#merger

11 03, 2024

DAILY031124

2024-03-11T17:15:23-04:00March 11th, 2024|2- Daily Briefing|

Hagerty Demands Signature-Asset Sale Answers ASAP

Sen. Bill Hagerty (R-TN) yesterday sent a letter to Chair Gruenberg questioning the FDIC’s adherence to requirements in its auction process during the sale of Signature Bank’s loan portfolio, accusing the FDIC of making political choices inconsistent with its least-cost mandate.

Scott Again Calls for Gruenberg Resignation

Adding to GOP pressure on FDIC Chair Gruenberg, Senate Banking Ranking Member Scott (R-SC) yesterday sent a letter reiterating his demand that Mr. Gruenberg step down.

BTFP Demise if FHLB Opportunity

As anticipated, the BTFP window closed today.

FDIC’s Hill Wants New Blockchain, Liquidity Standards

FDIC Vice Chair Hill today said there are “significant downsides” to the agency’s current approach to blockchain, describing its message and that of the inter-agency policy (see Client Report CRYPTO32) as “don’t bother trying.”

Warren Tries to Divide Powell from Other Regulators to Conquer Capital Regs

Following her grilling of Chair Powell last week regarding his decision to intervene in setting the new capital rules, Sen. Warren (D-MA) yesterday sent a letter to Vice Chair Barr, Chair Gruenberg, and Acting Comptroller Hsu asking them if pressure from big banks has “weakened your resolve.”

GAO Wants FinCEN to Move Better, Faster

Reinforcing longstanding bank complaints about the current AML regime, GAO today published a report finding that FinCEN needs to improve transparency surrounding its progress implementing the Anti-Money Laundering Act of 2020 (see FSM Report AML132).

Biden Presses for Statutory Change Boosting FHLB Affordable-Housing Contributions

President Biden’s FY25 …

1 03, 2024

DAILY030124

2024-03-01T17:10:56-05:00March 1st, 2024|2- Daily Briefing|

Fed Emergency Powers Back on Senate Docket

Just before the Senate passed the stopgap bill to avert a shutdown, Sen. Paul (R-KY) forced a vote on an amendment to prevent the Fed from buying debt from states and municipalities.

DOJ Goes After “Gate-Keepers”

In remarks late yesterday, Assistant AG Jonathan Kanter highlighted the impact of new DOJ/FTC guidelines (see FSM Report MERGER13) and enforcement efforts with regard to “gate-keepers” – i.e., “monopoly chokepoints” so powerful that they control entry and pricing in a key sector in which they also often compete.

Fed Seems a Bit Warier of Banking-System Stress

The Fed monetary-policy report submitted today ahead of Chair Powell’s testimony next week includes a financial-stability analysis largely derived from the FRB’s most recent financial-stability report (see Client Report SYSTEMIC97) and the update provided earlier this week by a key FRB-NY official.

White House Steps in to Comfort NYCB Worries

At close of business, NYCB shares had sunk to levels not seen since 1997 following the release of still more bad news on Thursday.

Daily030124.pdf

1 03, 2024

Al030424

2024-03-01T17:07:55-05:00March 1st, 2024|3- This Week|

A Central Bank Very Much in the Middle

As always, we will provide clients with in-depth analyses after Chair Powell comes before Congress later this week to face the usual fusillade of political inquiry along with policy questions.  As before (see Client Report FEDERALRESERVE74), Mr. Powell will face hard questioning from Republicans on the pending capital rules, with many now trying to pin him down on likely changes and the extent to which Mr. Powell’s promise of consensus before a final rule still holds.  A lot of questions will also come from both sides of the aisle on bank mergers, with House Democrats demanding a new merger policy, Sen. Warren (D-MA) trying to get Mr. Powell to signal disapproval of the CapOne/Discover deal – he won’t, and Republicans trying to get Mr. Powell to say that deals such as this one must get done to ensure regional-bank survival – again, he won’t.  We also expect a new grilling from the GOP on Fed emergency-liquidity powers, along with continuing questions on climate risk, CBDC, and the quality of bank supervision.  The fate of NYCB by the time of the hearing will also be a major preoccupation on both sides of the aisle even if bad doesn’t immediately go to worse.  Democrats will try to shore up CBDC but many are also troubled by emergency-liquidity powers.  All sides will of course take much of the hearing’s bandwidth by pushing Mr. Powell to go one way or …

28 02, 2024

DAILY022824

2024-02-29T11:26:05-05:00February 28th, 2024|2- Daily Briefing|

HFSC Dems Press for New Bank-Merger Policy

Although she issued a statement strongly opposed to the CapOne/Discover merger after it was announced, HFSC Ranking Member Waters (D-CA) today led a letter instead focusing on the need for the banking agencies and DOJ to quickly issue updated merger policies.

US Standards Complicate Transborder Personal-Financial Data Flows

The President plans later today to issue an executive order banning the transfer of sensitive data to “countries of concern” and certain persons subject to their jurisdiction.

Fed Worries About Regional-Bank Risk

Anna Kovner, Director of Financial Stability Policy Research at the New York Fed, today outlined four sources of systemic risk that worry the central bank even though the Fed still sees risks as manageable according to the analyses released last October (see Client Report SYSTEMIC97).

Daily022824.pdf

26 02, 2024

DAILY022624

2024-02-26T16:36:24-05:00February 26th, 2024|2- Daily Briefing|

BIS: More Bank Competition Leads to Increased Credit Risk

A new BIS paper looks at a question critical to the debate over bank-merger policy:  the extent to which competition drives bank risk-based pricing decisions in corporate lending and, by extension, other credit markets.

OCC Proposes Changes to FOIA Procedures

The OCC today proposed several changes to its FOIA procedures, including allowing expedited processing requests and appeals of denials of these requests and those for fee waivers.

Warren, Progressives Expand Blast on CapOne/Discover Deal to Encompass OCC Merger Proposal

Following other Democratic attacks on the CapOne/Discover merger and her own, Sen. Warren (D-MA) continued her challenge in a letter also signed by twelve House Democrats.

CFPB Takes Precedent-Setting Step Bringing Nonbanks Under Supervision

The CFPB late Friday released its first contested finding that a nonbank is subject to its supervision following the establishment in 2022 of a process for bringing nonbanks under its supervisory wings (see FSM Report CONSUMER44).

Senate Republicans Introduce Anti-CBDC Bill

Sen. Cruz (R-TX) alongside Sens. Hagerty (R-TN), Scott (R-FL), Budd (R-NC) and Braun (R-IN) today introduced a bill to prohibit the Fed from directly or indirectly issuing a CBDC or even using CBDC as a monetary-policy tool.

Daily022624.pdf

26 02, 2024

M022624

2024-02-26T11:06:35-05:00February 26th, 2024|6- Client Memo|

The Unintended Consequences of Blocking the Credit-Card Merger

There is no doubt that the banking agencies have approved all too many dubious merger applications along with charter conversions of convenience.  However, the debate roiling over the Capital One/Discover merger harkens to an earlier age of thousands more prosperous small banks all operating strictly within a perimeter guarded by top-notch consumer, community, and prudential regulators.  Whether this ever existed is at best uncertain.  What is for sure is that all this nostalgia for a halcyon past will hasten a future dominated by GSIBs and systemic-scale nonbanks still operating outside flimsy regulatory guardrails.

M022624.pdf

26 02, 2024

Karen Petrou: The Unintended Consequences of Blocking the Credit-Card Merger

2024-04-12T09:46:02-04:00February 26th, 2024|The Vault|

There is no doubt that the banking agencies have approved all too many dubious merger applications along with charter conversions of convenience.  However, the debate roiling over the Capital One/Discover merger harkens to an earlier age of thousands more prosperous small banks all operating strictly within a perimeter guarded by top-notch consumer, community, and prudential regulators.  Whether this ever existed is at best uncertain.  What is for sure is that all this nostalgia for a halcyon past will hasten a future dominated by GSIBs and systemic-scale nonbanks still operating outside flimsy regulatory guardrails.

The best way to demonstrate this awkward certainty is to run a counter-factual – that is, think about what the world would look like if opponents of the Capital One/Discover deal get their way.  Would we quickly see a return to card competition housed firmly within a tightly-regulated system?  Would the payment system be loosed from Visa and Mastercard’s grip?  Would merchants see the dawn of a new era of itsy-bitsy interchange fees?  Would card rates plummet and rewards stay splendiferous?  I very much doubt it.  Space here does not permit a detailed assessment of the analytics underlying my conclusions, so let’s go straight to each of them.  

First, banning the CapOne/Discover deal would not ensure robust card competition under strict bank regulation.  JPMorgan’s and American Express’ formidable stakes could grow because credit-card lending is a business dependent on economies of scale and scope vital to capital-efficiency through the secondary market.  However, large banks will

22 02, 2024

DAILY022224

2024-02-22T17:00:09-05:00February 22nd, 2024|2- Daily Briefing|

CapOne Deal Draws GOP Fire

Late yesterday, Sen. Josh Hawley (R-MO) joined Democrats in strongly opposing the CapOne/Discover merger, doing so not only via a short statement, but also a letter to Assistant AG Kanter.

CFPB Buttresses Calls to Block CapOne Deal

Adding still more heat to the fire it built Friday on credit-card industry practices, the CFPB today reported that the average APR margin for credit-cards has reached an all-time high.  APR margins were also found also to account for about half of the absolute card rate, which rose from 12.9 percent in 2013 to 22.8 percent in 2023.

Hsu Presses Cross-Border Cryptoasset-Platform Regulation

Speaking before the FSB’s Crypto Working Group today, Acting Comptroller Hsu made it clear that multi-function cryptoasset intermediaries require a home/host-country regulatory construct akin to that adopted in the U.S. and around the world after BCCI’s money-laundering scandal and failure in 1991.

Daily022224.pdf

20 02, 2024

DAILY022024

2024-02-20T17:06:56-05:00February 20th, 2024|2- Daily Briefing|

Waters Fails to Muster Meaningful Democratic Capital-Proposal Protest

Late Friday, HFSC Ranking Member Waters (D-CA) released another letter from Democrats protecting the pending capital proposals.

Fed Study: CBDC Impact on Dollar Dominance, Payment System Depends on Many Decisions

A new Fed staff study finds that a U.S. CBDC would have only a marginal impact on the dollar’s role as the reserve currency and within the payment system, although this conclusion depends on a raft of decisions now being made about other CBDCs and the cross-border payment system.

Sanders Targets BlackRock’s Market Power

We will shortly provide clients with an update on Congressional reaction to the C1/Discover merger earlier today, but here draw client attention to a new letter from Sen. Bernie Sanders (I-VT), sure also to be among the credit-card consolidation’s fiercest critics.

Brown Presses Powell for Enforceable Ethics Standards

Senate Banking Chair Brown today renewed his campaign against Fed conflict-of-interest policies, sending another letter to Chair Powell arguing that the Fed’s recent internal-investment and ethics standards are unenforceable.

Initial Response to C1/Discover Merger Starts M&A Debate

With Congress in recess, political response to the Capital One/Discover merger has been muted in terms of sparse comments, but fiery when it comes to Sen. Warren (D-MA).

Daily022024.pdf

20 02, 2024

M022024

2024-02-20T09:14:36-05:00February 20th, 2024|6- Client Memo|

How the OCC Made a Bad Bank Both Bigger and Badder

As I noted last week, the OCC’s proposed bank-merger policy fails to reckon with the strong supervisory and regulatory powers federal banking agencies already have to quash problematic consolidations and concentrations.  Here, I turn to one reason why the OCC may not trust these rules:  it doesn’t trust itself.  A bit of recent history shows all too well why this self-doubt is warranted even though it’s also inexcusable.

m022024.pdf

Go to Top