#OFR – Page 2 – Federal Financial Analytics

18 04, 2023

DAILY041823

Eliza Allen2023-04-18T17:03:30-04:00April 18th, 2023|2- Daily Briefing|

FRB-NY Finds NBFIs a Source of Systemic Risk Over the Centuries

Reflecting renewed interest in “narrow banks,” the Federal Reserve Bank of New York blog posted evidence of systemic risk from nonbanks in the absence of any banks at all.

Stablecoin Compromise Faces Steep Challenges

As noted yesterday, HFSC’s Digital Asset Subcommittee is set for a Wednesday hearing clearly intended to lay the groundwork for near-term action on Chairman McHenry’s (R-NC) longstanding goal of enacting stablecoin legislation.

Despite Failures, DIF Restoration Ahead Of Schedule

At the FDIC Board’s meeting today, FDIC staff said that – while the timing for restoring the DIF to its 1.35% statutory minimum remains uncertain – the DIF could reach its statutory minimum ahead of time and by 2024.

Bowman Remains Staunch CBDC Skeptic

Reiterating that any U.S. CBDC requires Congressional approval, Gov. Bowman today also reiterated her longstanding skepticism to any such instrument.

CFPB Plans Timing Study to Buttress Junk-Fee Regs

The Federal Register today includes a CFPB comment request on its “Junk Fees Timing Study,” which would be part of a series of online lab experiments testing differences in consumer choices across different information presentations.

Warren, Reed Demand OFR Use Subpoenas To Obtain Systemic Data

Sens. Warren (D-MA) and Reed (D-RI) today urged OFR Acting Director Martin to fill data gaps around financial stability risks posed by climate change, cryptocurrencies, and repo markets.

Daily041823.pdf…

24 03, 2023

DAILY032423

Eliza Allen2023-03-24T17:13:54-04:00March 24th, 2023|2- Daily Briefing|

GOP Expands Attack On Fed Supervisory Actions

In yet another letter ahead of next week’s hearings, Senate Banking Ranking Member Scott (R-SC) and all Republican Members of the committee asked Fed Chairman Powell and FRB-SF President Daly a series of questions asserting that SVB’s failure reflects significant supervisory lapses.

FSOC Breaks The Glass

Although there is no formal announcement, FSOC will hold what is clearly an emergency, closed meeting later today per a new media advisory.

Top HFSC Republicans Join SVB-Supervisory Inquest

Following a similar letter from Senate Banking Republicans earlier today, HFSC Subcommittee Chairmans Barr (R-KY) and Huizenga (R-MI) along with Rep. Kim (R-CA) sent yet another letter to Vice Chair Barr and FRB-SF President Daly also demanding detailed supervisory-related information on SVB.

Reserve Banks Promise to Bear Some Sometime Soon

Under ever-growing pressure, all of the Federal Reserve Banks today under the New York Fed’s aegis announced a common transparency policy.

HFSC GOP Targets State Bank Supervisors

Top House Republicans today brought state banking commissions into the SVB and SBNY fray, asking each for extensive details on recent actions and setting the April 6 deadline now evident in all recent GOP requests in this arena.

GOP Leaders Also Demand FSOC Answers

HFSC Subcommittee Chairman Barr (R-KY) and Huizenga (R-MI) today also sent letters to FSOC Chair Yellen and Council of Inspectors General on Financial Oversight Chair Delmar requesting detailed information on meetings surrounding the banking agencies’ March 12 decision to invoke a systemic risk exception for SVB …

23 03, 2023

DAILY032323

Eliza Allen2023-03-23T17:09:59-04:00March 23rd, 2023|2- Daily Briefing|

OFR Study Predicts Household Gains, Banking Instability From Digital Currencies

A new OFR working paper concludes that full integration of digital currencies into the economy would reduce financial-system volatility and improve household welfare, but also increase the probability of a banking crisis.

HFSC Poses Still Tougher SVB/SBNY Resolution Questions

Following tough GOP letters to the Fed and FDIC earlier this week, HFSC Chairman McHenry (R-NC) and Subcommittee Chair Hill (R-AR) last night sent even sterner missives to Chairman Gruenberg and Secretary Yellen.

Bipartisan Push Begins For CEO Clawbacks

Ahead of its first of many hearings on the collapse of SVB and SBNY, Senate Banking Chairman Brown (D-OH) and Ranking Member Scott (R-SC) today sent letters to the former CEOs of the banks demanding that they answer for the bank failures, noting also that they will be expected to testify before the Committee if they are unable to do so next week.

OFR Blog: CRE, Residential Markets Pose Little Systemic Risk

Despite growing concerns about CRE and even potential systemic risk, an OFR blog post today concludes that neither the residential nor commercial real estate market poses a significant threat to the financial system.

Basel Stands By Its Rules, Contemplates New Supervisory Standards

The Basel Committee’s release following its March 14 meeting unsurprisingly notes the bank failures preceding it just days before, but attributes them principally to poor risk management in the face of rising rates.

GSEs Seek Public Comment on Credit Score Model Transition

The FHFA today announced…

12 01, 2023

DAILY011223

Eliza Allen2023-01-12T16:51:37-05:00January 12th, 2023|2- Daily Briefing|

OCC Tightens Fair-Lending Review

Acting Comptroller Hsu took the occasion today of release of a new fair-lending manual to emphasize the OCC’s commitment to ending credit discrimination.

McHenry Chairmanship Starts With CFPB Confrontation

In his first financial-policy action since becoming HFSC Chairman, Rep. Patrick McHenry (R-NC) today blasted the Bureau and its “reckless” Director for what he described as expanding its authority beyond congressional intent.

FRB-NY Staff Renew Debate Over FBO Liquidity, Market Impact

A new post from FRB-NY staff assesses the funding strategies of FBO branches and agencies to judge their current impact setting dollar-liquidity pricing in the U.S. wholesale funding market.

OFR Cites Heightened Systemic Risk, MMF Worries

In its annual report on 2021, OFR has concluded that financial stability risks are generally elevated due to macroeconomic tightening, inflation, climate change and volatility in Treasury, crypto, and commodity markets.

DOJ Lands Unprecedented Redlining Settlement

Continuing the Administration’s racial-equity campaign, the Department of Justice today announced an historic settlement with City National Bank.

Daily011223.pdf…

5 01, 2023

DAILY010523

Eliza Allen2023-01-05T17:01:33-05:00January 5th, 2023|2- Daily Briefing|

OFR Tackles Repo-Market Data Transparency

As pressed by the FSOC (see Client Report FSOC28), OFR today released a sweeping proposal to gather daily data on the uncleared bilateral repo market. The proposal follows a data-collection pilot that leads OFR now to detail 33 daily reporting items that would be collected from the forty largest bank and nonbank primary dealers in this systemic-critical sector.

OCC Reiterates Long Term Principles

The OCC today published its 2022 Annual Report, revealing little of its priorities for 2023. It does, however, reiterate long-term goals laid out by Acting Comptroller Hsu, including guarding against complacency, addressing inequality, adapting to digitalization, and managing climate risk.

Daily010523.pdf…

9 09, 2022

DAILY090922

Eliza Allen2022-10-24T12:01:09-04:00September 9th, 2022|2- Daily Briefing|

White House Reaffirms Anti-Algo Stand

The White House late yesterday announced core bigtech policy principles. These are extremely general and do not go as far in areas such as antitrust that progressives sought.

U.S. Announces Start of Work on Basel “End Game”

Ahead of what might otherwise have been a fractious Basel Committee meeting, the Fed, OCC, and FDIC today reaffirmed the U.S. commitment to finalize what FRB Vice Chair Barr Wednesday called the Basel III “end-game.”

Basel Chair Announces Preliminary AI Priorities

Pablo Hernández de Cos, Chair of the Basel Committee, announced today the work that regulators plan on AI and algorithmic decision-making.

OFR Details Climate Data-Sharing Efforts

Acting OFR Director James Martin today addressed the need for integrated climate-related financial data and challenges to forecasting and modeling climate risk.

Liang Stresses Climate-Resiliency

Treasury Under Secretary Liang today reiterated an array of agency and Administration climate-risk priorities, emphasizing ongoing Treasury and FSOC climate resiliency efforts and underscoring Treasury’s commitment to a net-zero economy.

Treasury To Issue Price-Cap Sanction Guidance

Deputy Treasury Secretary Wally Adeyemo today made it clear that enforcement of the anti-Russia oil-price caps will depend not only on restricting shipping insurance, but also doing so for financial and payment services.

Daily090922.pdf…

23 08, 2022

DAILY082322

Eliza Allen2023-01-04T10:40:24-05:00August 23rd, 2022|2- Daily Briefing|

Life Insurers Depend on FHLB Advances for Stress Liquidity, Long-Term Funding

Reflecting longstanding fears about life-insurance run-risk (see Client Report SYSTEMIC92), a new research note from the Federal Reserve finds that life insurers were quick to establish liquidity buffers when Covid hit in 2020, largely doing so via FHLB advances and interest-rate derivative margins.

JEC Financial Inclusion Report Calls for Postal Banking, Crypto Regulation

The Joint Economic Committee yesterday afternoon released a report on the barriers that people of color and low-income communities face accessing financial services, concluding that traditional banks discriminate, new nonbank offerings may prove predatory, and policy solutions are essential.

OFR: Lower-Risk Hedge Funds Lead to Higher Treasury-Market Stress

A new OFR working paper finds that changes in aggregate hedge fund exposures are related to Treasury yield changes in economically and statistically significant ways, with managed futures and multi-strategy funds having the highest impact on Treasury prices.

FHFA Advances Equity Campaign with New Committee

Building on its equitable housing campaign, FHFA today announced an advisory committee on affordable, equitable, and sustainable housing. It will provide analysis focused on Fannie, Freddie, and the FHLBs in areas such as the barriers to and need for regulatory or policy changes to expand affordable, equitable, and sustainable housing.

Daily082322.pdf…

19 07, 2022

DAILY071922

Eliza Allen2023-01-06T14:46:12-05:00July 19th, 2022|2- Daily Briefing|

Fed Seeks to Bring Order Out of Looming LIBOR Chaos

Fighting the end-September deadline demanded in the new law (see FSM Report LIBOR7), the Federal Reserve Board today unanimously proposed the formulas by which benchmark-rate compliance will be judged in LIBOR-based legacy contracts without rate-fallback contractual clarity.

House Advances Sanctions, Cash-Access, Credit-Union, Mortgage Legislation to Uncertain Senate Fate

Chairwoman Waters (D-CA) today released an accounting of all the HFSC measures included in the massive National Defense Authorization Act (NDAA) approved by the House late last week.

House Judiciary Damns Bigtech, Skirts Financial Services

House Judiciary Committee Democrats today tried to reinvigorate antitrust legislation focused on bigtech companies with a report concluding that stronger antitrust and merger enforcement is needed for Google, Amazon, Facebook, and Apple.

CFPB Presses SPCs

The CFPB today issued a staff statement reiterating key points in February’s inter-agency statement encouraging special-purpose credit (SPC) programs. The new CFPB release reiterates the criteria for SPCs that comply with the Equal Credit Opportunity Act, noting also the benefits such programs may afford to racial equity.

OFR Details Commercial Real Estate Recovery, Emerging Risks

OFR today released a study detailing how the commercial real estate (CRE) market weathered the 2020 recession, also describing CRE’s future risks.

Daily071922.pdf…

12 07, 2022

DAILY071222

Eliza Allen2023-01-06T15:21:46-05:00July 12th, 2022|2- Daily Briefing|

FRB-NY Staff Target Consumer-Welfare Problems with Numeric Scores

A new post from Federal Reserve Bank of New York staff concurs with a recent GAO study and Senate Democratic concerns about consumer risks resulting from numeric scores for purposes other than credit reporting. GAO called for consumers to have the same transparency and error-correction rights related to scores such as those judging purchasing power or deposit activity as mandated under the FCRA for credit scores.

Treasury Reposts Crypto RFI

As Treasury for some reason today reposted its request for comment on digital assets. The release is the same as last week’s which we analyzed in today’s in-depth report (see FSM Report CRYPTO30).

OFR Report Finds CBDC Reduces Run-Risk

The Office of Financial Research today released a report concluding that – counter to many fears – a CBDC could reduce banking system run-risk. This is because a CBDC during normal times is said to lead to less maturity transformation (i.e., less intermediation), as well as the government resolving weak banks more quickly due to greater information signaling of a run evident in CBDC flows.

Daily071222.pdf…

4 02, 2022

Daily020422

Arezou Rafikian2023-04-05T13:58:56-04:00February 4th, 2022|2- Daily Briefing|

FSOC Reviews Ongoing NBFI Workstreams
In what appeared to be a meeting largely intended to comply with statutory demands for quarterly sessions, the FSOC met today to consider U.S. work on the 2021 global NBFI agenda (see Client Report NBFI). A key concern then was MMF illiquidity, an issue now addressed in a pending SEC proposal (see FSM Report MMF19); Chairman Powell and Acting Comptroller Hsu thanked the Commission for this work.

Bipartisan Bill Opens Custody Services to Small Banks
Sens. Tim Scott (R-SC) and Maggie Hassan (D-NH) have introduced S. 3562 to allow well-capitalized community banks, minority depositories, and CDFIs to accept custodial deposits without these being considered brokered under applicable FDIC rules (see FSM Report DEPOSITINSURANCE111).

Toomey Targets Chinese CBDC to Speed U.S. Crypto
Suggesting that the autocratic nature of the digital yuan should spur private-sector U.S. crypto development, Senate Banking Ranking Member Toomey (R-PA) today requested that both the Treasury and State Departments closely monitor and report on developments as China seeks an international rollout in tandem with the Olympics.

Daily022422.pdf…