#LIBOR – Page 3 – Federal Financial Analytics

10 05, 2022

FedFin: Fed is Cautiously Optimistic re U.S. Systemic Risk

Arezou Rafikian2023-02-21T15:48:57-05:00May 10th, 2022|The Vault|

In this report, we assess the new Federal Reserve financial-stability report. Secretary Yellen is also testifying now about systemic risk and sure to get questions on the Fed’s conclusions. We will shortly send you an in-depth report on this hearing, but key to the Fed’s report is a more cautious, but still sanguine outlook. For example, banks are found to be resilient and well-capitalized despite growing Fed concern about indirect risk channels such as asset-market volatility, sanctions-related disruptions to payment…

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

10 05, 2022

SYSTEMIC93

Arezou Rafikian2023-02-21T15:48:43-05:00May 10th, 2022|5- Client Report|

Fed is Cautiously Optimistic re U.S. Systemic Risk

In this report, we assess the new Federal Reserve financial-stability report. Secretary Yellen is also testifying now about systemic risk and sure to get questions on the Fed’s conclusions. We will shortly send you an in-depth report on this hearing, but key to the Fed’s report is a more cautious, but still sanguine outlook. For example, banks are found to be resilient and well-capitalized despite growing Fed concern about indirect risk channels such as asset-market volatility, sanctions-related disruptions to payment, settlements, and clearing, and inter-connections with large European banks. Life-insurance companies and hedge-fund leverage remains a significant concern, although the Fed finds that at broker-dealers and P&C insurers is well within reasonable range. As detailed below, the FRB is still concerned with MMF-liquidity risk, favoring the swing-pricing reforms if “properly calibrated” in the pending SEC proposal (see FSM Report MMF19) along with urging continued attention to bond and open-end funds. The report also includes a synopsis of the Fed’s CBDC discussion draft (see FSM Report CBDC10), suggesting it might reduce systemic risk without reaching any conclusions ahead of ongoing Board review.

SYSTEMIC93.pdf…

9 03, 2022

Daily030922

Arezou Rafikian2023-04-04T12:16:52-04:00March 9th, 2022|2- Daily Briefing|

President Presses Crypto, CBDC Buttons
We will shortly provide clients with an in-depth analysis of President Biden’s executive order setting the stage for substantive U.S. action across the digital-asset sector. We note at the outset that, according to the fact sheet, the order comes as close to demanding a CBDC as the President’s authority over the Fed and Secretary Yellen’s reservations doubtless allowed. The Fed is told to “place urgency” on its research, a demand likely to motivate the Fed to accelerate the very leisurely pace towards some sort of CBDC decision described in last month’s discussion draft (see FSM Report CBDC10).

Long-Awaited LIBOR-Certainty Bill Set for Enactment
Sen. John Tester (D-MN) today to ABA indicated that the Senate version of House-passed LIBOR-transition legislation is in the omnibus spending bill set to pass by the end of this week in order to keep the government open.

CFPB Targets Employer Financial Products, Data
The CFPB today detailed its agenda following meetings on the extent to which U.S. workers are placed at financial risk by their employers.

Daily030922.pdf…

3 03, 2022

DAILY030322

Eliza Allen2023-04-04T12:53:47-04:00March 3rd, 2022|2- Daily Briefing|

LIBOR Transition Rescue Advances

Advancing a long-delayed effort to clarify the LIBOR transition, a bipartisan group of Senate Banking Members today introduced legislation dictating replacement rates for legacy contracts. The language is a companion to a revised version of House-introduced standards (see Client Report LIBOR5) that among other things reflects Sen. Toomey’s (R-PA) concerns that the bill be narrowly tailored to a defined class of legacy contracts rather than, as some feared, stipulating new benchmark rates across the financial market for new contracts. The bill is supported by virtually all financial-industry advocacy organizations and should now advance quickly to the Senate floor since the Senate Banking Committee has already held hearings on this issue. At today’s hearing (see FedFin’s report), Chairman Powell strongly endorsed the bill and reiterated the need for rapid action.

Powell Defends Fed’s Institutional Legitimacy, Continuing Function as Nominations Stall

Today’s Senate Banking hearing with Chairman Powell featured continuing partisan wrangling over stalled Fed nominations showed no sign of resolution after Republicans essentially forced Mr. Powell to concur that his powers to act pro tem ensured continuing central-bank function. Ranking Member Toomey (R-PA) also renewed his campaign against Reserve Banks, arguing that they are anachronistic and have strayed from core mandate concerns.

Daily030322.pdf…

25 02, 2022

Daily022522

Arezou Rafikian2023-04-04T15:08:38-04:00February 25th, 2022|2- Daily Briefing|

CFPB Targets Auto Lending for Competition Make-Over

Late yesterday, the CFPB outlined the steps it plans to take to ensure that auto lending is fair and competitive. This initiative mirrors others (see FSM Report CONSUMER38) in which the Bureau seeks to deploy its consumer-protection powers to reshape markets.

Basel Plans Broad Digital, Crypto, Climate Work Plan

The Chair of the Basel Committee, Spain’s Pablo Hernández de Cos today reiterated that Basel now plans to press its final capital changes and work with other regulators to finalize climate risk standards. An array of “deep-dive analyses” are planned on fintech and cryptoassets, publishing initial conclusions on these topics and AI in “coming months.”

Fed Finds Financial Stability Just Fine, But That Was Then

The monetary policy report that Chairman Powell will deliver next week includes a slightly revised discussion of financial stability which does not take current geopolitical hazards into account.

FHFA Eases GSE Capital to Increase CRT

FHFA followed up sweeping action yesterday on mortgage servicers today with a finalized capital rule. As promised, the rule replaces the current fixed leverage ratio with a dynamic one designed to ensure that risk-based capital is the only binding constraint for Fannie Mae and Freddie Mac.

Daily022522.pdf…

17 12, 2021

Daily121721

Arezou Rafikian2023-05-22T15:52:04-04:00December 17th, 2021|2- Daily Briefing|

Partisan Battle to Have Lasting FDIC Impact– HFSC Chairwoman Waters (D-CA) reiterated her opposition to FDIC Chair McWilliams’ decision to quash the merger RFI circulated by FDIC Board Democrats (see FSM Report MERGER9), highlighting her recent letter to bank regulators calling for a moratorium on all bank mergers over $100 billion and saying again that these threaten community banks, small businesses, and consumers.

FSOC: Systemic Risk Elevated, Much Work in Progress
FSOC met to consider its annual stability report, which strikingly differs with the Fed’s more sanguine view of systemic risk (see Client Report SYSTEMIC92).

DOJ Redefines M&A Outlook
Even as partisan warfare continues over the Democratic merger RFI (see FSM Report MERGER9), the Department of Justice has irrevocably altered the M&A outlook by reopening its 2020 request for comment (see Client Report MERGER5).

GAO: Alternative Data’s Potential Stymied by Risks, Uncertainties
The GAO issued a report on the potential for alternative data to expand mortgage access for borrowers with minimal credit histories, concluding that current uncertainties and risks limit fair and effective use.

Daily121721.pdf…

9 12, 2021

Daily120921

Arezou Rafikian2023-05-23T12:50:03-04:00December 9th, 2021|2- Daily Briefing|

IMF Presses for Fast, Hard Global Crypto Standards
The IMF today reiterated its commitment to work with global regulators to craft crypto regulation due to inherent risks in the sector exacerbated by disorderly capital flows resulting from regulatory arbitrage.

FRB-NY Tackles Maternal-Health Inequity
Although Reserve Banks are facing harsh criticism from Senate Banking Ranking Member Toomey (R-PA) about “woke” actions he believes beyond the Fed’s mission, the New York Federal Reserve today released a study of maternal health that – despite public concern in this area – may spark renewed criticism with problematic implications for Vice-Chair nominee Brainard.

LIBOR Fix Powers Through House
By an overwhelming 415-9 vote, the House late yesterday passed H.R. 4616, the Sherman (D-CA) bill providing legal certainty for legacy LIBOR contracts (see FSM Report LIBOR6). The bill finally reached the House floor following a revision to the reported bill ensuring that rate resets are not taxable events.

BIS: Bond Funds Need Radical Regulatory Rewrite
Today, we follow our analysis yesterday of the BIS paper on DeFi regulatory policy with an assessment of another high-impact analysis of open-end funds.

FDIC Does, Doesn’t, May Advance New Bank M&A Policy
In a most unusual move, the FDIC today announced it did not release an RFI on bank merger policy hours after two directors – Messrs. Gruenberg and Chopra – said it had.

HFSC Ducks Tough Asset-Management Diversity Demands
Although the majority staff report released ahead of today’s HFSC Diversity and Inclusion Subcommittee hearing highlighted several legislative proposals, Members …

7 12, 2021

Daily120721

Arezou Rafikian2023-05-23T13:20:29-04:00December 7th, 2021|2- Daily Briefing|

FBO Sanctions Update
Sens. Cotton (R-AR), Rubio (R-Fl) and eleven GOP colleagues have introduced S. 3318, legislation pressing the U.S. to deny foreign financial institutions access to the U.S. financial system if they provide “Palestinian martyr” payments.

Chopra Slams “Banking Cartel” as CFPB Sets LIBOR Standards
The CFPB today issued its final LIBOR-transition rule, with Director Chopra’s accompanying statement emphasizing that this rule will now prevent the “banking cartel” from again illegally setting disadvantageous consumer interest rates.

CFPB Accepting Additional Bigtech Inquiry Comments
The CFPB today reopened the comment period on its bigtech inquiry, now accepting comment until December 21. As we noted when the comment period opened, the Bureau then provided a very short comment window because Director Chopra said that the Bureau must move quickly due to the initiative’s importance.

Warren Readies Anti-Powell Attack
Sen. Warren (D-MA) today released a letter making it clear that she will strongly oppose Chairman Powell when his confirmation comes before the Senate Banking Committee.

FSB: Persistent Gaps Challenge Resolution Regimes
The FSB today updated progress on implementing its key attributes of effective resolution regimes, reporting significant advances at GSIBs despite gaps at smaller banks, insurance companies, and CCPs.

HFSC Dems: Investment Firms Must Increase Diversity
Ahead of a hearing Thursday sure to be critical of large financial companies, a new HFSC majority staff report on diversity and inclusion looks at large investment firms (including those owned by banks) and finds little progress.

Daily120721.pdf…

30 11, 2021

FEDERALRESERVE64

Arezou Rafikian2023-05-23T14:42:56-04:00November 30th, 2021|5- Client Report|

Powell Threads His Way Through Macro, Monetary, Regulatory Challenges

Most of the news at today’s Senate Banking hearing revolves around Chairman Powell’s concession that inflation may not be transitory and economic growth is now so robust that quantitative tightening might proceed more quickly than planned, pandemic permitting. Mr. Powell was pressed on this dramatic turn-around, but none of the questioning appears to dim his chances for rapid confirmation. Secretary Yellen focused her comments on fiscal stimulus and the debt ceiling. In this report, we analyze in depth financial-policy issues, addressing issues such as CBDC, stablecoin, LIBOR transition, and economic inequality.

FEDERALRESERVE64.pdf…

22 11, 2021

Daily112221

Arezou Rafikian2023-05-23T15:18:26-04:00November 22nd, 2021|2- Daily Briefing|

FedFin Initial Assessment: Powell Appointment Process, What’s Next
As anticipated, today President Biden nominated Jerome Powell to a second term as Fed chair and Lael Brainard accepted the vice chairmanship of the Federal Reserve System, not just that for supervision.

ECB Adopts Innovative, Crypto, Digital Regulatory Construct
Leaving the U.S. still farther behind, the European Central Bank today finalized a new electronic-payment regime capturing nonbank and digital payments.

FSB Reiterates Urgency of LIBOR Transition
Underscoring the importance of quickly ending LIBOR reliance, the FSB today again emphasized that it is critical that institutions be ready for LIBOR cessation at the end of the year.

Daily112221.pdf…