#NCUA

28 03, 2024

Daily032824

2024-03-29T10:36:38-04:00March 28th, 2024|2- Daily Briefing|

House GOP Resolution Challenges CFPB Credit-Card Late-Fee Rule

As promised, the GOP resolution to overturn the CFPB’s credit-card late-fee rule has now been introduced (see FSM Report CREDITCARD37).  HFSC Rep. Ogles (R-TN) introduced H.J. Res. 121 on Tuesday, adding another attack to the rule which is already being challenged in court.

FinCEN Advances Limited KYC Reform

Acting on its longstanding promise, FinCEN in consultation with banking agency and NCUA staff today issued a RFI examining new KYC approaches, including permitting banks to collect partial SSN information directly from the customer backed by third-party sources that provide full SSN prior to account opening.

BIS: Statement Revisions Augur Greater Bank Risk

Doubtless reflecting Credit Suisse’s failure, the BIS today released a study on risk information derived from pre-publication revisions to bank financial statements sent to supervisors, finding that the frequency of revisions is highly correlated with a bank’s subsequent CAMELS rating downgrade, higher future average probability of borrower default, and greater distance to default score.

Daily032824.pdf

21 12, 2023

DAILY122123

2023-12-21T16:29:00-05:00December 21st, 2023|2- Daily Briefing|

OFR Nomination Scuttled

Although Sen. Jack Reed (D-RI) recently called for his confirmation, Ron Borzekowski’s appointment as Director of the Office of Financial Research was scuttled yesterday in the Senate.

Treasury Payment-System Policy Addresses Resilience, Reserve-Currency Status, Inter-Operability

Providing an update on Treasury’s working group on the future of money and payments, Deputy Assistant Secretary for International Financial Markets Nicholas Tabor yesterday indicated that the working group is considering the implications of new payment technologies for smooth international financial system functioning, U.S. national security, privacy, and financial inclusion.

Reserve Banks Promise a Peek

Tidying up, the Federal Reserve Bank of New York today released a new “Transparency and Accountability” policy on behalf of all of the System’s Banks.

Regulators Clarify Bank BOI Expectations

FinCEN was today joined by the FDIC, FRB, OCC, NCUA, and State Bank and Credit Union Regulators in an interagency statement clarifying that FinCEN’s beneficial ownership information Access Rule does not create new regulatory requirements or supervisory expectations for banks to access BOI from the beneficial ownership IT System.

Daily122123.pdf

14 12, 2023

DAILY121423

2023-12-15T17:22:54-05:00December 14th, 2023|2- Daily Briefing|

Top Senate Democrats Heighten Payment App Scrutiny

Continuing to shift their focus from Zelle to payment-service providers, Senate Banking Chairman Brown (D-OH) along with Sens. Reed (D-RI) and Warren (D-MA) today sent letters to Paypal and CashApp urging them to adopt new scam-reimbursement policies.

Treasury Defends Russian Sanctions, Economic-Warfare Clout

Facing increasing assertions that U.S.-led sanctions are not meaningfully affecting Russia, Treasury today issued a blog stoutly defending sanctions effectiveness.

Reed Presses OFR to Subpoena Shadow-Bank Data

The principal sponsor of the Dodd-Frank provisions creating the Office of Financial Research, Sen. Jack Reed (D-RI), today defended the agency on grounds that it lacks a confirmed director, promising to push the appointment on the floor as quickly as possible.

Basel Targets Stablecoin Reserve-Asset Risk

Moving forward with “targeted” changes to current standards, the Basel Committee today outlined revisions to its crypto standards with significant practical implications.

Liang Disputes Over-Arching Need for New AI Regs

Treasury Under Secretary Liang today argued that AI is not fundamentally different than other financial innovations and is already subject to existing consumer-protection, safety-and-soundness, illicit-finance, and financial-stability guardrails.

FRB-NY Official Highlights AI Promise, Problems, Policy Action

Summarizing a recent Federal Reserve Bank of New York AI conference, the Bank’s chief risk officer, Mihaela Nistor, concluded that AI can now identify GSIB and GSIFI risk due to its ability to detect tail behavior not now captured by relevant models.

Democrats Urge CFPB to Take Second Stand Against Forced Arbitration

Sens. Warren (D-MA) and Sanders (I-VT) were today …

5 12, 2023

FINTECH33

2023-12-05T15:39:20-05:00December 5th, 2023|5- Client Report|

HFSC GOP Grills Regulators Over Novel Activities, Third-Party Risk Management Guidance

At today’s HFSC Digital Assets Subcommittee hearing on banking agency financial innovation, Republicans raised concerns about the Fed’s novel activities guidance (see FSM Report FINTECH32), interagency guidance on third-party risk management (see FSM Report VENDOR10), and the SEC’s predictive data analytics proposal. Members on both sides of the aisle also focused on AI, crypto, and CBDC, with Republicans pressing for hands-off crypto policy while Democrats urged faster action to curb AI risk. Pointing to the OCC’s recent hiring scandal, Subcommittee Chairman Hill (R-AR) suggested that more oversight might be necessary.

FINTECH33.pdf

15 11, 2023

REFORM230

2023-11-15T15:58:45-05:00November 15th, 2023|5- Client Report|

Bipartisan Capital Bashing Continues in the House

Following yesterday’s Senate Banking hearing (see Client Report REFORM229), today’s HFSC session with top bank regulators again highlighted growing bipartisan consternation over the unintended consequences of the agencies’ capital proposal (see FSM Report CAPITAL230).  Although Ranking Member Waters (D-CA) echoed Chairman Brown’s defense, Democratic criticism today went beyond concerns about mortgages and green bonds also to address credit availability, new trading and derivatives standards, capital recognition of securities losses, and insufficient review of the proposal’s quantitative impacts.  Republicans continued to bash the proposal for what they said is insufficient economic analysis.  Unlike yesterday, attention to the FDIC’s harassment scandal most notably came from Democrats’ side of the aisle, with Ranking Member Waters using all of her questioning time to criticize the FDIC and request a report from each agency describing how they will review sexual-harassment.  Reiterating concerns he and Subcommittee on Financial Institutions Chairman Barr (R-KY) recently raised regarding regulators’ interactions with international standard-setters, Chairman McHenry grilled Vice Chair Barr and Acting Comptroller Hsu about staff compensation and agency documentation practices at international events.  Mr. Barr emphasized that all Board and staff member compensation comes from the Fed, while Mr. Hsu only said that his agency tracks participation in these bodies to ensure mission alignment.   We continue to expect GOP pressure on the international-agency front but no action until GAO completes its report.  Chair Gruenberg noted broad alignment with a new incentive-compensation proposal, but revised the initial timeline …

14 11, 2023

REFORM229

2023-11-14T15:57:18-05:00November 14th, 2023|5- Client Report|

Capital Proposal Gets Bipartisan Bashing in Senate Banking

Today’s Senate Banking hearing with top bank regulators showcased broad bipartisan concern over the interagency capital proposal (see FSM Report CAPITAL230).  Although Chairman Brown (D-OH), Sen. Warren (D-MA), and Sen. John Fetterman (D-PA) staunchly defended the proposal on countercyclicality grounds, other senators on both sides of the aisle sounded the alarm over its impact on credit availability, small-business lending, and shadow-bank migration.  FRB Vice Chair Barr repeatedly defended his agency’s analysis while emphasizing openness to comment, also highlighting that the proposal relates primarily to non-credit activity and would apply to only 37 banks.  Some Republicans also raised concerns over other recent rulemakings, with Sen. Britt (R-AL) asking Vice Chair Barr if the agencies would consider a comment deadline extension for the LTD proposal (see FSM Report TLAC9).  Although Mr. Barr stated that the rule is far simpler than the capital proposal, he also said the agencies would consider a similar extension.  FDIC Chairman Gruenberg drew bipartisan ire over reports of FDIC widespread harassment, with Republicans seizing the occasion to criticize Mr. Gruenberg’s leadership.  Grilled by Sen. Tillis (R-NC) about reports of a Fed leak of confidential supervisory information, Mr. Barr only said that he is deeply concerned.  Separately, Chairman Brown emphasized unfinished work on bank executive accountability and urged Congress to pass the RECOUP Act (see FSM Report COMPENSATION37), which passed the Committee nearly unanimously in July.

REFORM229.pdf

20 10, 2023

DAILY102023

2023-10-20T17:21:03-04:00October 20th, 2023|2- Daily Briefing|

Senate AI Measure Tackles Financial Services

The text of the key Senate AI bill, S. 3050, has now become available.

Banking Agencies Offer Olive Branch

Reflecting strong pressure and recent FRB Chair Powell statements, the FRB today announced the launch of an open data collection assessing the rule’s effects – an issue on which many bank comment letters and Congressional Republicans have been scathing.

GOP Renew Funding Campaign vs. CFPB via Fed Losses

HFSC Vice Chairman Hill (R-AR) yesterday reintroduced legislation pressuring both the Fed and CFPB by prohibiting the Fed from transferring its earnings to the Bureau if the Fed incurs an operating loss.

FinCEN Highlights Hamas Sanction Red Flags

Reflecting ongoing Congressional pressure and recent Treasury sanctions, FinCEN today issued an alert reminding financial institutions to remain vigilant for suspicious activity related to Hamas funding sources.

Fed Stays Stoic on Financial-Stability Outlook

The FRB today released is semiannual financial-stability report differing little from the relatively-sanguine outlook in its May report (see Client Report SYSTEMIC94).

Daily102023.pdf

28 07, 2023

DAILY072823

2023-07-28T17:09:55-04:00July 28th, 2023|2- Daily Briefing|

FSOC Considers Nonbank Systemic Risk, Credit-Based LIBOR Replacements

At today’s FSOC meeting, participants as usual said nothing about the closed-door agenda, which notably featured more discussion of the systemic risk that may be posed by nonbank mortgage servicers. Different agencies presented their work to address this risk, which was also flagged when FSOC finalized its new approach to identifying systemic risk (see FSM Report SYSTEMIC95).  Whether FSOC as a whole is satisfied with FHFA and Ginnie actions and even if these agencies think their work to date suffices will determine the extent to which FSOC intervenes, but the session reinforced the systemic importance accorded to nonbank mortgage firms and the potential for additional action.

Agencies Take Action to Enhance Emergency Liquidity, Whitewash Discount Window

As presaged at Chair Powell’s press conference earlier this week, the banking agencies today issued liquidity-planning guidance designed both to ensure adequate preparation for acute liquidity stress and take the stigma off discount-window draws.  The guidance deals only with liquidity planning and thus does not alter the treatment of discount-window funding for purposes of the LCR, admonishing banks to take account of the hard lessons of the March bank failures and prepare for runs and other extreme-stress scenarios.

Daily072823.pdf

14 07, 2023

DAILY071423

2023-07-14T16:23:06-04:00July 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

6 07, 2023

DAILY070623

2023-07-06T16:55:22-04:00July 6th, 2023|2- Daily Briefing|

Basel Redesigns Global Bank-Supervision Construct

As promised at its last meeting, the Basel Committee today released a public consultation on revisions to its 2012 core supervisory principles (see FSM Report REFORM92).

Accommodative CRE Policy Goes Live

Publication in the Federal Register today makes effective a finalized policy statement issued by the banking agencies and NCUA late last week on how financial institutions are to handle troubled commercial real estate (CRE) loans.

Senate Dems Demand CFPB Voice-Cloning Action

Following his letter to large bank CEOs regarding AI fraud, Chairman Brown (D-OH) along with Sens. Menendez (D-NJ), Reed (D-RI), and Smith (D-MN) today sent a letter to Director Chopra urging action against AI-related financial scams.

FSB Turns to GSIB Resolvability

The FSB’s plenary today announced that recent events have spurred it to assess the resolvability of GSIBs and other large banks, providing neither timeline nor focus for this work.

FRB-NY Study Advances Wholesale Digital Currency

Although making clear that it sets no new policy nor endorses any CBDC action, the Federal Reserve Bank of New York’s Innovation Center published a DLT proof-of-concept finding that shared ledgers can effectively support both wholesale domestic interbank and cross-border payments.

Daily070623.pdf

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