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17 03, 2023

DAILY031723

2023-03-17T16:53:13-04:00March 17th, 2023|2- Daily Briefing|

Biden Positions White House On Side Of SVB/SBNY Enforcement Actions

Reflecting growing political heat as SVB/SBNY revelations continue, President Biden today called on Congress to toughen enforcement penalties for senior management at failed banks.  As noted on the fact sheet accompanying the formal request to Congress, the White House believes current law makes it unduly difficult for regulators to claw back executive compensation following a receivership and/or to bar individuals from further banking-industry employment.

HUD Reinstates Tough Disparate-Impact Standard

HUD today announced a final rule rescinding a 2020 rule governing Fair Housing Act disparate impact claims (see FSM Report FAIRLEND8) and restoring a 2013 discriminatory effects rule (see FSM Report FAIRLEND4).  The fact sheet accompanying the announcement claimed that the complications added in 2020 rule would have made it “virtually impossible” for HUD and private plaintiffs to prove discrimination.

Waters Pledges Bill on Failed-Bank Execs, Pushes Incentive-Comp Regs

Shortly after the President called on Congress to toughen penalties for failed bank executives, HFSC Ranking Member Waters (D-CA) sent a letter today to Fed, FDIC, and SEC leadership announcing she is crafting legislation to do so.  The letter also reiterated Democratic calls for the agencies to hold SVB and SBNY executives accountable and urged them to finalize longstanding compensation rules (see FSM Report COMPENSATION30), which Ms. Waters demanded include strong clawback provisions.

Daily031723.pdf

8 03, 2023

DAILY030823

2023-03-08T17:06:14-05:00March 8th, 2023|2- Daily Briefing|

HFSC Plans Broad Attack, Limited Legislation to Rewrite Administration Crypto Standards

The HFSC staff memo makes it clear that the Digital Asset Subcommittee hearing on Thursday will be a strong general GOP attack on Biden Administration crypto policy and specific campaign against the SEC’s enforcement-focused strategy.

HFSC Plans to Blast CFPB, Press Limited Change

Thursday’s HFSC Monetary Policy Subcommittee hearing on the CFPB is sure to be a raucous, partisan affair judging by the staff memo describing it.  Republicans have strongly objected to the Bureau before its inception, with concerns sharply heightened by a series of recent actions under Director Chopra.

CFPB Slams Fees, Promises Mercy

Ahead of a meeting later today between senior White House officials, Director Chopra, and hundreds of state legislators concerning the President’s “junk fee” agenda, the CFPB  today released Supervisory Highlights focusing on recent instances of what it deems unlawful junk fees in deposit accounts, auto loan servicing, mortgage servicing, payday lending, and student loan servicing.

GAO Doubts Fintech’s Inclusion Advantage

The GAO today released a report finding that fintech may enhance inclusion, but that this inclusion comes at risk due to the patchwork of rules governing firms offering products – e.g., wage advances – that may put vulnerable households at risk.

HFSC Republicans Scrutinize SEC Rulemaking, Fed Climate Policy

As anticipated, today’s HFSC Subcommittee Hearing with the inspectors-general for the FRB, CFPB, Treasury, and SEC focused on GOP attacks on the SEC’s IG vacancy and the CFPB’s funding mechanism.

Brown, Others Demand ABA

19 10, 2022

DAILY101922

2022-10-20T17:16:10-04:00October 19th, 2022|2- Daily Briefing|

CFPB Brings Older Adults Into Fair-Fee Focus

Following yesterday’s enforcement action and furthering its “fair-fee” policy agenda (see FSM Report CONSUMER38), the CFPB today published an Issue Brief on overdraft fees and economically-insecure older adults.

HUD Advances LIBOR Replacement As Deadline

Following its ANPR on replacing LIBOR last year, HUD today published a proposed rule to remove LIBOR as an approved index for forward ARMs and reverse mortgages, replacing it with SOFR.  For existing ARMs, HUD proposes to establish a spread-adjusted SOFR index to transition from LIBOR, with a lifetime five percent interest-rate cap for monthly adjustable rate reverse mortgages.

House Republicans Question PayPal’s Content Fine Mistake

Following revelations that PayPal had temporarily imposed a penalty fee on certain content, HFSC Ranking Member McHenry (R-NC), Energy and Commerce Ranking Member Rodgers (R-WA), and Reps. Emmer (R-MN) and Griffith (R-VA) sent a letter to PayPal CEO Dan Schulman requesting more information about PayPal mistakenly updating its Acceptable Use Policy to include a fine for sharing “objectionable” messages on the platform.

Fed Study Finds Little Evidence of Discrimination in Mortgage Lending

A new Fed study on racial bias in mortgage lending finds little evidence of discrimination, concluding instead that disparities in observable applicant risk explain most racial denial disparities.  The study uses confidential HMDA supervisory data from 2018-2019 that controls for credit scores, DTI, and LTV on top of automated underwriting systems (AUS) recommendations.

Daily101922.pdf

4 10, 2022

DAILY100422

2022-10-05T10:36:14-04:00October 4th, 2022|2- Daily Briefing|

IMF Calls for Open-End Fund Swing Pricing

The IMF today released a study of open-end funds sure to guide the action promised by SEC Chairman Gensler (see Client Report INVESTOR20).

Fed Study: Climate-Risk Insurance Cross-Subsidies Pose Moral Hazard, Financial Risk

Using homeowners’ insurance as a proxy for climate-risk insurance, a Fed staff study finds that the decoupling of rates and risk raises moral hazard and causes policy-holders in lower-risk and less restrictively regulated states to subsidize those in riskier states, where rates have been outpaced by losses.

Yellen Highlights Need for Crypto Reg at Racial Equity Roundtable

At a Treasury roundtable on racial equity and economic inequality, Treasury Secretary Yellen today reiterated the importance of the cryptoasset standards recommended yesterday by the Financial Stability Oversight Council.

Fed Sets Supervisory Standards for a Non-Traditional IDI Parent

The Federal Register today includes the Federal Reserve’s final supervisory framework for DIHCs controlled by insurance companies.

Final FHLB Listening Session Brings System Praise, Resistance to Change

We will shortly provide clients with an in-depth report on the last session FHFA held today listening to dozens of views on the future of the Federal Home Loan Bank System.

Daily100422.pdf

29 06, 2022

DAILY062922

2023-01-24T16:00:53-05:00June 29th, 2022|2- Daily Briefing|

FRB-Cleveland Study: Small-Business Finance Availability Shows Continuing Disparate Impact

The Federal Reserve Bank of Cleveland today published the results of the Small Business Credit Survey, finding that small businesses owned by people of color were far less likely to have recovered to pre-pandemic levels than their white counterparts, due in part to continuing gaps in financial access.

GOP Renews Demand for Reserve Bank Reform

Picking up on the GOP’s serious concern about Federal Reserve Bank governance expressed when Chairman Powell came before them last week (see Client Report FEDERALRESERVE70), Senate Banking Republicans today sharply criticized the head of the Kansas City Fed for what they call her unresponsiveness and even untruthfulness related to how Reserve Trust achieved payment-system access.

CFPB Report: Credit Line Reductions Harm Vulnerable Borrowers

Continuing the CFPB’s assessment of credit-card finance, Bureau staff today issued a report about the adverse impact that credit line reductions or withdrawals have on consumers, especially those under stress.

HFSC Homeownership Session Fans Partisan Flames

Today’s HFSC hearing on homeownership and inequality was a largely partisan session where each side repeated policy and macroeconomic arguments along party lines about the best ways to govern the nation’s housing market.

IMF Calls for Improvements to Capital Market Regulation

The IMF issued a report today on capital-markets regulation calling for new market liquidity backstops, strengthened CCP risk management, and greater attention to emerging risks to strengthen the regulatory perimeter focus.

Waters Renews Demands to Break Up Big Bad Banks

Following the hearing …

14 04, 2022

DAILY041422

2023-03-02T11:15:36-05:00April 14th, 2022|2- Daily Briefing|

Admin Issues Low-Impact Equity Plans

We have reviewed the Treasury and HUD reports filed in compliance with President Biden’s executive order on racial equity.

CEA Urges Tough Merger Policy, New Government Green Investments

Today’s Economic Report of the President from the Council of Economic Advisers emphasizes the Administration’s positive view of the economy and its own macroeconomic and equity accomplishments.

GSE Strategic Plans Demands Equity, Sustainability

FHFA today released the final version of its forward-looking strategic plan for Fannie, Freddie, and the FHLBs.  As we noted when the proposal was released in February, the plan redirects all of the GSEs to focus not only on safety-and-soundness and more traditional mission criteria, but also on equity and sustainability.

EXIM Enters Domestic C&I Finance

The U.S. Export-Import Bank today announced a fundamental shift in its decades-long function, going beyond export finance now to fund or guarantee domestic manufacturing companies even if they are only “export-focused” and do not use EXIM funds for export-related activity.

DOJ Equity Report Quiet on Mergers and Fair-Lending

Our review of the Department of Justice’s report implementing President Biden’s equity order indicates no discussion of bank-merger policy (see FSM Report MERGER10) or fair-lending enforcement, despite the high-priority focus given to these issues and the link drawn from them to equity outcomes in Mr. Biden’s competition order (see Client Report MERGER6).

FinCEN Targets Kleptocrats, Corrupt Public Officials

FinCEN today implemented provisions in the President’s anti-corruption order, issuing an advisory laying out how financial …

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