#NSF – Federal Financial Analytics

5 04, 2023

DAILY040523

Eliza Allen2023-04-05T16:55:56-04:00April 5th, 2023|2- Daily Briefing|

FDIC Joins CFPB Targeting UDAP

The FDIC today published Consumer Compliance Supervisory Highlights showing that UDAP violations related to NSF representment constituted the second highest number of total citations and were by far the largest number of serious citations in 2022. The FDIC reiterates August guidance that third-party arrangements related to re-presented items may present numerous risks. We note that the FDIC’s UDAP focus is new under Chairman Gruenberg and comes at a time when the CFPB is expanding the reach of its own UDAAP enforcement powers with a focus in part on overdrafts and NSF practices.

IMF Staff Highlight New Systemic Risk: Geopolitical Stress

At a panel event today, IMF staff reported that their model-based study in the IMF’s global financial stability report found that geopolitical risks and global fragmentation gravely threaten financial stability by weakening interconnectivity between geopolitical blocs. Their model found that increased fragmentation results in reduced cross-border banking between blocs, higher lending costs, substantial diversification losses among G7 countries, and reduced bank profitability. Staff also drew a link between the war in Ukraine and the recent banking crisis, arguing that the war’s inflationary pressures led to an aggressive monetary policy reaction, revealing bank vulnerability to interest rate risk.

Daily040523.pdf…

8 03, 2023

DAILY030823

Eliza Allen2023-03-08T17:06:14-05:00March 8th, 2023|2- Daily Briefing|

HFSC Plans Broad Attack, Limited Legislation to Rewrite Administration Crypto Standards

The HFSC staff memo makes it clear that the Digital Asset Subcommittee hearing on Thursday will be a strong general GOP attack on Biden Administration crypto policy and specific campaign against the SEC’s enforcement-focused strategy.

HFSC Plans to Blast CFPB, Press Limited Change

Thursday’s HFSC Monetary Policy Subcommittee hearing on the CFPB is sure to be a raucous, partisan affair judging by the staff memo describing it. Republicans have strongly objected to the Bureau before its inception, with concerns sharply heightened by a series of recent actions under Director Chopra.

CFPB Slams Fees, Promises Mercy

Ahead of a meeting later today between senior White House officials, Director Chopra, and hundreds of state legislators concerning the President’s “junk fee” agenda, the CFPB today released Supervisory Highlights focusing on recent instances of what it deems unlawful junk fees in deposit accounts, auto loan servicing, mortgage servicing, payday lending, and student loan servicing.

GAO Doubts Fintech’s Inclusion Advantage

The GAO today released a report finding that fintech may enhance inclusion, but that this inclusion comes at risk due to the patchwork of rules governing firms offering products – e.g., wage advances – that may put vulnerable households at risk.

HFSC Republicans Scrutinize SEC Rulemaking, Fed Climate Policy

As anticipated, today’s HFSC Subcommittee Hearing with the inspectors-general for the FRB, CFPB, Treasury, and SEC focused on GOP attacks on the SEC’s IG vacancy and the CFPB’s funding mechanism.

Brown, Others Demand ABA …

19 08, 2022

Al082222

Eliza Allen2023-01-04T11:09:21-05:00August 19th, 2022|3- This Week|

A Payment System Premised on Peccadillos?

As we noted at the start of this month, August may seem quiet, but that’s only because Congress is more or less muffled. Regulators remain busy, with the CFPB a-churn with new actions. Our in-depth analyses of the Bureau’s new digital-marketing rule (see FSM Report FINTECH30) and data-safeguards standards (see FSM Report INFOSEC28) make clear that the CFPB never sleeps. Bank regulators are also wakeful, with the most recent evidence of this to be found in the FDIC’s NSF-fee clamp down and the Fed’s supervisory cryptoasset statement and striking new payment-system access policy (see FSM Report PAYMENT25). As our in-depth analysis describes, this policy could well redefine winners and losers across the entire spectrum of U.S. financial services.

Al082222.pdf…

18 08, 2022

DAILY081822

Eliza Allen2023-01-04T11:25:52-05:00August 18th, 2022|2- Daily Briefing|

CFPB Plans to Change Credit-Card Filings

The CFPB is seeking comments on revisions to reports it receives on credit-card terms and those related to certain cobranding agreements. Although the new data are not described, the Bureau is likely planning to gather more information supporting its campaign to limit “junk fees, (see FSM Report CONSUMER38), govern credit-card late fees (see FSM Report CREDITCARD35), and otherwise restructure this sector.

IMF Blog: Climate Finance Should Blend Public/Private Sectors

An IMF blog post today by its managing director Kristalina Georgieva and Tobias Adrian advocates for blending public and private sector finance as a way of de-risking climate finance. Advocating options that pose challenges under both U.S. law and longstanding-policy tradition, the Fund recommends public-sector equity investments and credit enhancements, highlighting additional financing practices it says would reduce impediments to private capital such as public-private partnerships, multi-sovereign guarantees, and separate underwriting for risks such as political instability.

FDIC Takes Concrete Anti-Overdraft Action

Although the CFPB has blasted overdraft fees and Acting Comptroller Hsu has suggested that they may pose supervisory concerns, the FDIC today took concrete action against them. In a new supervisory edict, it announced that state nonmember banks receiving multiple NSF fees for the same transaction risks supervisory sanction because such fees are unsafe and unsound.

Daily081822.pdf…

20 07, 2022

DAILY072022

Eliza Allen2023-01-06T14:31:13-05:00July 20th, 2022|2- Daily Briefing|

Fed Study: Mortgage Churning for CRA Adversely Affects LMI Mortgage Market

A new Fed staff paper revisits one of the longstanding questions with CRA regulation: whether allowing equal CRA credit for mortgage originations and purchases increases LMI-focused mortgage finance. Critics of past CRA rules have argued that mortgage purchases are “churning” – i.e., the same loans are bought and sold across the marketplace at the time of each bank’s CRA examination.

Comment Deadline Extended for CFPB Relationship Banking RFI

The Federal Register today provides a 30-day comment period extension for the CFPB’s Relationship Banking RFI (see FSM Report CONSUMER43). Comments are now due August 22. As noted, the Bureau has inferred that preserving relationship banking requires “human touch” rapid responses to consumer inquiries that will ensure high-quality banking services are available in all markets.

CFPB Blog: Overdraft/NSF Policy Changes Reduced Fees

Expanding on its December 2021 report, a CFPB blog post today concluded that overdraft and NSF policy changes led to significant reductions in the amount bank customers incur from various account fees. The post provides two tables — one displaying overdraft/NSF revenue and the other showing ATM fees — across multiple years and specific quarters for small and midsize banks and for select large banks.

Daily072022.pdf…

13 04, 2022

DAILY041322

Eliza Allen2023-03-02T11:20:39-05:00April 13th, 2022|2- Daily Briefing|

CFPB Pursues Overdraft/NSF Fees

Venturing Doggedly pursuing its anti-overdraft campaign despite acknowledging industry concessions, the CFPB today published a list of banks deriving the most revenue from NSF/overdraft fees; a chart also names the banks that have or plan to eliminate these fees.

Toomey Pushes Back on SEC MMF Proposal

Issuing the first official Congressional statement on the SEC’s MMF proposal (see FSM Report MMF19), Ranking Member Toomey (R-PA) today argued that the proposal too narrowly prescribes how MMFs must operate, urging the SEC to broadly authorize MMFs to determine how to ensure their own resiliency.

Senate GOP Readies Objections to Gruenberg Appointment

Doubtless laying pipe should the White House nominate Acting Chairman Gruenberg to serve again as FDIC chairman, Senate Banking Committee Ranking Member Toomey (R-PA) and Sen. Scott (R-SC) today sent a letter to Mr. Gruenberg raising concern about allegations of racial discrimination during Mr. Gruenberg’s previous term as Chairman.

IMF: Faltering Banks Need New Rules along with Fintech, DeFi

The IMF today published a blog post on the rapid growth of fintech and DeFi, focusing on issues of concern to regulators and supervisors. One top-priority risk is, though, to legacy banks, which the post’s authors do not believe are quickly adapting to changing technology and new competitors and thus may also need more stringent prudential standards as their franchises become unsustainable.

Daily041322.pdf…

10 02, 2022

DAILY021022

Eliza Allen2023-04-05T09:57:51-04:00February 10th, 2022|2- Daily Briefing|

KC Fed: 2020 Capital-Distribution Constraints Worked
Touching on a subject of considerable sensitivity as well as a policy issue subject to change under a new Fed, the Kansas City Federal Reserve Bank has released a study arguing that 2020’s limits on capital distributions contributed to greater systemic resilience. The paper tracks both share buy-backs and dividends over recent years, noting that GSIBs often distributed more than their income. Repurchases succeeded dividends as the principal capital-distribution medium since the great financial crisis, a shift found to give banks more flexibility to adjust distribution levels without significant investor backlash.

FHFA Leads Way on U.S. AI/ML Standards
FHFA today issued the first U.S. financial-agency supervisory guidance on AI/ML use by Fannie Mae, Freddie Mac and Common Securitization Solutions (not also the FHLBs). This goes well beyond the 2020 RFI released so far by the banking agencies (see FSM Report AI), with the standards also reflecting FHFA’s new equity focus in supervisory guidance specific to inclusive considerations.

Toomey Takes on the Entire Reserve-Bank System
In remarks today, Senate Banking Ranking Member Toomey (R-PA) heightened his critique of the Federal Reserve’s regional banks, suggesting that the System needs a sweeping overhaul.

CFPB Assesses Overdraft-Fee Marketplace
Reflecting the CFPB’s continuing critique of overdraft fees (see FSM Report CONSUMER38), the Bureau today posted a chart of overdraft and NSF fees at the largest banks, calling recent changes “encouraging.” However, the release does not retract recent allegations about their anti-consumer or -competition impact, …

1 02, 2022

CONSUMER38

Arezou Rafikian2023-04-05T14:14:55-04:00February 1st, 2022|1- Financial Services Management|

“Fair-Fee” Policy

Taking action to advance President Biden’s competition order, the CFPB is seeking views on fees which it believes exploit consumers by virtue of unfair competition. Although many of the fees it cites are covered by statutory disclosure regimes designed to ensure both front- and back-end fee transparency, the Bureau believes that many of these fees are unfair due to large-bank market power. Unfairness is in part judged by the extent to which a fee exceeds the provider’s marginal cost with some recognition of possible risk, but how much of a profit margin above these break-even thresholds is neither specified nor discussed.

CONSUMER38.pdf…

1 02, 2022

FedFin: “Fair-Fee” Policy

Arezou Rafikian2023-04-05T14:22:57-04:00February 1st, 2022|The Vault|

Taking action to advance President Biden’s competition order, 1 the CFPB is seeking views on fees which it believes exploit consumers by virtue of unfair competition. Although many of the fees it cites are covered by statutory
disclosure regimes designed to ensure both front- and back-end fee transparency, the Bureau believes that many of these fees are unfair due to large-bank market power.

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

1 12, 2021

Daily120121

Arezou Rafikian2023-05-23T14:07:25-04:00December 1st, 2021|2- Daily Briefing|

FRB-NY Staff Assess CBDC Mission Impact
With Chairman Powell yesterday reiterating that the Fed will soon seek views on CBDC (see Client Report FEDERALRESERVE64), the New York Fed’s blog post today is a timely assessment of whether central-bank digital currency advances core central-bank missions.

CFPB Launches Anti-Overdraft, Pro-Portability Campaign
In concert with a new CFPB report, CFPB Director Chopra today announced that the Bureau will soon limit overdraft and NSF fees and undertake an array of other reforms to retail banking.

FFIEC Tackles New AML Priorities
Rec The FFIEC today released a significant rewrite of their BSA/AML examination manual, stressing not only an array of new priorities, but also recognition that current standards have unintentionally but often decisively encouraged derisking.

Daily120121.pdf…