#Lummis – Federal Financial Analytics

14 07, 2023

DAILY071423

Eliza Allen2023-07-14T16:23:06-04:00July 14th, 2023|2- Daily Briefing|

HFSC ESG Efforts Tackle Insurance Risk Pricing

Today’s HFSC Subcommittee hearing on ESG’s housing and insurance market impacts focused almost entirely on insurance. Chairwoman De la Cruz (R-TX) argued that ESG regulations drive up home costs and distort insurance and homebuilding markets, while Ranking Member Cleaver (D-MO) asserted that climate risk is material to insurance costs, calling for long-term housing resiliency solutions.

HFSC Republicans Target Bank Supervisors

The HFSC memo ahead of next week’s hearing looking at the political independence of the banking agencies makes it clear that top agency supervisors will principally be grilled on climate-risk initiatives. However, bills on which the session will set a record would require prior Congressional notice prior to action on any initiative advocated by the FSOC or an executive order.

Senate GOP Targets “ESG” Lending, Ideological Bias

Sens. Vance (R-OH), Lummis (R-WY) and Marshall (R-KS) yesterday introduced legislation that would bar regulators from taking action against any regulated entity based on fears of reputational risk and establish a Treasury special IG tasked with collecting tips on regulatory misconduct with a focus on ideological bias. The IG would be responsible for investigating allegations of misconduct by the FDIC, NCUA, Fed, OCC, SEC, CFTC, FHFA, and CFPB, offering recommendations or submitting quarterly reports to Congress on the nature and number of complaints.

Daily071423.pdf…

13 07, 2023

DAILY071323

Eliza Allen2023-07-13T16:52:37-04:00July 13th, 2023|2- Daily Briefing|

FSB Sees Climate-Risk Disclosure, Analytical Progress

The FSB today released a progress report on its Roadmap for Addressing Climate-Related Financial Risks that updates work toward the four key goals identified in its 2021 Roadmap. Progress is evident via the International Sustainability Standards Board’s (ISSB) disclosure standards, with the FSB urging IOSCO quickly to endorse them.

New Lummis-Gillibrand Crypto Bill Faces Steep Odds

Sens. Lummis (R-WY) and Gillibrand (D-NY) yesterday introduced an updated version of their comprehensive crypto bill (see FSM Report CRYPTO28). Changes include increased consumer protection provisions, AML penalties, proof-of-reserves and asset segregation requirements, requirements for all cryptoassets – aside from truly decentralized ones – to register with the CFTC and requirements also for all payment stablecoins to be issued by financial institutions.

FTC Settlement May Signal Move into Crypto Regulation

Wading into crypto regulation, the FTC today reached a settlement with the crypto platform Celsius Network, permanently barring it from handling customer assets and charging three executives with misleading customers. It remains to be seen if the FTC expands its enforcement scope to other crypto entities under SEC scrutiny for investor-related risks, but a growing FTC presence in this sector could cast a formidable shadow given the CFPB’s more limited enforcement powers.

Daily071323.pdf…

17 05, 2023

DAILY051723

Eliza Allen2023-05-17T17:44:04-04:00May 17th, 2023|2- Daily Briefing|

Bipartisan Senate Consensus Demands Structural Change To Fed IG

At today’s Senate Banking Subcommittee on Economic Policy hearing on Fed accountability, Chairwoman Warren (D-MA) was unsparing in her criticism of the Fed and its current IG, Mark Bialek. She elicited the fact that he is the Fed’s highest-paid employee and, while he may be dismissed only by two-thirds of the Board, she argued that he is essentially captive and thus cannot be relied upon to investigate ethics challenges, bank failures, and internal operations.

HFSC GOP Demands LLPA Changes No Matter FHFA’s RFI

As anticipated, Chairman Davidson (D-OH) reiterated GOP demands that the FHFA rescind the entirety of its LLPA proposal at today’s HFSC Subcommittee on Housing and Insurance hearing, despite FHFA conceding to some Republican demands and issuing an RFI on the Enterprises’ single-family pricing framework earlier this week. Mr. Davidson also pushed back on FHFA’s assertion that LLPA pricing must be set with regard to private mortgage insurance, saying that MI does not reduce taxpayer risk or GSE capital even though it is required for risk reduction and captured in the GSE capital standards.

Daily051723.pdf…

3 03, 2023

DAILY030323

Eliza Allen2023-03-03T17:07:43-05:00March 3rd, 2023|2- Daily Briefing|

Senate Dems Demand Bank, Service-Provider Regulation of EWS

Regardless of recent bank changes to Zelle policy, Senate Banking Democrats yesterday sent a letter to the heads of the banking agencies urging them to examine the customer reimbursement and AML practices of banks using Zelle and for the Fed and OCC also to monitor Early Warning Services (EWS).

SEC Custody Bulletin Under Renewed Attack

Senate Banking Member Lummis (R-WY) and HFSC Chairman McHenry (R-NC) late yesterday sent a letter to top banking regulators taking serious issue with an SEC accounting bulletin requiring custodians to recognize digital assets on their balance sheets.

Biden Backs CFPB Late-Fee Proposal

President Biden today reiterated his commitment to targeting “junk fees” in a proclamation announcing this week as National Consumer Protection Week. The statement highlights overdraft fees as unfair and endorses the CFPB’s NPR (see FSM Report CREDITCARD36) cutting credit card late fees to $8.

Daily030323.pdf…

31 01, 2022

Karen Petrou: CBDC’s Big Empty

Arezou Rafikian2023-04-05T16:20:36-04:00January 31st, 2022|The Vault|

Anyone looking for even a scintilla of a clue buried in a hint of an intention in the Fed’s CBDC discussion draft hunted in vain for guidance on the most consequential strategic inflection point for the U.S. financial-services industry, the financial system, the global payment system, and even the future of money. Once, we all would have had to wait for augers from the on-high Fed to see the fate the imperium decreed. Now, the Fed still thinks it rules all it surveys even though it doesn’t. Soon, it may find out the hard way that fast-moving companies crafting digital money care as little for the central bank’s wishes as they did for those of the media, hotel, and retailing magnates they have already supplanted.

This is not to say that we must necessarily have a central-bank digital currency. As I noted in my book, a democracy must ensure privacy and competition in ways China, for one example, disregards. Rather, it’s to say that the U.S. will not have a secure store of value or sound medium of exchange without a payment system on which the economy stands firm. Payment-system finality, accessibility, ubiquity, and cyber-security are all at risk if the Fed cedes the CBDC field without first and fast establishing the new framework it knows we need.

Nor am I saying that CBDC is inevitable because stablecoins are a certainty. Libra’s ignominious demise is ample evidence of the power regulators still have to set the terms of payment …

31 01, 2022

m013122

Arezou Rafikian2023-04-05T16:20:27-04:00January 31st, 2022|6- Client Memo|

CBDC’s Big Empty

Anyone looking for even a scintilla of a clue buried in a hint of an intention in the Fed’s CBDC discussion draft hunted in vain for guidance on the most consequential strategic inflection point for the U.S. financial-services industry, the financial system, the global payment system, and even the future of money. Once, we all would have had to wait for augers from the on-high Fed to see the fate the imperium decreed. Now, the Fed still thinks it rules all it surveys even though it doesn’t. Soon, it may find out the hard way that fast-moving companies crafting digital money care as little for the central bank’s wishes as they did for those of the media, hotel, and retailing magnates they have already supplanted.

m013122.pdf

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11 01, 2022

FedFin Assessment: Powell Sidesteps Many Challenges, Promises Much

Arezou Rafikian2023-04-24T15:54:45-04:00January 11th, 2022|The Vault|

As promised yesterday (see Client Report FEDERALRESERVE66), we listened closely today to gauge the extent to which Chairman Powell faces a serious challenge to reconfirmation. At least as far as Senate Banking Members are concerned, he doesn’t. Although Sen. Warren (D-MA) and other Democrats lambasted Mr. Powell over insider-trading allegations and what they called the Fed’s unresponsiveness, all still were cordial and seemed generally to blame the problem on institutional failures, not the chairman. Sen. Menendez (D-NJ) called the Fed’s diversity policy “outrageous,” but also does not seem inclined….

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

11 01, 2022

FEDERALRESERVE67

Arezou Rafikian2023-04-24T15:54:31-04:00January 11th, 2022|5- Client Report|

FedFin Assessment: Powell Sidesteps Many Challenges, Promises Much

As promised yesterday (see Client Report FEDERALRESERVE66), we listened closely today to gauge the extent to which Chairman Powell faces a serious challenge to reconfirmation. At least as far as Senate Banking Members are concerned, he doesn’t. Although Sen. Warren (D-MA) and other Democrats lambasted Mr. Powell over insider-trading allegations and what they called the Fed’s unresponsiveness, all still were cordial and seemed generally to blame the problem on institutional failures, not the chairman. Sen. Menendez (D-NJ) called the Fed’s diversity policy “outrageous,” but also does not seem inclined to block confirmation based solely on this issue. As anticipated, most senators focused on inflation and the economy; Mr. Powell often reflected this by affirming that the Fed will soon cease to be quite as accommodative. Senate Banking Chairman Brown (D-OH) urged Mr. Powell not to let up on economic stimulus, also complaining about big-bank consolidation, capital distribution, bank profits, and the need for more lending to “Main Street.”

FEDERALRESERVE67.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…