112122.pdf

16 11, 2022

REFORM215

2022-11-22T15:02:46-05:00November 16th, 2022|5- Client Report|

HFSC Session Brings Crypto Action to Fore, “Holistic” Capital Under Scrutiny

HFSC today largely focused bank regulators on the same range of questions posed at yesterday’s Senate Banking session (see Client Report REFORM214).  However, Chairwoman Waters (D-CA) emphasized the importance of federal legislation in sharp contrast to Chairman Brown (D-OH), also announcing a hearing in December on FTX.  Ranking Member McHenry (R-NC), who will become HFSC chairman in the next Congress, concurred with the chairwoman’s views on the need for digital-finance statutory reform.  However, he took strong issue with inter-agency policy with regard to new capital rules, merger restrictions, and third-party relationship constraints.  Republican members also targeted Vice Chairman Barr’s holistic capital review, arguing that banks are currently well capitalized and that additional standards would hamper lending.  Mr. Barr indicated that an SLR rewrite is part of the holistic review but not immediately necessary to quell Treasury-market volatility or illiquidity.  As discussed in more detail below, regulators promised banking-sector crypto rules at least as stringent as Basel’s proposal.

REFORM215.pdf

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15 11, 2022

REFORM214

2022-11-22T15:27:38-05:00November 15th, 2022|5- Client Report|

Crypto, Deposit Rates, Capital Top Senate Discussion

At today’s Senate Banking oversight hearing with the banking agencies, Chairman Brown (D-OH) generally applauded the work of regulators, emphasizing the need for tough standards, like-kind rules for bigtech companies, and an inquiry into why depositor interest rates lag Fed rate hikes along lines posed earlier by Sen. Reed (D-RI).  FDIC Acting Chairman Gruenberg concurred, criticizing banks for sluggish rates.  Ranking Member Toomey (R-PA) reiterated his longstanding complaints about regulators straying outside their mission in areas such as climate change.  He also called for SLR relief to reduce Treasury-market risk and opposed pending large-bank resolution guidance (see FSM Report LIVINGWILL19) on grounds that it is unnecessary.

REFORM214.pdf

7 09, 2022

DAILY090722

2022-11-09T16:08:53-05:00September 7th, 2022|2- Daily Briefing|

Hsu Expands on Crypto, Climate, Merger, Systemic Actions

Acting Comptroller Hsu today made it clear that – contrary to assertions from Sen. Warren (D-MA) and others – his decision not to rescind prior OCC crypto charters and related rulings does not mean the agency is taking anything other than a cautious approach to cryptoassets.  He also indicated that the slow-down in interagency action is warranted as it gives officials time to understand recent shocks to this sector.

New Brainard Position Suggests Fed CBDC Thinking Advances

In addition to hawkish anti-inflation remarks, Fed Vice Chair Brainard today appeared to back away from her prior comments espousing an expansive view of how a U.S. CBDC might work (see Client Report CBDC13).  Now calling CBDC a “neutral settlement layer” affording additional stability and opposing a consumer-facing model.

Barr Takes Stage With Bold Plans For Capital, Resolution, Mergers

In his maiden speech today, Fed supervisory Vice Chair Michael Barr made several significant announcements.  Reiterating the support for holistic capital regulation noted during his confirmation, Mr. Barr confirmed that the Fed will undertake a sweeping review of standards to address unintended consequences without reducing capital requirements.  The Board will also begin action on the Basel “end-game” later this fall.

Daily090722.pdf

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