#IMF – Page 3 – Federal Financial Analytics

7 08, 2023

DAILY080723

Eliza Allen2023-08-07T16:43:53-04:00August 7th, 2023|2- Daily Briefing|

McHenry Highlights New PayPal Stablecoin, Legislative Progress

In response to PayPal’s announcement this morning of a new payment stablecoin, HFSC Chairman McHenry today championed the new product, emphasizing that there has been bipartisan progress toward legislative action on his bill and touting strong state regulatory regimes such as New York’s. This is the venue PayPal has selected in concert with working with Paxos Trust, also New York State licensed but a firm sanctioned this year for prior stablecoin activities.

IMF: Fed Should Focus on Corporate-Bond Risk

A new study from the IMF on corporate bond shocks and commercial bank lending urges the Fed to limit its market maker of last resort function and focus future policy interventions on mitigating corporate-bond dealer vulnerabilities and increasing investment-fund resilience. It bases these recommendations on findings that corporate bond market shocks can generate significant contagion to the commercial banking sector that reduces bank lending and increases prices and that commercial banks cannot be expected to shore up corporate bond markets.

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18 07, 2023

Daily071823

Arezou Rafikian2023-07-18T17:47:11-04:00July 18th, 2023|2- Daily Briefing|

Barr Puts AI On Fair-Lending Watch

Reflecting the Administration’s new focus on AI and SEC Chairman Gensler’s concerns, Vice Chair Barr today made it clear that the FRB is also mindful of emerging AI risks. As a result, Fed supervisors will evaluate firms on whether they have appropriate risk management and controls for AI-related factors, with Mr. Barr emphasizing that AI-lending models should be transparent and explainable to prevent digital or reverse redlining.

IMF Opposes Crypto Sovereign Currency, Emphasizes AML/Systemic Risk

The IMF today published cryptoasset recommendations previously submitted to the GHOS. Organized around “three pillars” of sound macro-policy, transparency, and effective implementation, the IMF recommends ensuring that monetary-policy frameworks protect sovereign currencies, ensuring also that cryptoassets are not granted official currency-or legal-tender status – a blow to nations such as El Salvador that have done so.

HFSC GOP Advances Beneficial Ownership Legislative Rewrite

Today’s HFSC National Security Subcommittee hearing on FinCEN’s beneficial ownership rulemaking revisited recent bipartisan concerns. These included implementation, transparency, outreach, compliance costs, agency funding, and law enforcement and financial institution BOI registry access. Subcommittee Chairman Luetkemeyer (R-MO) raised concerns over FinCEN’s small business outreach and education as well as the January 1 BOI effective date, criticizing the rulemaking for what he said was undue complexity.

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15 06, 2023

DAILY061523

Eliza Allen2023-06-15T16:36:26-04:00June 15th, 2023|2- Daily Briefing|

Bipartisan Cash-Acceptance Bill Reintroduced

The chairman of Senate Foreign Relations and Banking Committee member Menendez (D-NJ) yesterday reintroduced bipartisan legislation (S. 1984) along with Rep. Payne (D-NJ) (H.R. 4128) to require retail businesses to accept cash for in-person transactions.

CFPB Renews Mortgage-Servicing Rewrite

In a blog post today, CFPB Director Chopra highlighted an issue that failed to come up at hearings earlier this week (see Client Report CONSUMER51): mortgage servicing.

Senate Democrats Focus On P2P Consumer Protection

Reflecting recent CFPB concerns and a consumer warning, Senate Banking Committee Chairman Brown (D-OH) along with Sens. Reed (D-RI), Warren (D-MA), and Menendez (D-NJ) today sent letters to the CEOs of PayPal and Cash App requesting consumer-fraud and scam data as well as steps the companies are taking to protect consumers.

IMF Sees Regional-Bank Risk, Urges Fast Action

The IMF’s financial-stability report for the United States today details recent macroeconomic-, fiscal-, monetary-, and financial-policy developments, with the Fund’s executive directors (including that of the U.S.) emphasizing in response the need to prioritize inflation-fighting over fiscal tightening.

FHFA Housing Equity Session Provides Little Insight

We had intended to listen through today’s FHFA equitable finance listening session, but its opening indicated that it will not address the pending regulatory rewrite.

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31 05, 2023

DAILY053123

Eliza Allen2023-05-31T17:00:40-04:00May 31st, 2023|2- Daily Briefing|

IMF: Housing Risk Not At GFC Level, Still Worrisome

While falling home prices are unlikely to trigger another financial crisis, an IMF blog post today finds that a drop could still harm the global economic outlook.

FDIC Tries Guarded Optimism

The FDIC’s first-quarter report on the condition of the U.S. banking industry was guardedly optimistic, but that in part appears to be due to the way in which the agency foresees its problems. Problem banks are up by 4 to 43 with $58 billion in assets among them.

End-Game Starts Soon

FRB Governor and Vice-Chair nominee Jefferson today expanded on the Fed’s financial-stability objectives, resolutely disavowing any of the credit-allocation ambitions Republicans sometimes ascribe to its work on climate risk.

CFPB Small-Business Disclosures Go Live

The Federal Register today includes the CFPB’s controversial final rule on small business data collection published late March which the Bureau says will increase transparency in small business lending, promote economic development, and combat unlawful discrimination.

FHA Expands Pandemic Mortgage Relief As Rates Rise

FHA today requested comment on a new loss mitigation proposal called the Payment Supplement Partial Claim allowing servicers to use FHA funds to bring a borrower’s mortgage current and temporarily reduce principal payments.

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30 05, 2023

Daily053023

Eliza Allen2023-05-30T17:13:13-04:00May 30th, 2023|2- Daily Briefing|

Fed Study Validates Bank/Shadow-Bank Interconnections, Systemic Risk

A new study by staff from the Federal Reserve Banks of Boston and New York evaluates the banking-sector impact of fire sales across multiple NBFI segments, finding numerous bank vulnerabilities to nonbanks not only through direct exposures, but also through complex, indirect channels.

McHenry Protests U.S. Outbound-Investment Constraints

HFSC Chairman McHenry (R-NC) sent a letter to Secretary Yellen late Friday demanding information about a potential executive order that would enable CFIUS to prohibit or require notification of outbound investments into China, stating that the Administration’s interest in capital controls necessitates Congressional oversight.

IMF Article Calls SVB Resolution “Riskless Capitalism”

An article in the IMF’s forthcoming Finance and Development magazine issue argues that SVB’s uninsured depositors enjoyed “riskless capitalism,” concluding that high moral hazard-risks will persist without incentives for depositor due diligence.

FTC Demands Greater Debit-Card Data Access

The FTC today finalized a consent order requiring Mastercard to provide competing card networks with the customer account information necessary to process debit payments, alleging that the company illegally withheld that information to prevent merchants from using its competitors or Mastercard-branded debit cards saved in e-wallets outside of traditional networks.

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23 05, 2023

DAILY052323

Eliza Allen2023-05-23T17:15:40-04:00May 23rd, 2023|2- Daily Briefing|

House Advances Consensus Anti-China Reporting Legislation

The House yesterday voted 400-5 to approve H.R. 1156, bipartisan legislation addressing Congress’ China concerns by mandating a new study.

Gruenberg Endorses Bank On Accounts, Notes Continuing Racial Gaps

In remarks today largely devoid of policy implications, Chairman Gruenberg praised Bank On’s impact on financial inclusion, but noted that racial divides still persist as Black and Hispanic households are more likely to be unbanked than White ones at every income level.

IOSCO Aims at Ending Crypto-Market Arbitrage

Advancing global crypto standards, the International Organization of Securities Commissions today released a consultative report on the contentious question of centralized-market regulation with which a joint HFSC/AG Committee process is now wrestling (see Client Report CRYPTO43).

HFSC GOP Blasts GSE Fees, Supports FHLB System

Today’s HFSC hearing with FHFA Director Thompson was largely the LLPA battle we anticipated, with Republicans lambasting recent actions and Democrats tartly responding that Republicans did not know what they were talking about.

Hsu Echoes Gruenberg’s Bank-On Praises

Following Chairman Gruenberg’s remarks earlier today, Acting Comptroller Hsu similarly praised Bank On’s impact on financial inclusion while highlighting racial and income gaps.

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5 04, 2023

DAILY040523

Eliza Allen2023-04-05T16:55:56-04:00April 5th, 2023|2- Daily Briefing|

FDIC Joins CFPB Targeting UDAP

The FDIC today published Consumer Compliance Supervisory Highlights showing that UDAP violations related to NSF representment constituted the second highest number of total citations and were by far the largest number of serious citations in 2022. The FDIC reiterates August guidance that third-party arrangements related to re-presented items may present numerous risks. We note that the FDIC’s UDAP focus is new under Chairman Gruenberg and comes at a time when the CFPB is expanding the reach of its own UDAAP enforcement powers with a focus in part on overdrafts and NSF practices.

IMF Staff Highlight New Systemic Risk: Geopolitical Stress

At a panel event today, IMF staff reported that their model-based study in the IMF’s global financial stability report found that geopolitical risks and global fragmentation gravely threaten financial stability by weakening interconnectivity between geopolitical blocs. Their model found that increased fragmentation results in reduced cross-border banking between blocs, higher lending costs, substantial diversification losses among G7 countries, and reduced bank profitability. Staff also drew a link between the war in Ukraine and the recent banking crisis, arguing that the war’s inflationary pressures led to an aggressive monetary policy reaction, revealing bank vulnerability to interest rate risk.

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4 04, 2023

DAILY040423

Eliza Allen2023-04-04T16:59:13-04:00April 4th, 2023|2- Daily Briefing|

House Republicans Launch Attack On New Small-Business Reporting Rule

House Republicans including Reps. Williams (R-TX), Barr (R-KY), and Ogles (R-TN) today introduced a resolution to overturn the CFPB’s small business data collection final rule via the Congressional Review Act.

Bipartisan Leaders Demand End to AML “Escape Hatch”

Accelerating the odds for a significant FinCEN rewrite, HFSC Chairman McHenry (R-NC), Senate Banking Chairman Brown (D-OH), Ranking Member Waters (D-CA) and a group of bipartisan lawmakers today sent a letter to Secretary Yellen and FinCEN Acting Director Das emphatically stating that FinCEN’s latest beneficial ownership proposal undermines the intent of the Corporate Transparency Act (see FSM Report AML133) by allowing an “escape hatch” through which firms can continue to do business with a customer even if they are unable to collect beneficial-ownership information.

IMF Says NBFIs Should Have Central-Bank Backing

The IMF’s financial-stability report includes a new chapter on NBFIs. Largely echoing all the concerns and policy recommendations in continuing FSB calls for NBFI standards, the Fund goes on to advocate also for NBFI access to central-bank backstops.

Global Regulators Like Look Of Systemic Insurance Standards, U.S. Implementation

IAIS today published a report assessing the implementation of its holistic supervisory framework across national jurisdictions, concluding that results demonstrate a “very positive outcome.” This is reflected in strong implementation of the holistic framework standards and good levels of observance across many of the standards, including by U.S. states.

Daily040423.pdf…

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.

Daily022323.pdf…

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.

Daily020323.pdf…