#OFAC – Federal Financial Analytics

23 11, 2022

DAILY112322

Eliza Allen2022-11-23T12:42:48-05:00November 23rd, 2022|2- Daily Briefing|

OFAC Updates Guidance For Price-Cap Sanction Compliance

Reflecting ongoing negotiations about the level of the oil-price cap, OFAC last night provided updated guidance to banks and insurers about when transactions may violate this latest sanction. The new guidance identifies “covered services” for financing; this means a commitment for the provision or disbursement of debt, equity, or economic resources related to the maritime transport of Russian oil. However, and as before, U.S. persons are authorized to provide covered services if the Russian oil is purchased at or below the price cap.

FDIC Signals Tougher GSIB Resolution Reviews

With the FDIC signaling a tough new approach to resolution plan approval, the FRB and FDIC today announced the results of the resolution plans filed by U.S. GSIBs in July, 2021. All the banking organizations saw their plans approved except for Citigroup, which had noted shortcomings due to data quality and management concerns; the bank now has until January 31, 2023 to submit a revised plan. FDIC Acting Chairman Gruenberg noted that, going forward, the agencies will conduct more detailed reviews of internal testing results and independent capability assessments.

Daily112322.pdf…

12 09, 2022

DAILY091222

Eliza Allen2022-10-13T12:00:09-04:00September 12th, 2022|2- Daily Briefing|

Senate Banking GOP Demand CFPB Recant, Retreat, Redo

All Republican members of the Senate Banking Committee today sent CFPB Director Chopra a scathing letter challenging his legal authority to undertake many recent actions. The letter specifically cites what it calls the Bureau’s “smear campaign” against banks offering optional overdraft services, calling its February list of the top 20 banks by revenue from overdraft fees an abusive “name-and-shame” tactic.

OFAC Eases Implementation of Oil Price-Cap Sanctions

As anticipated, OFAC late Friday issued initial guidance to banks and insurers on Russian oil price-cap compliance. Although OFAC plans to follow this guidance with a more comprehensive statement and a “red-flag” advisory, it now makes clear that banks and insurers will not be liable for price-cap violations related to their financing or coverage if the financial company has no independent knowledge of the actual price and reasonably relied on a customer’s attestation.

Fed Study: Credit Profitability Depends on NIM

At a time when credit-card rates reached a quarter-century high, the Fed has released a staff study using new data to conclude that card interest rates are by far the most important source of issuer profitability. The study decomposes credit-card income into component parts (interchange fees, interest charges, and consumer fees) with interest-rate revenue accounting for eighty percent of card profitability at the largest bank issuers.

Daily091222.pdf…

30 06, 2022

DAILY063022

Eliza Allen2023-01-24T15:53:35-05:00June 30th, 2022|2- Daily Briefing|

OFAC Updates Counter-Terrorism Sanctions

OFAC today adopted a final rule that amends the Global Terrorism Sanctions Regulations to implement a 2019 executive order and make several minor technical changes.

Basel Crafts Stringent New Regime for Crypto Exposures

As promised, the Basel Committee today tried again to craft a global prudential regime for bank crypto exposures. We will shortly provide clients with an in-depth analysis of the new consultation, which replaces a controversial first round (see FSM Report CRYPTO19) with one that continues add-on capital requirements for higher-risk digital assets (now redefined for stablecoins).

FSB Frets About Commodity, Resilience Risk

The FSB’s plenary today is far more pessimistic about both macroeconomic and financial conditions than it was just a month ago. Although it then worried about commodity-market volatility, these concerns now are heightened by large margin calls, “undetected” leverage, and concentrated exposures.

CFPB Pledges Guidance on Wage Access Products

The CFPB today terminated the Sandbox Approval Order for Payactiv, an earned wage access company, removing an exemption for some of the company’s products from liability under the Truth in Lending Act. Payactiv requested the termination in order to make changes to its fee model, as changes to its products would require modifications to the order.

Daily063022.pdf…

22 06, 2022

DAILY062222

Eliza Allen2023-01-25T15:55:01-05:00June 22nd, 2022|2- Daily Briefing|

Treasury Issues Stern Sanctions Warning to Foreign Banks

In remarks today to UAE bankers, Deputy Treasury Secretary Wally Adeyemo warned that foreign financial institutions are subject to possible sanction if transactions touch sanctioned entities via any U.S.-domiciled point.

CFBP Follows Threats with Credit-Card Action Plan

Consistent with its promises as recently as last week, the CFPB today released an ANPR examining ways to govern what it calls excessive late fees charged by credit-card issuers and announced broader initiatives in this sector.

CBDC Authorizing Legislation Takes Shape

Building on his HFSC subcommittee’s CBDC hearing record (see Client Report CBDC13), Rep. Jim Himes (D-CT) today released a white paper outlining legislation he plans to advance to authorize and define CBDC for the United States.

House Set to Report Revised ILC Reform Bill

As anticipated, HFSC seems likely to report H.R. 5912, ILC-reform legislation introduced by Rep. Chuy García (D-IL) (see FSM Report ILC13). The measure subjects ILCs to bank regulation, rolling back the FDIC’s rule during the Trump Administration providing these charters with unique regulatory advantages (see FSM Report ILC15).

Daily062222.pdf…

15 06, 2022

CRYPTO28

Eliza Allen2023-01-26T15:43:09-05:00June 15th, 2022|1- Financial Services Management|

U.S. Digital-Asset Framework

After protracted negotiations and much public attention, bipartisan senators have introduced a far-reaching bill designed to encourage digital-asset use without undue risk to consumers, investors, or the financial system. The bill decides most, if not all, of the outstanding regulatory barriers to digital-asset use in favor of digital assets and their providers. Provisions in many cases go farther than public discussion has so far noted – for example, the measure not only expands the ability of digital-asset providers to reach retail and wholesale customers, but also gives them access to FDIC resolution without the cost of paying insurance premiums or coming under many of the rules that govern insured depositories. Digital-asset providers could also make loans without the disclosures designed to be transparent to less well-informed consumers or the other consumer-protection standards administered by the CFPB.

CRYPTO28.pdf …

14 06, 2022

FedFin On: U.S. Digital-Asset Framework

Arezou Rafikian2023-01-27T15:30:30-05:00June 14th, 2022|The Vault|

After protracted negotiations and much public attention, bipartisan senators have introduced a far-reaching bill designed to encourage digital-asset use without undue risk to consumers, investors, or the financial system. The bill decides most, if not all, of the outstanding regulatory barriers to digital-asset use in favor of digital assets and their providers. Provisions in many cases go farther than public discussion has so far noted – for example, the measure not only expands the ability of digital-asset providers to reach retail and wholesale customers, but also gives them access to FDIC resolution without the cost of paying insurance premiums or coming under many of the rules that govern insured depositories…

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

9 05, 2022

DAILY050922

Eliza Allen2023-03-01T13:21:36-05:00May 9th, 2022|2- Daily Briefing|

U.S. Adopts Powerful Back-Door Campaign vs. Shell Companies, Trusts

In conjunction with a G-7 statement strongly condemning Russia, Treasury took an innovative move to address shell companies linked to the Russian Federation even as FinCEN’s beneficial-ownership rules remain bogged down.

Hsu Promises Deal-By-Deal Review of Large Regional M&A Pending Broad, Forward-Looking Policy

Citing changes in both U.S. banking and inequality since the last round of merger-policy statements in 1995, Acting Comptroller Hsu today called for a new policy that is neither pro- nor anti-merger but rather determines which larger mergers are “good” transactions so that only risky ones are rejected.

SEC Bows to Critics with Longer Comment Periods

In a significant concession to Congressional Republicans and industry critics, the SEC today extended the comment period for two of its most controversial initiatives. The deadline for comments on its climate-risk disclosures is moved forward by twenty-eight days to June 17.

CFPB Takes Administrative Action Expanding ECOA Reach, Lender Risk

Living up to its promise on Friday to address structural racism, the CFPB today issued a new advisory extending its fair-lending enforcement scope under the ECOA to all aspects of a credit transaction, not just loan origination or servicing.

Daily050922.pdf…

31 03, 2022

DAILY033122

Eliza Allen2023-03-27T14:51:11-04:00March 31st, 2022|2- Daily Briefing|

FSB Stays Its Course

The FSB today officially published its 2022 work plan, making only one change in terms of topics and timing from the plan detailed in a February letter to G20 finance ministers and central bankers.

HFSC Democrats Don’t Like Overdrafts, But No Action Imminent

As anticipated, today’s HFSC Consumer Protection Subcommittee hearing reviewed Democratic complaints about overdraft fees and a general Republican defense of the importance of the private sector in setting consumer-finance charges.

Sanctions Now Reach Sectors

Treasury’s OFAC today sharply expanded U.S. sanctions against the Russian Federation.

Gensler Tackles Climate Disclosures, Crypto

Noting that the SEC is focused on disclosures, not the “merit” of what issuers may do, SEC Chairman Gensler today defended the controversial Scope 3 climate-risk disclosures, calling them “layered” because mandatory upstream and downstream disclosures would only be required if exposures are material or if a company had made a risk-reduction commitment.

GOP Bill Would Ban CBDC

Clearly still laying out the CBDC political divide, Sens. Cruz (R-TX), Braun (R-IN), and Grassley (R-IA) have introduced S. 3954, legislation essentially barring a retail-focused CBDC if it serves – as the senators expect – as a “financial surveillance tool.”

Thompson Open to FHLB Inquiry, New Mortgage Product

In the wake of another op-ed questioning the purpose of the home loan bank system, acting FHFA director Thompson said today that the creation of an advisory committee to review the system is a “great idea” to which she is open, saying also …

2 03, 2022

DAILY030222

Eliza Allen2023-04-04T12:58:20-04:00March 2nd, 2022|2- Daily Briefing|

Senate Banking Tackles Crypto Sanctions Compliance

Reflecting ongoing developments, Senate Banking Chairman Brown (D-OH) and several of his Democratic colleagues today wrote to Secretary Yellen heightening their longstanding crypto concerns to specific questions about the extent to which digital assets and exchanges are appropriately captured in AML, sanctions, and CFT regulation. They note in particular the potential for Russia to evade sanctions in the cryptosphere, an issue we anticipated in our policy assessment (see FSM Report SANCTION16).

HFSC Powell Hearing Focuses on Monetary Policy, Geopolitical Risk

As anticipated, today’s HFSC hearing with Fed Chair Powell was almost exclusively focused on Ukraine and the decisions ahead for the FOMC at its mid-March hearing. Mr. Powell made it clear that, while he bemoaned the tragedy unfolding in Ukraine, sanctions policy is outside the Fed’s remit and cyber-risk is being handled to the greatest extent possible. Mr. Powell refused to comment on the Senate stalemate over pending Fed nominations.

Daily030222.pdf

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2 11, 2021

FedFin Assessment: The Near-Term Stablecoin Regulatory Agenda

Arezou Rafikian2023-06-02T13:04:23-04:00November 2nd, 2021|The Vault|

As noted yesterday, the President’s Working Group on Financial Markets (PWG) was joined by the OCC and FDIC yesterday issuing a report calling for prompt Congressional action to regulate stablecoins and, even in its absence, also for fast action by federal regulators and the FSOC. In part because it poses the largest regulatory void, the most worrisome of the risks the report details arises from the role stablecoins may play in the payment system and resulting threats to systemic stability and competition. Issues germane to digital-asset trading (defined to include lending and related activities) are described but largely left to regulators; SEC Chairman Gensler has made it clear (see Client Report INVESTOR19) that he intends to act and the CFTC-chair nominee has done the same.

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

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