#ILC – Page 2 – Federal Financial Analytics

5 08, 2022

Al080822

Eliza Allen2023-01-04T13:17:39-05:00August 5th, 2022|3- This Week|

An Unquiet August

As is all too evident, campaign season is roaring and Democrats are doing all they can to persuade Americans that allowing them to retain Congressional control is the best way to ensure a better economic outcome than pretty much anyone else thinks possible. As of this writing, the “Inflation Reduction Act” is moving forward, with the Senate thus set for a “vote-a-rama” in which all sorts of extraneous issues appear seemingly out of nowhere as appendages to a must-pass measure. We are watching this closely and will advise clients as soon as we identify legislation with financial-sector strategic impact. And, while August is indeed vacation season, federal regulators remain very busy in part because several cherished initiatives are at grave risk should Republicans gain control of both the House and Senate. As we have noted, the CFPB is less frightened of Congress because it’s less scrupulous about the niceties of administrative action, but it will use August’s seeming quiet to drop some high-impact initiatives.

Al080822.pdf…

24 06, 2022

DAILY062422

Eliza Allen2023-01-25T15:43:05-05:00June 24th, 2022|2- Daily Briefing|

ILC, Overdraft Bills Face Tough Path to Passage

The vote is now out on H.R. 5912, Rep. Garcia’s (D-IL) bill to circumscribe ILC charters (see FSM Report ILC13). As we noted during the mark-up, the final bill includes modified grandfather language designed to protect existing parent companies without giving them future protection from BHC-like standards. The bill passed narrowly – 28-25 – and is likely to face a still more challenging time on the House floor.

HFSC Wants Tough New Broker-Dealer Standards

HFSC’s investigative report today on the meme-stock crisis takes a strikingly different approach than the SEC’s pending rule. While the Commission is focused on circumscribing payment for order flow and other market practices, HFSC principally targets broker-dealer resilience and the role of the DTCC and other critical market infrastructure. It thus calls on Congress, the SEC, the DTCC, and the NSCC to create a new emergency-liquidity facility for clearing brokers and lays out an array of safety-and-soundness standards it wants the SEC and FINRA to mandate.

GOP Targets Thompson

Picking up their complaints about HFSC’s housing focus from Wednesday’s mark-up, Committee Republicans today called on Chairwoman Waters (D-CA) to bring FHFA Director Thompson before the panel. They are concerned about the safety and soundness of the housing finance system amid increasing recession forecasts, highlighting the urgent pressures of higher mortgage rates and declining household income.

Daily062422.pdf…

22 06, 2022

DAILY062222

Eliza Allen2023-01-25T15:55:01-05:00June 22nd, 2022|2- Daily Briefing|

Treasury Issues Stern Sanctions Warning to Foreign Banks

In remarks today to UAE bankers, Deputy Treasury Secretary Wally Adeyemo warned that foreign financial institutions are subject to possible sanction if transactions touch sanctioned entities via any U.S.-domiciled point.

CFBP Follows Threats with Credit-Card Action Plan

Consistent with its promises as recently as last week, the CFPB today released an ANPR examining ways to govern what it calls excessive late fees charged by credit-card issuers and announced broader initiatives in this sector.

CBDC Authorizing Legislation Takes Shape

Building on his HFSC subcommittee’s CBDC hearing record (see Client Report CBDC13), Rep. Jim Himes (D-CT) today released a white paper outlining legislation he plans to advance to authorize and define CBDC for the United States.

House Set to Report Revised ILC Reform Bill

As anticipated, HFSC seems likely to report H.R. 5912, ILC-reform legislation introduced by Rep. Chuy García (D-IL) (see FSM Report ILC13). The measure subjects ILCs to bank regulation, rolling back the FDIC’s rule during the Trump Administration providing these charters with unique regulatory advantages (see FSM Report ILC15).

Daily062222.pdf…

10 06, 2022

DAILY061022

Eliza Allen2023-01-27T15:45:24-05:00June 10th, 2022|2- Daily Briefing|

Treasury Emphasizes Crypto BSA Compliance

Treasury Deputy Secretary Wally Adeyemo today outlined his agency’s digital-asset priorities not only in adherence to the President’s executive order (see Client Report CRYPTO26), but also recent developments. Treasury’s top priority is ensuring BSA compliance in this sector, followed by addressing illicit-finance risk posed by unhosted wallets.

HFSC to Advance Overdraft, ILC Legislation

The schedule for Tuesday’s HFSC mark-up includes a revised version of H.R. 4277, long-pending Maloney (D-CA) legislation to restrict overdrafts (see FSM Report OVERDRAFT4). The Democratic memo acknowledges that many banks have reformed or eliminated overdraft and related fees, but says some continue to charge pernicious fees and others could resume this practice without new law.

GAO Recommends Fed Improve Alternative-Data Use, Stress Testing

The GAO today issued several recommendations to the Fed on alternative data use and improving stress testing. The alternative data recommendations reiterate a prior call to the FDIC related to working with fintechs and vendors, calling for the Fed in coordination with other banking regulators and the CFPB to provide clear written guidance to banks who engage with third-party fintech lenders on the appropriate use of alternative underwriting data.

Daily061022.pdf…

18 05, 2022

DAILY051822

Eliza Allen2023-02-21T14:36:00-05:00May 18th, 2022|2- Daily Briefing|

ILC Restrictions Hit Speedbump

The House Financial Services Committee today attempted to markup H.R. 5912 (Garcia, D-IL), a bill that would subject ILCs and their parent companies to BHC regulation (see FSM Report ILC13). Reflecting concerns about the bill’s grandfather provisions, Rep. Garcia introduced an amendment to the bill that would subject commercial entities looking to acquire an ILC to prior FSOC review.

Barr Highlights Crypto Rules, Equity Ahead of Hearing

Although we will provide clients tomorrow with an in-depth assessment of his confirmation hearing, Michael Barr’s testimony confirms that he will take a different approach to financial regulation than his predecessor, Randy Quarles. His very brief statement emphasizes the need for innovation to come with regulation and for it to advance fairness.

Bill Requiring Cash Acceptance Reported to House

The House Financial Services Committee today reported H.R. 4395 (Payne, D-NJ), a bill that requires all businesses to accept cash payments for transactions under $2000, by a vote of 32-17. The panel added an amendment from Rep. Garcia (D-TX) to clarify that only businesses with a physical location are covered.

Daily051822.pdf…

13 05, 2022

Al051622

Arezou Rafikian2023-02-21T15:16:59-05:00May 13th, 2022|3- This Week|

Mark-Up Mayhem

On Tuesday, the House Financial Services Committee will meet in open, hybrid session to have another go at each other. The increasingly nasty mood was in relative abeyance when Secretary Yellen testified last week (see Client Report FSOC27), but it was on full display later in the day when Republicans launched a full-bore attack against Acting Comptroller Hsu and earlier in the week when what should have been a staid session on the credit-rating agencies became a sparring match between Chairwoman Waters (D-CA) and Rep. Huizenga (R-MI) over who controls the Committee’s agenda. None of these ill feelings has dissipated and all will be in clear view when the panel meets to report several high-profile, controversial measures.

Al051622.pdf…

2 11, 2021

FedFin Assessment: The Near-Term Stablecoin Regulatory Agenda

Arezou Rafikian2023-06-02T13:04:23-04:00November 2nd, 2021|The Vault|

As noted yesterday, the President’s Working Group on Financial Markets (PWG) was joined by the OCC and FDIC yesterday issuing a report calling for prompt Congressional action to regulate stablecoins and, even in its absence, also for fast action by federal regulators and the FSOC. In part because it poses the largest regulatory void, the most worrisome of the risks the report details arises from the role stablecoins may play in the payment system and resulting threats to systemic stability and competition. Issues germane to digital-asset trading (defined to include lending and related activities) are described but largely left to regulators; SEC Chairman Gensler has made it clear (see Client Report INVESTOR19) that he intends to act and the CFTC-chair nominee has done the same.

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

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2 11, 2021

CRYPTO21

Arezou Rafikian2023-06-02T13:03:50-04:00November 2nd, 2021|5- Client Report, Uncategorized|

FedFin Assessment: The Near-Term Stablecoin Regulatory Agenda

As noted yesterday, the President’s Working Group on Financial Markets (PWG) was joined by the OCC and FDIC yesterday issuing a report calling for prompt Congressional action to regulate stablecoins and, even in its absence, also for fast action by federal regulators and the FSOC. In part because it poses the largest regulatory void, the most worrisome of the risks the report details arises from the role stablecoins may play in the payment system and resulting threats to systemic stability and competition. Issues germane to digital-asset trading (defined to include lending and related activities) are described but largely left to regulators; SEC Chairman Gensler has made it clear (see Client Report INVESTOR19) that he intends to act and the CFTC-chair nominee has done the same.

CRYPTO21.pdf…

1 10, 2021

AL100421

Arezou Rafikian2023-07-24T15:29:39-04:00October 1st, 2021|3- This Week|

Back to Work

Although Senate Banking (see Client Report REFORM208) and HFSC’s (see Client Report REFORM209) hearings this week with Secretary Yellen and Chair Powell ostensibly focused on the CARES Act, in reality they covered the waterfront. In between them, HFSC’s Consumer Protection Subcommittee considered risks from fintech and much more (see Client Report MERGER7). This session made clear that a bipartisan consensus is forming around the need to bring fintech inside the regulatory perimeter when not partnering with a bank. At the least, this consensus powers up the banking agencies’ efforts to use their third-party vendor powers to impose consumer-protection and safety-and soundness rules on fintechs linked to banks (see FSM Report VENDOR9). More importantly, they signal initial Congressional alignments that may well lead to substantive legislation in 2022 and, even if they don’t, will surely lead to a new regulatory framework

AL100421.pdf…

29 09, 2021

MERGER7

Arezou Rafikian2023-07-31T16:00:20-04:00September 29th, 2021|5- Client Report|

HFSC Explores Wide Array of Merger, Fintech, ILC Reforms

In a wide-ranging hearing today, HFSC’s Consumer Protection and Financial Institutions Subcommittee showed the extent to which Chairwoman Waters (D-CA) and progressive Democrats are wary of large-bank mergers. Buoyed by witnesses who believe recent large transactions accelerate under-service for communities of color, Democrats suggested new, tougher standards and greater transparency. Republicans countered that regulatory burden exacerbates consolidation. However, both sides of the aisle agreed that fintechs pose an array of risks, with Democrats contending these warrant new ILC standards or even an end to limited-purpose charters. Republicans lambasted the true lender rule reversal, arguing it harms the bank-fintech partnership model they generally supported. For fintechs operating outside of bank partnerships, there was bipartisan agreement that the regulatory playing filed needs to be leveled to reduce arbitrage opportunities.

MERGER7.pdf …