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21 12, 2022

FedFin on: Nonbank Enforcement-Order Registry

2022-12-21T16:54:37-05:00December 21st, 2022|The Vault|

The CFPB is proposing to create a public registry of certain enforcement actions that would initially cover nonbanks (including BHCs) with a goal of drawing public and enforcement-agency attention to what the Bureau’s director calls “serial offenders.” …

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

21 12, 2022

CONSUMER47

2022-12-21T15:27:45-05:00December 21st, 2022|1- Financial Services Management|

Nonbank Enforcement-Order Registry

The CFPB is proposing to create a public registry of certain enforcement actions that would initially cover nonbanks (including BHCs) with a goal of drawing public and enforcement-agency attention to what the Bureau’s director calls “serial offenders.”  The new filings would be extensive and likely expensive in terms not just of the filings, but also of the analytical processes needed to ensure accuracy and the internal controls assuring officers making requisite attestations that their statements are complete and accurate.  Public disclosure of much in the filings – including information that companies consider confidential – would make it easier for other enforcement agencies to identify institutions that may also have violated their own standards as well as alert state and federal banking agencies to entities under their supervision with potential compliance and risk-management shortcomings.

CONSUMER47.pdf

15 12, 2022

DAILY121522

2022-12-15T17:13:08-05:00December 15th, 2022|2- Daily Briefing|

FinCEN Advances Beneficial-Ownership Privacy Constraints

Following its finalization of the beneficial ownership reporting rule, FinCEN today issued a notice of proposed rulemaking that would clarify how beneficial ownership information (BOI) must be acquired, used, and stored.  The proposal limits BOI access to only federal national security agencies, law enforcement authorities with a court order, financial institutions with customer due diligence requirements, and certain foreign and Treasury officials, all of which are subject to stringent security protocols aligned with the scope of the information request.

Chopra Defends Nonbank Repeat-Offender Registry, Confirms Zelle Watch-and-Wait

Today’s Senate Banking hearing repeated much of what HFSC and Director Chopra said yesterday (see Client Report CONSUMER45), with Democrats lauding the Bureau and Republicans condemning it for politicization, poor administrative process, and an unconstitutional construct. Ranking Member Toomey (R-PA) grilled Director Chopra on the Bureau’s new proposal requiring certain nonbank financial firms to report enforcement actions, asking him what he would do if a nonbank said it was compliant with a consent order and the CFPB disagreed.

Comment Deadline Extended For Controversial DSIB-Resolution Standards

Reflecting continuing controversy, the Federal Reserve Board and FDIC today announced that they will extend by one month the comment deadline for their ANPR on large bank resolvability standards.  The former deadline was December 23; the new deadline is January 23.

Daily121522.pdf

5 12, 2022

Karen Petrou: Bank Canaries in the Crypto Mineshaft

2022-12-05T16:34:33-05:00December 5th, 2022|The Vault|

Just because crypto hasn’t triggered a systemic collapse doesn’t mean that it won’t be the perpetrator of quiet banking crashes.  We would do well to remember that the 2008 calamity came shortly after the collapse of small subprime-mortgage finance companies.  These would have been proverbial dead canaries had anyone looked down the mineshaft.  And, even as the U.S. subprime crashes formed into a single, torrential crisis, bank regulators confidently foretold no systemic impact because they comfortably believed that no bank had undue exposure to high-risk mortgages.  So bank regulators still say now when it comes to crypto and let’s hope the outcome is different this time.  However, bits and pieces of bank wreckage are already to be found in FTX’s rubble and may well surface as the crypto tide continues to ebb.  No bank shipwrecks have emerged, but some of the wreckage has the look of a sizeable hull.

The most tantalizing bit of banking wreckage is a super-tiny Washington State bank which FTX appears to have surreptitiously acquired.  As the New York Times reported, one of FTX’s affiliates last March invested more than double all the capital previously held in Farmington State Bank, doing so in a carefully-structured way to avoid triggering legal control thresholds.  The bank is the nation’s 26th smallest and, after this generous investment, it deposits went up about 600 percent from its initial $10 million level via four new accounts.  Sill more intriguingly, Farmington’s crypto ties via shadow owners appear to go back to …

5 12, 2022

M120522

2023-01-08T12:44:14-05:00December 5th, 2022|6- Client Memo|

Bank Canaries in the Crypto Mineshaft

Just because crypto hasn’t triggered a systemic collapse doesn’t mean that it won’t be the perpetrator of quiet banking crashes.  We would do well to remember that the 2008 calamity came shortly after the collapse of small subprime-mortgage finance companies.  These would have been proverbial dead canaries had anyone looked down the mineshaft.  And, even as the U.S. subprime crashes formed into a single, torrential crisis, bank regulators confidently foretold no systemic impact because they comfortably believed that no bank had undue exposure to high-risk mortgages.  So bank regulators still say now when it comes to crypto and let’s hope the outcome is different this time.  However, bits and pieces of bank wreckage are already to be found in FTX’s rubble and may well surface as the crypto tide continues to ebb.  No bank shipwrecks have emerged, but some of the wreckage has the look of a sizeable hull.

m120522.pdf

29 07, 2022

DAILY072922

2023-01-04T13:45:23-05:00July 29th, 2022|2- Daily Briefing|

Credit-Card Routing Expansion Introduced, Faces Long Odds

As anticipated, Sens. Marshall (R-KS) and Durbin (D-IL) have introduced S. 4674, legislation to extend routing-system requirements to credit cards.

FDIC, Fed Crack Down on IDIs Working with Crypto Companies

In addition to joining the Fed in sending a stern warning to Voyager about misrepresenting FDIC insurance, the FDIC today issued an advisory instructing IDIs as to how best to partner with crypto companies to prevent future misunderstanding and ensure compliance with the agency’s new rule (see FSM Report DEPOSITINSURANCE113).

BIS Lays Out Risks to Central Bank Green Assets

The BIS Consultative Group on Risk Management today released a report detailing the data and methodological challenges faced by central banks implementing climate risk into their reserve-management frameworks.

FTC Takes on Payment Processing

The FTC today unanimously reached a settlement with the nation’s largest payment processor, First American, related to what some call “trick-and-trap” practices.

BIS Advances Cross-Border PVP Payment Options

Hoping to speed the introduction of payment versus payment (PvP) systems to reduce frictions in cross-border payments, the BIS today released a call for information that details previous PvP proposals and asks for comment on them.

HFSC Republicans Expand CFPB Attack to State-AG Partnerships

Continuing their campaign against CFPB Director Chopra, HFSC Republicans have sent him a letter accusing the Bureau of intimidating companies by pursuing duplicative enforcement actions with state regulators.

Daily072922.pdf

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