#merger – Federal Financial Analytics

19 04, 2024

DAILY041924

Shane Smith2024-04-19T16:22:08-04:00April 19th, 2024|2- Daily Briefing|

GAO Gives CFPB Clear Bill of Financial Health

The GAO today released the report initially scheduled for the Financial Institutions Subcommittee hearing earlier this week convened to discuss CFPB financial management.

Deadline Set for Comment on Controversial FDIC Merger Proposal

The Federal Register today sets the comment deadline on the FDIC’s request for comment on its bank merger policy (see FSM Report MERGER15).

House Bill Revises Exam Appeal Process

HFSC Vice Chair Hill (R-AR) and Rep. Scott (D-GA) yesterday introduced H.R. 8071, a bill to create an FFIEC independent review officer for banks seeking review of supervisory judgements and require supervisors to respond more quickly to bank queries.

FDIC’s Paperwork Request Illuminates Proposed Merger Policy

In conjunction with today’s publication of the FDIC’s proposed merger-policy rewrite (see FSM Report MERGER15) comes a proposed change in the filings that would need to accompany any merger application submitted to the FDIC.

DAILY041924.pdf…

16 04, 2024

DAILY041624

Eliza Allen2024-04-16T17:10:39-04:00April 16th, 2024|2- Daily Briefing|

House GOP Takes on New Merger Guidelines

The House Small Business Committee today sent a GOP letter to the FTC and Justice Department strongly protesting new merger guidelines (see FSM Report MERGER13) on grounds that they sharply curtail needed small-business capital.

House Hikes Iran Sanctions

Working through a series of sanctions bills in the wake of recent geopolitical developments, the House yesterday voted 294-105 to advance H.R. 5921, a bill introduced by Rep. Huizenga (R-MI) that prohibits Treasury from authorizing transactions by U.S. financial institutions in connection with Iranian imports or exports other than food, medicine, and other humanitarian assistance.

House Passes Bill Targeting China-Iran Petroleum Trade

Continuing its response to recent geopolitical events, the House yesterday voted by a 383-11 margin to pass H.R. 5923, a bill from Reps. Lawler (R-NY) and Gottheimer (D-NJ) that would require the President to periodically determine if any Chinese financial institutions have purchased petroleum or petroleum products from Iran, stating that U.S. financial institutions also may not open or maintain certain accounts with Chinese institutions that have done so.

Warren Again Targets OCC Merger Decisions

Continuing recent attacks on the OCC’s approach to mergers, Sens. Warren (D-MA) and Blumenthal (D-CT) yesterday sent a letter to Acting Comptroller Hsu sharply criticizing the agency’s decision first to allow NYCB to acquire Flagstar bank and then do the same shortly thereafter for Signature.

OCC Toughens LCR, NSFR via New Reporting Requirements

The OCC today sought public comment as required by law for …

10 04, 2024

DAILY041024

Eliza Allen2024-04-10T17:24:00-04:00April 10th, 2024|2- Daily Briefing|

OCC Merger Deadline Extended, De Facto Policy Remains

Responding to industry requests, the OCC today extended the comment deadline on its merger proposal (see FSM Report MERGER14) until June 15 from April 15.

Gruenberg Defends FDIC GSIB-Resolution Readiness

Rejecting criticism from its own inspector-general and others including Karen Petrou, FDIC Chair Gruenberg today stated that the agency is indeed ready to resolve a U.S. GSIB and that any such resolution will exert market discipline on shareholders and BHC counterparties.

Hsu Presses Banks to Expand Account Access for Immigrants

Focusing on increasing banking access for immigrants, Acting Comptroller Hsu today told banks to consider risk-based adjustments to their account screening processes to accept more forms of identification for account openings such as municipal IDs and consular ID cards.

Daily041024.pdf…

8 04, 2024

DAILY040824

Shane Smith2024-04-08T16:31:06-04:00April 8th, 2024|2- Daily Briefing|

Schumer Weighs In Against CapOne/Discover Deal

Senate Majority Leader Schumer (D-NY) made it clear that the Capital One/Discover merger faces an unusually high hurdle: strong opposition with the power to pack even more of a political punch than concerns voiced so far by progressive Democrats.

Treasury IMF Presses for Bank Insurance, Pension, Bond-Fund Rules Restricting Private-Credit Interconnection

The IMF continued its pressure on private credit, finding that the sector clocked in last year at $2.1 trillion with three quarters of this in the U.S. and soon to eclipse syndicated lending and high-yield bonds.

GOP Introduces CRA Resolutions Challenging Climate-Risk Rules

Splitting the issue among various GOP sponsors, GOP members have introduced Congressional Review Act resolutions to overturn climate-risk rules finalized by the OCC (H.J. Res 124 by Rep. Donalds [R-FL] et al.), the FRB (H.J. Res 125 by Rep. Fitzgerald [R-WI] et al.), and FDIC (H.J. Res 126 by Rep. Houchin [R-IN] et al.).

CFPB Criticizes Credit Report Inaccuracies for Victims of Human Trafficking, Identity Theft

A CFPB report criticized furnishers for providing false or fraudulent information to consumer reporting companies and accused consumer reporting agencies of failing to ensure the accuracy of credit reports related to victims of human trafficking and identity theft, finding significant non-compliance with its 2022 rule requiring reporting companies to block adverse information.

FRB-NY Finds that Brokers with BHCs are Better, But Are They?

The Federal Reserve Bank of New York’s blog today posted a brief about a May 2021 study …

3 04, 2024

DAILY040324

Eliza Allen2024-04-03T17:21:51-04:00April 3rd, 2024|2- Daily Briefing|

Bowman Wants Policy Review, Fed-Operational Improvements Ahead of New Liquidity Regs

Turning from mergers to the Fed’s lender-of-last-resort role, Gov. Bowman today argues that new liquidity policies require careful review before any new rules are adopted.

Fed Treads Carefully in New Global Money-Tokenization Project

The BIS today announced a new program exploring ways in which tokenizing central-bank and bank money for wholesale transactions on programmable platforms would benefit the monetary system.

Powell Defends Independence, Mandate Limits

In remarks today on monetary policy and Fed independence, Chair Powell was at pains to emphasize that climate risk was outside the Federal Reserve’s mandate.

FHFA Treads Cautiously Towards FHLB Reform

Issuing a minor ruling regarding Puerto Rico cooperatives, FHFA today also laid out its 2024 priorities following last year’s report on the Home Loan Bank System.

Barr Stands by CRA Rule

Responding to questions about the court injunction on the CRA rule, FRB Vice Chair Barr today stated that the rules are restated expectations within the boundaries of the Act and Congress intended the agencies to update the 1977 law.

Chopra: Merger Approval Requires Affirmative, Additive Community Benefit

Building on his comments when the FDIC board voted 3-2 to issue its merger proposal (see FSM Report MERGER15), CFPB Director Chopra today doubled down on the view that bank mergers should only be approved if there is demonstrable community benefit over an extended period of time.

Daily040324.pdf…

2 04, 2024

DAILY040224

Eliza Allen2024-04-03T11:33:54-04:00April 2nd, 2024|2- Daily Briefing|

Bowman Attacks “Regulation by Application”

FRB Governor Bowman today expressed concerns about the regulatory agencies’ evolving approach to M&A, stating that pending reforms may exacerbate existing procedural problems such as long delays and regulatory uncertainty that may undermine the viability of banks.

OFR Examines Stress-Event LCR

The OFR today published a brief examining the performance of components of the LCR on U.S. GSIBs in response to the COVID-19 shock.

FRB-PHL: Majority of Consumers Receptive to CBDC

The Federal Reserve Bank of Philadelphia today released a report on CBDCs, finding that a majority of consumers were generally receptive to a U.S. CBDC despite obstacles to widespread CBDC consumer adoption.

Daily040224.pdf…

27 03, 2024

FedFin on: Bank Merger Policy

Arezou Rafikian2024-03-27T16:44:22-04:00March 27th, 2024|The Vault|

Following its 2022 request for input, the FDIC has released a formal proposal that would redefine the agency’s bank-merger policy into one that will make it difficult for all but the smallest and simplest transactions within its jurisdiction to have the clear prospects for approval usually necessary in non-emergency transactions, subjecting other M&A applications to protracted review with a high likelihood of denial. Strategic alliances involving nonbanks and/or nonbank affiliates and BHCs with nonbank activities may also come under critical FDIC scrutiny, complicating transactions otherwise under the FRB or OCC’s review….

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

27 03, 2024

MERGER15

Shane Smith2024-03-27T13:21:30-04:00March 27th, 2024|1- Financial Services Management|

Bank Merger Policy

Following its 2022 request for input, the FDIC has released a formal proposal that would redefine the agency’s bank-merger policy into one that will make it difficult for all but the smallest and simplest transactions within its jurisdiction to have the clear prospects for approval usually necessary in non-emergency transactions, subjecting other M&A applications to protracted review with a high likelihood of denial. Strategic alliances involving nonbanks and/or nonbank affiliates and BHCs with nonbank activities may also come under critical FDIC scrutiny, complicating transactions otherwise under the FRB or OCC’s review. Transactions over $100 billion would face the toughest scrutiny, but even small bank mergers could be denied if the FDIC is dissatisfied with the bank’s prior supervisory, enforcement, or community/consumer record.

MERGER15.pdf…

25 03, 2024

M032524

Eliza Allen2024-03-25T11:45:52-04:00March 25th, 2024|6- Client Memo|

How the FDIC Fails and Why It Matters So Much

Last January, we sent a forecast of likely regulatory action and what I called a “philosophical reflection” on the contradiction between the sum total of rules premised on unstoppable taxpayer rescues and U.S. policy that no bank be too big to fail. Much in our forecast is now coming into public view due to Chair Powell and Vice Chair Barr; more on that to come, but these rules like the proposals are still premised on big-bank blow-outs. I thus turn here from the philosophical to the pragmatic when it comes to bank resolution, picking up on a stunning admission in the FDIC’s proposed merger policy to ponder what’s really next for U.S. banks regardless of what any of the agencies say will result from all the new rules.

m032524.pdf…

25 03, 2024

Karen Petrou: How the FDIC Fails and Why It Matters So Much

Eliza Allen2024-03-25T11:45:45-04:00March 25th, 2024|The Vault|

Last January, we sent a forecast of likely regulatory action and what I called a “philosophical reflection” on the contradiction between the sum total of rules premised on unstoppable taxpayer rescues and U.S. policy that no bank be too big to fail. Much in our forecast is now coming into public view due to Chair Powell and Vice Chair Barr; more on that to come, but these rules like the proposals are still premised on big-bank blow-outs. I thus turn here from the philosophical to the pragmatic when it comes to bank resolution, picking up on a stunning admission in the FDIC’s proposed merger policy to ponder what’s really next for U.S. banks regardless of what any of the agencies say will result from all the new rules.

Let me quote at some length from the FDIC’s proposed merger policy:

“In particular, the failure of a large IDI could present greater challenges to the FDIC’s resolution and receivership functions, and could present a broader financial stability threat. For various reasons, including their size, sources of funding, and other organizational complexities, the resolution of large IDIs can present significant risk to the Deposit Insurance Fund (DIF), as well as material operational risk for the FDIC. In addition, as a practical matter, the size of an IDI may limit the resolution options available to the FDIC in the event of failure.”

In short, the FDIC wants to block most big-bank mergers because it can’t ensure orderly resolution of a large insured depository …