#IMF – Federal Financial Analytics

23 02, 2023

DAILY022323

Eliza Allen2023-02-23T16:48:42-05:00February 23rd, 2023|2- Daily Briefing|

Agencies Strengthen Defenses vs. Crypto-Related Funding

As FedFin forecast when significant bank crypto-related deposit exposures came to light (see Client Report CRYPTO38), the banking agencies today issued guidance telling banks to monitor and mitigate risks related to resulting liquidity risk.

FSB Sets Out Key Cross-Border Payments Action Items

The Financial Stability Board today released a list of actions for implementing the G20’s Roadmap for Enhancing Cross-border Payments, including three priorities. These are payment system interoperability and extension; legal, regulatory and supervisory finalizing frameworks; and cross-border data exchange and message standards.

IMF Presses CBDC, New “Unified Ledger”

A new IMF blog post advocates for public sector implementation of new payment technologies including tokenization, encryption, and programmability to improve cross-border payments, limit counterparty risk, and facilitate AML and other compliance.

FHFA Proposes GSE-Capital Revamp

FHFA today sought comment on several significant revisions to the regulatory-capital rules governing Fannie and Freddie. As we will detail in a forthcoming in-depth report, several of these changes concede to comments rejected as the current rules were finalized.

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3 02, 2023

DAILY020323

Eliza Allen2023-02-03T16:59:55-05:00February 3rd, 2023|2- Daily Briefing|

House GOP Bill Sanctions Digital Yuan

Ahead of a major HFSC anti-China push next week, Chairman of the Subcommittee on National Security, Illicit Finance, and International Financial Institutions Luetkemeyer (R-MO) today introduced H.R. 804 to bar money servicing businesses from engaging in any transaction involving Chinese CBDC.

HFSC Plans Wide-Ranging China Attack

Emphasizing the priority Republicans have placed on U.S.-China policy, HFSC’s staff memo for Tuesday’s full committee hearing details numerous initiatives the panel may advance to isolate China and the Communist Party from the U.S. and global financial system.

HFSC Anti-Woke Group Targets SEC, Proxy Voting

Following his promise to go after “woke” policies during the HFSC organizational meeting, Chairman McHenry (R-NC) today announced the formation of a Republican ESG working group. It has no legislative jurisdiction and will instead combat the “far-left” influence over capital markets by addressing SEC regulatory “overreach,” reinforcing the materiality standard for disclosures, and preventing the misuse of the proxy process.

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3 11, 2022

DAILY110322

Eliza Allen2022-11-03T17:15:32-04:00November 3rd, 2022|2- Daily Briefing|

Gruenberg Backs Bank On

In remarks late yesterday, FDIC Acting Chairman Gruenberg pointed to the importance of Bank On accounts to retain previously un- or under-banked households brought into the system following large government payments early in the pandemic.

ECB Presses Climate-Risk Capital Regs

Moving far ahead of the Fed, the ECB has announced strict plans to ensure that EU banks not only improve governance and express climate-risk stress testing, but also hold sufficient internal-capital allocations for physical and transition risk.

Data Standard-Setters to Come Under CFPB Regs

In remarks late yesterday updating the CFPB’s open-banking rulemaking efforts, Director Chopra indicated that the new consumer-data rules (see forthcoming in-depth FedFin report) will also address how best to set public and private-sector standards to ensure industry-wide fairness and access to critical infrastructure.

IMF Climate-Risk Priorities Include GSIB Buffers

The IMF’s Deputy Managing Director Bo Li today set priorities for central banks and bank regulators addressing financial-system climate resilience.

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4 10, 2022

DAILY100422

Eliza Allen2022-10-05T10:36:14-04:00October 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.

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26 09, 2022

DAILY092622

Eliza Allen2022-09-26T17:13:15-04:00September 26th, 2022|2- Daily Briefing|

EU Banks Placate Investors vs. Protecting Capital

As pressure mounts on bank capital requirements (see Client Report REFORM213), the IMF has released a study finding that European banks could not have reduced capital distributions during the first year of the pandemic but for supervisory restrictions. This study is models-based and thus dependent on its assumptions. It also does not cover U.S. banks and conditions in each region may differ, but the study concludes that EU banks did not discount future expectations of economic conditions or profitability.

FRB Dallas Paper Finds CBDCs Enhance Financial Inclusion

The Federal Reserve Bank of Dallas today published a working paper finding that both a low fixed-cost/rate and a high fixed-cost/rate CBDC facilitate inclusion without harming intermediation, although the lower fixed-cost/rate option results in greater inclusion by encouraging households now relying on cash to participate in the financial system. It also found that a CBDC that increases inclusion does not necessarily decrease intermediation if the banking sector is not perfectly competitive, as its definition suggests is now the case.

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1 09, 2022

DAILY090122

Eliza Allen2022-12-20T16:17:52-05:00September 1st, 2022|2- Daily Briefing|

FTC Tackles Credit-Card Digital Marketing

In an action with implications for all credit-card issuers, the FTC today ordered Credit Karma to pay $3 million to consumers allegedly harmed by the company’s marketing misrepresentations. The Commission’s complaint claims that Credit Karma’s use of digital dark patterns – user interfaces designed to steer consumers to choices in a company’s, rather than their own, interest – enticed consumers into applying for credit cards for which they did not qualify.

Hsu Presses for Responsible Innovation

In remarks today generally focused on community banks, Acting Comptroller Hsu also focused on ways to ensure that small banks safely enter digital finance. The OCC is reinvigorating a 2015 effort to encourage partnerships among community banks that pool resources and expertise – what we would call a new approach to bankers’ banks focused here on technology innovation.

IMF Stakes Out New Stablecoin Standards

The IMF today released a flurry of articles outlining the benefits and risks of DeFi and digital assets, with one article warning against regulating stablecoins like banks.

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18 08, 2022

DAILY081822

Eliza Allen2023-01-04T11:25:52-05:00August 18th, 2022|2- Daily Briefing|

CFPB Plans to Change Credit-Card Filings

The CFPB is seeking comments on revisions to reports it receives on credit-card terms and those related to certain cobranding agreements. Although the new data are not described, the Bureau is likely planning to gather more information supporting its campaign to limit “junk fees, (see FSM Report CONSUMER38), govern credit-card late fees (see FSM Report CREDITCARD35), and otherwise restructure this sector.

IMF Blog: Climate Finance Should Blend Public/Private Sectors

An IMF blog post today by its managing director Kristalina Georgieva and Tobias Adrian advocates for blending public and private sector finance as a way of de-risking climate finance. Advocating options that pose challenges under both U.S. law and longstanding-policy tradition, the Fund recommends public-sector equity investments and credit enhancements, highlighting additional financing practices it says would reduce impediments to private capital such as public-private partnerships, multi-sovereign guarantees, and separate underwriting for risks such as political instability.

FDIC Takes Concrete Anti-Overdraft Action

Although the CFPB has blasted overdraft fees and Acting Comptroller Hsu has suggested that they may pose supervisory concerns, the FDIC today took concrete action against them. In a new supervisory edict, it announced that state nonmember banks receiving multiple NSF fees for the same transaction risks supervisory sanction because such fees are unsafe and unsound.

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11 07, 2022

DAILY071122

Eliza Allen2023-01-24T15:11:32-05:00July 11th, 2022|2- Daily Briefing|

FSB Highlights Crypto, Stablecoin Risk

The FSB today issued an unusual statement warning of cryptoasset risk. Rejecting the BIS’s more sanguine view that stablecoins and other digital assets have yet to prove, the FSB warns that inter-connectivity with the financial system already poses grave hazard.

HFSC to Consider CRA Reform, Rewrite

As noted, the HFSC Consumer Protection and Financial Institutions Subcommittee on Wednesday will consider the inter-agency CRA rule (see FSM Report CRA32).

Basel Committee Will Be Slow to Advance Climate-Risk Capital, Disclosure Standards

The head of the Basel Committee, Pablo Hernández de Cos, today reiterated that global bank regulators are dedicated to a cautious but determined set of climate-risk standards.

BIS Group Charts Course to Cross-Border CBDC

As part of the G20 cross-border payments roadmap, the BIS, IMF, and World Bank released a joint report today urging governments working on a CBDC to coordinate their designs and account for cross-border functionality early in their process.

FRB Atlanta Blog Refutes Dem’s Zelle Allegations

Coming in the wake of a letter sent by Senate Democrats alleging Zelle of mishandling fraud, FRB Atlanta today published a blog post defending the payments industry in cases where customers willingly authorize a fraudulent payment.

Chopra Promises to Promote Fierce Competition

CFPB director Chopra today reasserted his agency’s authority over ensuring financial-market competitiveness, describing recent actions against credit-card companies (see FSM Report CREDITCARD35), bigtech, and “junk fees” (see FSM Report CONSUMER38).

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29 06, 2022

DAILY062922

Eliza Allen2023-01-24T16:00:53-05:00June 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 …

9 06, 2022

DAILY060922

Eliza Allen2023-01-27T15:47:44-05:00June 9th, 2022|2- Daily Briefing|

FSB, IMF Close One Data-Gap Project, Open Next Phase

In a joint report today, the FSB and the IMF reported progress on closing financial data gaps, closing the second phase of the Data Gaps Initiative called for by the G20 in 2009. The project identified these gaps in the wake of the financial crisis, with phase two specifically addressing increasing data collection on financial stability risks and interconnections, as well as enhancing communication of financial statistics. The organizations state that data gaps have closed considerably on financial soundness indicators, G-SIFIs, non-bank intermediation, and other financial stability risks.

IMF Staff Assess Green CBDC Options

A new IMF paper concludes that Proof of Work-based DLT applications should not define any payment system transformation prioritizing reduced energy consumption, including CBDC. Although CBDC could be designed to be more energy efficient than the current payment system, the ultimate energy efficiencies and environmental benefits of CBDC will depend on the design priorities of the issuing central bank.

BIS Officials Caution re “Green Bubbles”

In an article today, top BIS officials highlighted the potential risk of “green bubbles” and stressed the limits of the financial industry’s ability to reduce climate risk. The article states that the financial sector faces the same misalignment of incentives as other industries, with the current generation bearing the costs of a green transition that will mainly benefit future generations.

Daily060922.pdf…