#Hsu – Federal Financial Analytics

6 03, 2023

DAILY030623

Eliza Allen2023-03-06T16:54:30-05:00March 6th, 2023|2- Daily Briefing|

GOP Revs Up Fight Vs. Big-Bank Capital Hikes

Firing a fusillade ahead of capital rewrites expected late this month, Senate Banking Republicans late Friday sent FRB Chairman Powell a letter arguing strongly against capital increases and laying out a strong view that the agencies are required by law to tailor key standards.

BIS Project Finds Retail-CBDC Cross-Border Benefits

In a project boosting retail CBDC, the BIS Innovation Hub today announced the results of Project Icebreaker, a cross-border retail CBDC pilot between Sweden, Norway, and Israel.

GOP Will Deploy IGs To Demand Fed, CFPB, SEC Reform

In addition to a hearing that morning with Chairman Powell, the full HFSC will call federal banking agencies on the carpet Wednesday for “wasteful” spending and other governance issues.

Dems Beg Gensler Not to Scrap Scope 3 Climate Disclosures

Responding to intense GOP opposition to the SEC’s climate disclosure proposal, fifty Congressional Democrats led by Sen. Warren (D-MA) sent a letter to SEC Chairman Gensler today urging him not to scale the proposal back, especially its Scope 3 provisions.

Treasury Wants Fast NBFI, OEF, Crypto Standards

Treasury International Affairs Under-Secretary Jay Shambaugh today outlined U.S. priorities, emphasizing not only the importance of containing Russia and countering new threats, but also quickly advancing numerous global initiatives.

Hsu Pushes To Start The End Game

Acting Comptroller Hsu today reiterated his determination to act as quickly as possible on Basel’s end-game rules, noting the interagency statement last year that this would soon be done without providing …

2 03, 2023

DAILY030223

Eliza Allen2023-03-03T17:11:19-05:00March 2nd, 2023|2- Daily Briefing|

Senate GOP Reiterates Anti-Woke Demands

At the same time as the Senate passed a resolution overturning the Labor Department’s rule authorizing pension ESG investments, Sens. Rubio (R-FL), Cruz (R-TX), Cramer (R-ND), Cotton (R-AR), Blackburn (TN), and Scott (R-FL) reintroduced legislation (S. 583) to permit the FDIC to terminate the insured status of depository institutions refusing to provide services to Federal contractors.

HFSC GOP Reams CFPB Late-Fee Proposal

Seventeen HFSC Republicans sent a letter late yesterday to CFPB Director Chopra strongly protesting the Bureau’s recent NPR targeting credit card late fees (see FSM Report CREDITCARD36).

Gensler Boosts SEC Custody Rewrite

SEC Chairman Gensler today reiterated and emphasized his strong support for the agency’s proposal to rewrite the rules governing custody services (see FSM Report CUSTODY5), arguing that they would strengthen safeguards and provide a much-needed expansion to the protections qualified custodians provide.

Bipartisan Senators Target Another Crypto Culprit

Following Sen. Warren’s (D-MA) pledge to introduce bipartisan legislation extending AML protections to crypto firms (see Client Report CRYPTO39), Sens. Warren, Van Hollen (D-MD), and Marshall (R-KS) sent letters yesterday to the leadership of the crypto platform Binance, alleging that the company built an intentionally opaque corporate structure to circumvent securities and AML laws and facilitate money laundering and sanctions evasion.

Brown Demands Branch-Closure Hearings, Merger Policy

In the midst of what may well be negotiations over the nomination of Michael Hsu as Comptroller and continuing controversies over big-bank mergers, Senate Banking Chairman Brown (D-OH) today wrote …

15 02, 2023

DAILY021523

Eliza Allen2023-02-15T17:02:30-05:00February 15th, 2023|2- Daily Briefing|

GOP Launches Anti-SEC Climate-Risk Legislative Attack

As anticipated, House Republicans have gone beyond blasting the SEC’s pending climate-risk disclosure proposal to laying out a consensus bill to force Chairman Gensler in fact to retract it. H.R. 1018 has been introduced by HFSC member Lucas (R-OK) and 55 Republicans to prohibit climate-risk disclosures under securities law.

FDIC Adds Punch to FDIC-Misrepresentation Enforcement Promise

Building on its insurance misrepresentation final rule (see FSM Report DEPOSITINSURANCE113), the FDIC today issued four cease and desist orders demanding the removal of false claims and thus made it clear that it is surveying the marketplace to take far more rapid action than has been the case thus far.

Calling Out Hsu, Warren Demands Merger Reform

In a wide-ranging speech urging tough U.S. antitrust policy, Sen. Warren (D-MA) today reiterated her claims that banking agencies “rubber-stamp” mergers and pressed for immediate reform. She took particular aim at Acting Comptroller Hsu, urging him to prepare new guidelines for the banking industry and to block anticompetitive mergers.

Will SEC Custody Rules Kill Crypto?

Conceding that rulemaking is needed on at least one crypto question, the SEC today voted 4-1 to approve proposed changes to investment-advisor asset custody regulation. The measure would expand assets subject to custody requirements and the protections custody affords as well as revise related record-keeping requirements.

Daily021523.pdf…

10 02, 2023

DAILY021023

Eliza Allen2023-02-10T17:02:31-05:00February 10th, 2023|2- Daily Briefing|

Waller Reiterates Fed’s Wary Cryptoasset Policy

In remarks today, FRB Governor Waller reiterated the Fed’s wary approach to cryptoassets, repeating the Fed’s requirements (see FSM Report CRYPTO31) for banks that wish to engage with crypto customers or activities. Following the collapse of FTX and its ripple effect on banks such as Silvergate (see Client Report CRYPTO38), Mr. Waller stressed that banks engaging with crypto customers must have a thorough understanding of their client’s business models, risk management systems and corporate governance.

Hsu Reprises, Expands Bank Merger Reform

In remarks today, the OCC Chief Counsel on behalf of Acting Comptroller Hsu stressed the need to update competition metrics, financial stability considerations, and community assessments in bank merger reviews, but gave no indication of when new merger policy may be finalized. Mr. Hsu argued that while HHI is an objective and transparent metric, it is no longer suitable for measuring competition because its deposit share-based approach fails to capture the competitive effect of nonbanks and online banking.

FHFA Outlines Substantive FHLB Reform Agenda

As anticipated earlier this week, FHFA Director Thompson today called the status quo of the FHLB system unacceptable and said that FHFA will make “meaningful” recommendations to improve the sector. This will take shape in a report following completion of FHFA’s roundtable series concluding in March. FHFA’s report will make statutory recommendations to Congress and lay out its own regulatory objectives, perhaps starting with an ANPR and/or regulatory guidance or supervisory actions.

Daily021023.pdf…

20 01, 2023

Al012323

Eliza Allen2023-01-20T16:56:45-05:00January 20th, 2023|3- This Week|

Back At It, But What Is It?

With the Senate convening this week for the first time in 118^th Congress and the House back in town, the U.S. Congress will begin to get down to work. Traditionally, the interregnum between reconvening in mid-January and actually doing anything meaningful lasts until the President’s State of the Union Address. This is set for February 7, giving Congress another three weeks or so to posture without the need to prove any sort of purpose.

Al012323.pdf…

17 01, 2023

DAILY011723

Eliza Allen2023-01-17T17:03:48-05:00January 17th, 2023|2- Daily Briefing|

FinCEN Opens Beneficial-Ownership Reports to Public Comment

Likely furthering its effort to garner greater public buy-in for its beneficial ownership information (BOI) standards, FinCEN is now requesting public comment on these reports.

CFPB Presses Consumers, Employees to Action

In a post today, the CFPB double-downed on its recent precedent-setting enforcement action against Wells Fargo (see Client Report CONSUMER46).

Breaking Up Won’t Be Hard to Do

In a high-impact speech today, Acting Comptroller Hsu expressly threatens that the OCC will not stop at the kind of growth restrictions imposed on Wells Fargo (see Client Report CORPGOV26) or the CFPB’s fines (see Client Report CONSUMER46) if a large bank is a repeat offender in safety-and-soundness arenas.

Fed Begins Big-Bank Physical/Transition Financial Climate Risk Analysis

The Fed today announced a two module structure for its upcoming GSIB pilot climate scenario analysis, kicking off a process to identify the data, governance, and processes banks need to manage the financial risks related to physical and transition climate events.

Daily011723.pdf…

12 01, 2023

DAILY011223

Eliza Allen2023-01-12T16:51:37-05:00January 12th, 2023|2- Daily Briefing|

OCC Tightens Fair-Lending Review

Acting Comptroller Hsu took the occasion today of release of a new fair-lending manual to emphasize the OCC’s commitment to ending credit discrimination.

McHenry Chairmanship Starts With CFPB Confrontation

In his first financial-policy action since becoming HFSC Chairman, Rep. Patrick McHenry (R-NC) today blasted the Bureau and its “reckless” Director for what he described as expanding its authority beyond congressional intent.

FRB-NY Staff Renew Debate Over FBO Liquidity, Market Impact

A new post from FRB-NY staff assesses the funding strategies of FBO branches and agencies to judge their current impact setting dollar-liquidity pricing in the U.S. wholesale funding market.

OFR Cites Heightened Systemic Risk, MMF Worries

In its annual report on 2021, OFR has concluded that financial stability risks are generally elevated due to macroeconomic tightening, inflation, climate change and volatility in Treasury, crypto, and commodity markets.

DOJ Lands Unprecedented Redlining Settlement

Continuing the Administration’s racial-equity campaign, the Department of Justice today announced an historic settlement with City National Bank.

Daily011223.pdf…

5 01, 2023

DAILY010523

Eliza Allen2023-01-05T17:01:33-05:00January 5th, 2023|2- Daily Briefing|

OFR Tackles Repo-Market Data Transparency

As pressed by the FSOC (see Client Report FSOC28), OFR today released a sweeping proposal to gather daily data on the uncleared bilateral repo market. The proposal follows a data-collection pilot that leads OFR now to detail 33 daily reporting items that would be collected from the forty largest bank and nonbank primary dealers in this systemic-critical sector.

OCC Reiterates Long Term Principles

The OCC today published its 2022 Annual Report, revealing little of its priorities for 2023. It does, however, reiterate long-term goals laid out by Acting Comptroller Hsu, including guarding against complacency, addressing inequality, adapting to digitalization, and managing climate risk.

Daily010523.pdf…

5 01, 2023

GSE-010523

Eliza Allen2023-01-05T12:37:19-05:00January 5th, 2023|4- GSE Activity Report|

End-Game Standards in the End-Time

As we previously noted, the U.S. banking agencies will finally, finally, finally get around to proposing their version of the Basel IV capital rules more recently dubbed the “end-game” standards. These will come with new, unique U.S. fillips due to the tough approach to big-bank capital announced by Fed Vice Chairman Barr strongly supported by Acting Comptroller Hsu and FDIC Chairman Gruenberg along with staff at all three agencies who have been doing this a long time and seen more than a financial crisis or two. This report identifies key mortgage-finance issues with strategic impact along with what’s to become of them in the end-game.

GSE-010522.pdf…

16 12, 2022

DAILY121622

Eliza Allen2022-12-16T17:19:37-05:00December 16th, 2022|2- Daily Briefing|

GHOS Presses Speedy Bank-Crypto Capital Standards

Basel’s governing body, the Governors and Heads of Supervision, today endorsed the Committee’s planned work schedule.

Fed Finally Finalizes LIBOR Transition Regs

Narrowly ahead of its year-end statutory deadline, the Federal Reserve today issued a final version of its detailed proposal (see FSM Report LIBOR8) to implement the LIBOR Act’s provisions on replacement rates for existing contracts without fallback language (see FSM Report LIBOR7).

Regulators Highlight P2P, Crypto, NBFI Risks at FSOC Meeting

Although most of the FSOC’s discussion today of the LIBOR transition and climate risks was perfunctory, comments on the now-released 2022 Treasury annual report were not.

McHenry, Davidson Point to Forex-Clearing Systemic Risk

Picking up a recent BIS report finding at least $65 trillion at risk in off-balance sheet foreign-exchange clearing, incoming HFSC Chairman McHenry (R-NC) and the top Republican on the panel’s fintech task force, Rep. Warren Davidson (R-OH), called on Fed Chairman Powell and Secretary Yellen to investigate what they consider a looming risk to U.S. financial stability.

Chopra Presses Cloud-Service Provider, Stablecoin Systemic Designation

CFPB Chairman Chopra’s written statement for the FSOC meeting is considerably different than the oral one described in our earlier client alert.

Daily121622.pdf…