#Hsu – Page 2 – Federal Financial Analytics

24 10, 2023

DAILY102423

Eliza Allen2023-10-24T17:18:54-04:00October 24th, 2023|2- Daily Briefing|

McHenry, Barr Blast Basel Adherence in End-Game Regs

Although today’s hearing challenging regulatory actions aligned with global regulators was postponed, HFSC Chairman McHenry (R-NC) and Financial Institutions Subcommittee Chairman Barr (R-KY) today kept up the pressure, releasing a letter to the GAO commissioning a study of the end-game rules.

New CRA Reg Sets Controversial, Complex Standards

Leading the way to certain inter-agency approval, the Federal Reserve today voted 6-1 to approve a final version of their 2022 controversial proposal (see FSM Report CRA32).

FDIC OIG: Supervisors Missed So Much, Acted So Slowly re SBNY

The FDIC’s OIG report today on SBNY’s failure follows much of the line the Fed’s OIG took when it came on the material-loss review of SVB’s collapse.

House Republicans Pressure Biden on $6 Billion Iran Ransom

Although HFSC continues to cancel all its hearings as the speakership battle continues, its Oversight Subcommittee today optimistically released a memo outlining goals for Thursday’s Iran-sanctions hearing.

Treasury Presses CSPs to Negotiate With Banks

Treasury Assistant Secretary for Financial Institutions Graham Steele today highlighted Treasury’s work with cloud service providers (CSPs) to improve transparency and security.

Divided FDIC Advances CRA Rewrite, Climate-Risk Principles

As anticipated, the FDIC on a 3-2 vote joined the Fed in approving a 1400+ page final CRA rule.

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4 10, 2023

DAILY100423

Eliza Allen2023-10-04T16:40:00-04:00October 4th, 2023|2- Daily Briefing|

Bowman Unbending in Demands for Better Reg Analytics, Community-Bank Mergers

In what might have been only perfunctory introductory remarks, FRB Gov. Bowman today instead continued her all-out campaign to force far more independent research before the Fed finalizes pending rules.

Brown Asks for No Wells Fargo Mercy

Senate Banking Chairman Brown (D-OH) today sent a letter to FRB Vice Chair Barr and OCC Acting Comptroller Hsu taking serious issue with what he calls unfair labor relations practices, consumer abuses, and compliance failures at Wells Fargo, urging the regulators to take stronger action to change the bank’s culture.

McKernan Counters Gruenberg on Endgame’s Nonbank Effects

Fleshing out official comments made in dissent against pending rules, FDIC Board member Jonathan McKernan today countered Chair Gruenberg’s recent comments that any migration of bank activities to nonbanks due to the capital rules should not be considered in the regulatory process.

Gruenberg Reiterates His Top Risk Worries

As with Gov. Bowman earlier today, FDIC Chair Gruenberg used his remarks later in the day to emphasize continuing concerns: in this case, uninsured deposits, maturity mismatches, and rapid growth.

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3 10, 2023

DAILY100323

Eliza Allen2023-10-03T16:38:58-04:00October 3rd, 2023|2- Daily Briefing|

Hsu Notes Benefits of International Data Hub, Warns of Nonbank Risks

In remarks today, Acting Comptroller Hsu focused on the benefits of the BIS International Data Hub, noting for example that it provides national authorities with a horizontal view of key risks affecting the global financial system difficult to obtain elsewhere.

Basel Sees End-Game in Sight, US Off Late List

Finally taking the U.S. off the tardy list, the Basel Committee today updated its Basel III implementation dashboard, finding that as of Q3 2023 the US, along with the EU, UK, China, Switzerland, South Africa, and Hong Kong are now working to adopt revisions to the credit valuation adjustment and operational risk frameworks, the standardized approach for credit risk, the minimum requirements for market risk, and the output floor – i.e., Basel’s end-game.

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29 08, 2023

DAILY082923

Eliza Allen2023-08-29T16:55:20-04:00August 29th, 2023|2- Daily Briefing|

Agencies Advance Controversial Long-Term Debt, Resolution Proposals

The FDIC, OCC, and FRB today tackled several critical resolution issues in the wake of recent bank failures, proposals that raise strong objections from regional banks despite FDIC and FRB unanimity today on at least one of them. As anticipated, the FDIC and FRB approved an NPR that would impose minimum long-term debt requirements for banks and BHCs with assets over $100 billion, with the FDIC and Fed boards voting unanimously in favor even as FRB Gov. Bowman strongly dissented despite a three-year transition period. Similar to the ANPR floating this rule (see FSM Report RESOLVE48), the proposal would require large banks to hold a minimum amount of eligible long-term debt equal to the greater of six percent of risk weighted assets, 3.5% of average total consolidated assets, or 2.5% of total leverage exposure for banks subject to the SLR.

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1 08, 2023

DAILY080123

Eliza Allen2023-08-01T16:49:48-04:00August 1st, 2023|2- Daily Briefing|

Curtain Falls on Fintech-Charter Hopeful

In a blow to the waning chartering prospects for fintech and crypto banks, the OCC today announced that Figure – a fintech platform that applied in 2020 for a strikingly-novel national bank charter (see Client Report CHARTER28) – has officially withdrawn its application. As noted, Figure’s application followed OCC revisions to federal-charter activities making any activity authorized for national banks possible via electronic, not just traditional, means (see FSM Report CHARTER27).

Discount-Window Stigma Persists

The Fed today released the results of its May 2023 Senior Financial Officer Survey, with most banks continuing to fear public disclosure of discount window advances. As noted, the banking agencies last week told banks not only to improve contingency-funding planning, but also to look more favorably on the discount window. This seems unlikely absent a change in current market perception or repeal of the disclosure requirements.

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27 07, 2023

DAILY072723

Eliza Allen2023-07-27T17:47:02-04:00July 27th, 2023|2- Daily Briefing|

FSB Tries to Calm CoCo Confusion

Doubtless responding to the CoCo chaos when Credit Suisse failed, the FSB today issued a report laying out how cross-border crisis-management groups are to handle unallocated TLAC (UTLAC) such as the “alternative Tier 1” bonds popular in the EU.

FDIC 3-2 Vote Presages Knock-Down Basel Battle

As anticipated, the FDIC today voted 3-2 to issue a sweeping rewrite of U.S. regulatory capital requirements.

Divided, Cautious Fed Advances End-Game, GSIB Rewrites

As anticipated, Gov. Bowman today voted against the new capital framework, as did Gov. Waller; as a result, the vote was 4-2.

Stablecoin Bill Advances, Compromises to Come

At a fiery HFSC markup today, Chairman McHenry (R-NC) announced that bipartisan negotiations had broken down largely due to the White House, choosing to proceed to a final package as he remains open to amendment before floor action.

House Republicans Skewer Basel Rules

Hill comment so far in response to the new capital rules is sparse.

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12 07, 2023

DAILY071223

Eliza Allen2023-07-12T17:05:21-04:00July 12th, 2023|2- Daily Briefing|

SEC Concedes, Drops MMF Swing Pricing

In a startling bow to industry comments, the SEC today finalized MMF rules for institutional prime and tax-exempt funds that dispense with the proposal’s swing pricing (see FSM Report MMF19).

HFSC Bickers Over ESG, SEC Authority, Investor Rights

Today’s ESG hearing was the partisan show-down we anticipated – indeed, Rep. Sherman (D-CA) denounced the GOP for “waging war” against capitalism like Leon Trotsky.

Fed Nominations Advance

As anticipated, Senate Banking today approved the nominations of all three Federal Reserve Board nominees for the full Senate.

Warren Heightens Anti-Merger Campaign

Republicans were absent today from Senate Banking’s Economic Policy bank-merger hearing. Chair Warren (D-MA) reiterated her strong opposition to virtually all mergers, indicating her plans to reintroduce anti-merger legislation from prior Congresses (see FSM Report MERGER8).

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10 07, 2023

DAILY071023

Eliza Allen2023-07-10T16:43:24-04:00July 10th, 2023|2- Daily Briefing|

HFSC Lays Out Its ESG Priorities

The majority staff memo ahead of Wednesday’s HFSC hearing on ESG follows the outline anticipated last week and that laid out in the GOP agenda for ESG-related action (see Client Report ESG4).

OCC Concurs On Capital, Tries For The Merger Middle

Acting Comptroller Hsu today confirmed our assessment of Vice Chair Barr’s comments earlier today (see Client Report CAPITAL228) that the three banking agencies are aligned on the new capital construct to be shortly released for public comment.

Barr, Foster Demand Delay to Capital Rewrite

Anticipating Vice Chair Barr’s remarks this morning detailing near-term capital policy changes (see Client Report CAPITAL228), HFSC Financial Institutions Subcommittee Chair Barr (R-KY) and Ranking Member Foster (D-IL) sent a letter late Friday demanding that he appear before the Subcommittee to present the conclusions of his capital review and upcoming Basel III implementation plans prior to public release, asking also for details and likely outcomes for industry consolidation.

House Republicans Keep Spotlight On FRB-SF

Continuing the GOP’s attack on the San Francisco Fed’s supervision of SVB in the wake of what many believe are “woke” priorities, House Oversight Committee Chairman Comer (R-KY) was joined today by Financial Services Subcommittee Chairwoman McClain (R-MI) in sending a letter to FRB Chairman Powell taking serious issue with the Federal Reserve Bank of San Francisco and the Fed for what they describe as SVB-related transparency and communication failures.

BIS Survey: Most Central Banks Considering CBDCs

The BIS …

27 06, 2023

DAILY062723

Eliza Allen2023-06-27T16:53:41-04:00June 27th, 2023|2- Daily Briefing|

Treasury, FIO Target Insurance, Banking Interconnections

In conjunction with FIO’s new report on Insurance Supervision and Regulation of Climate-Related Risks, Treasury’s Assistant Secretary for Financial Institutions, Graham Steele, today emphasized the need for further work to understand the insurance industry’s climate-related financial stability risks, especially from housing and banking sector spillovers. In a panel discussion, FIO Director Steven Seitz also highlighted the report’s recommendations around macroprudential risks, including prioritizing the growth of the residual and surplus lines markets, “hardening” of the reinsurance market, and realizing the effects climate risk may have on state insurance guarantee funds.

Warren Gives No Merger Ground

In a letter sent today to Chair Gruenberg, Acting Comptroller Hsu, Vice Chair Barr, Assistant Attorney General Kanter, and Secretary Yellen, Sen. Warren (D-MA) demands fast action on the rewrite of bank merger guidelines pending since at least the President’s executive order in 2021 (see FSM Report MERGER10) as well as an end to large-bank M&A. Sen. Warren takes particular issue with Secretary Yellen’s recent comments suggesting the need for industry consolidation and again confronts Acting Comptroller Hsu’s “openness” to at least some transactions. It thus seems clear that her opposition to his nomination as Comptroller remains as firm as ever.

Daily062723.pdf…

16 06, 2023

Daily061623

Eliza Allen2023-06-16T16:49:58-04:00June 16th, 2023|2- Daily Briefing|

Waller Separates Monetary, Stability Policy

FRB Gov. Waller today defended recent rate hikes against criticism that they undermine financial stability, noting that monetary and stability policy are inter-related but must generally be addressed with different tools.

Brown-Scott Clawback Bill Adds Enforcement Teeth

In his first legislative mark-up since assuming the chairmanship in 2021, Banking Committee Chairman Brown (D-OH) will convene voting next Wednesday on compromise compensation-reform legislation on which he and Ranking Member Scott (R-SC) have agreed.

Hsu Warns of Tokenized-Settlement, AI Risk

Acting Comptroller Hsu’s speech today highlights both the benefits and risks of tokenization and AI, urging parallel development of new technologies and essential controls.

Democrats Try Again To Mandate TILA, CFPB Small-Business Authority

Banking Committee member Sen. Menendez (D-NJ) yesterday introduced legislation (S. 2021) along with Small Business Committee Ranking Member Velazquez (D-NY) (H.R. 4192) to extend TILA protections to small business lending, also giving the CFPB authority in this sector.

Fed Fears Little Systemic Risk

The financial-stability discussion in today’s report from the Federal Reserve ahead of next week’s hearings generally reiterates conclusions from the most recent Fed financial-stability report (see Client Report SYSTEMIC96): banks are generally sound and resilient and, despite MMF worries, most other vulnerabilities are of only moderate systemic concern.

Fed’s Long-Awaited Master-Account Database Goes Live

Conceding to a long-resisted and now statutory demand (see FSM Report PAYMENT25), the Federal Reserve today published the first database detailing who has or seeks access to Reserve Bank master accounts and services.…