Heading Your Way?
Following FSOC’s fulminations about nonbank mortgage companies, FHFA in 2023 heightened its supervisory standards mandating GSE prudential governance of eligible seller servicers. A new OIG report likes most of this a lot, but wants structural improvements in how FHFA executes its obligations and ensures Fannie and Freddie do the same. A bit of this will brush off on other counterparties, most likely MIs.
FRB Reconsiders Interchange-Fee Cuts
Bowing to critics in the banking industry and on the Board, the Federal Reserve today extended the comment period on its debit-card interchange fee proposal (see FSM report INTERCHANGE12) by a surprisingly-long ninety days to May 12. The extension is in part due to the Board’s decision to publish additional interchange fee cap data which may have persuaded the Board that the initial data analysis supporting a mandatory pricing reduction was incorrect.
OIG Finds Reserve-Bank Trades Legal, But Problematic
The Federal Reserve’s Office of the Inspector General (OIG) today released long-awaited reviews of personal trades by former Dallas and Boston Reserve Bank Presidents two years ago that raised numerous and often vociferous assertions of conflicts of interest. Indeed, Sen. Warren (D-MA) stated that she believed these epitomized a “culture of corruption” at the Fed, introducing bipartisan legislation to force considerably more transparency at the Reserve Banks.
FSB Plans Global Run-Risk Buffers
The head of the Financial Stability Board, Secretary General John Schindler, today briefed media on the global regulator’s plans to brief the G20 in October about viral-run risk and the standards needed to avert it. Mr. Schindler said little about what the FSB is likely to propose although the Basel Committee is now considering rewrites to global LCR and NSFR standards likely to be reflected in the FSB’s recommendations.
Paul Picks Up GAO Fed-Audit Support
Sen. Rand Paul (R-KY) has again honored his father’s legacy, reintroducing legislation mandating a full GAO audit of the FRB that was the hallmark of Ron Paul’s tenure as a long-time Member of the House and occasional libertarian candidate for president.
OIG Gives FHFA Passing Grade on Community Support System Improvements
Saying nothing about FHFA’s plans for Home Loan Bank community support, the FHFA OIG yesterday issued a report concluding that the agency has effectively addressed issues with its oversight of FHLB community support requirements by implementing an automated system for Community-Support Statement submission.
Partisan HUD Hearing Discusses FHA-Policy Options
Today’s HFSC hearing with HUD Secretary Fudge was the partisan event we anticipated, with Chairman McHenry (R-NC) criticizing Ms. Fudge for unresponsiveness to committee requests and obstacles in the income verification process for disabled veteran housing in his district.
HFSC’s HUD Hearing to Trod Partisan Ground
HFSC’s majority staff memo on Thursday’s hearing with HUD Secretary Fudge makes it still clearer that the session will focus on affordable housing, homelessness, and public-housing agencies in cities such as New York and Washington, D.C.
HFSC GOP Slams DOL Fiduciary Rule
At today’s HFSC Capital Markets Subcommittee hearing on the DOL’s Fiduciary Rule, Subcommittee Chairwoman Wagner (R-MO) argued that the proposal should be withdrawn, calling it a partisan effort to eliminate “junk fees.”
HFSC Takes Partisan Approach to FSOC
At today’s HFSC Digital Assets Subcommittee hearing on FSOC’s systemic-designation framework (see FSM Report SYSTEMIC98), Subcommittee Chairman Hill (R-AR) questioned FSOC’s approach to addressing systemic risk, claiming that the Council’s revised guidance is vulnerable to abuse and unintended consequences.
CFPB Small-Business Reg Survives
Senate Republicans tried today to override the President’s veto of the Congressional Review Act resolution approved by both Houses of Congress to repeal the CFPB’s small-business reporting rule.
FDIC’s OIG Presses for Non-Capital PCA Triggers, Additional Supervisory Reform
The FDIC’s OIG report on First Republic’s failure is at least as scathing as its SBNY post-mortem.
Treasury Launches Anti-Crypto Enforcement Campaign
In remarks today from Deputy Secretary Wally Adeyemo, Treasury officially launched its anti-crypto sanctions and AML campaign.
Basel Proposes Sweeping Climate-Risk Disclosure Standards
Following the FSB’s finding that most banks were failing to provide meaningful climate disclosures, the Basel Committee today issued proposed climate-risk disclosure standards.
3Q Report Highlights AOCI Risk
The FDIC’s 3Q banking-condition report includes a stunning 22.5 percent rise in the total of HTM and AFS unrealized losses, which now stand at $683.9 billion.
Senate Banking Opens Private-Credit Inquiry
Senate Banking Chair Brown (D-OH) and Sen. Reed (D-RI) today asked FRB Vice Chair Barr, Acting Comptroller Hsu, and FDIC Chair Gruenberg to look into the risks private credit poses to the banking system.
FDIC Special Assessment to Cost Still More
After abruptly cancelling its open meeting, the FDIC late yesterday released its final special-assessment rule.
GOP Tries to Force Gruenberg Out
Following HFSC Chairman McHenry’s (R-NC) decision yesterday to begin a formal investigation of FDIC Chair Gruenberg are not only a raft of Senate Republicans putting pressure on the increasingly-beleaguered long-time FDIC official, but also top Democrats.
Senate Dems, HFSC Intensify FDIC Scrutiny
Building on earlier comments, bipartisan scrutiny of the FDIC and Chairman Gruenberg grew this afternoon with two new letters from Democratic and Republican leaders in both chambers of Congress.
Chopra Wants DIF Redesign
Although the most contentious issue on the agenda for yesterday’s cancelled FDIC meeting was the special assessment, the board was also to consider the Deposit Insurance Fund’s status and progress on its designated reserve ratio (DRR).
Global Supervisors Press Direct, Indirect CSP Oversight
Global financial supervisors today highlighted cloud-service provider systemic risk, pointing to an issue also of longstanding FSOC concern.
Barr Takes Surprising AOCI Turn
In remarks today focused on Treasury-market risk, FRB Vice Chair Barr also surprisingly said that “most banks” do not need to report unrealized securities gains and losses in capital although supervisors are stepping up surveillance in this area.
McHenry Escalates FDIC Revelations to Official Probe
Following bipartisan outrage regarding the FDIC’s harassment scandal at Senate Banking and HFSC hearings this week, HFSC Chairman McHenry (R-NC) today announced that his Committee will investigate the FDIC as well as Chairman Gruenberg for alleged misconduct.
Global Regulators Set Crypto Custody Standards
IOSCO today issued final standards for cryptoassets in securities markets, codifying its prior stand that protections such as those against conflicts of interest and embedded vertical-integration risks should be managed for cryptoassets in the same manner regulators and supervisors address them in fiat-asset transactions.
McHenry, Barr Blast Basel Adherence in End-Game Regs
Although today’s hearing challenging regulatory actions aligned with global regulators was postponed, HFSC Chairman McHenry (R-NC) and Financial Institutions Subcommittee Chairman Barr (R-KY) today kept up the pressure, releasing a letter to the GAO commissioning a study of the end-game rules.
New CRA Reg Sets Controversial, Complex Standards
Leading the way to certain inter-agency approval, the Federal Reserve today voted 6-1 to approve a final version of their 2022 controversial proposal (see FSM Report CRA32).
FDIC OIG: Supervisors Missed So Much, Acted So Slowly re SBNY
The FDIC’s OIG report today on SBNY’s failure follows much of the line the Fed’s OIG took when it came on the material-loss review of SVB’s collapse.
House Republicans Pressure Biden on $6 Billion Iran Ransom
Although HFSC continues to cancel all its hearings as the speakership battle continues, its Oversight Subcommittee today optimistically released a memo outlining goals for Thursday’s Iran-sanctions hearing.
Treasury Presses CSPs to Negotiate With Banks
Treasury Assistant Secretary for Financial Institutions Graham Steele today highlighted Treasury’s work with cloud service providers (CSPs) to improve transparency and security.
Divided FDIC Advances CRA Rewrite, Climate-Risk Principles
As anticipated, the FDIC on a 3-2 vote joined the Fed in approving a 1400+ page final CRA rule.
OIG Blasts FDIC’s Crypto-Policy Delay
Late yesterday, the FDIC’s Office of Inspector General (OIG) issued a report critical of the FDIC’s supervisory crypto policy.
Fed May Signal Possible Compromise as GOP Barr Demands Capital Answers
Amid press reports that Chair Powell has implicitly promised capital-rule compromise, HFSC Financial Institutions Chair Barr (R-KY) released a letter today pressing Vice Chair Barr still harder on the cost-benefit analytical (CBA) and cumulative-impact issues raised at the September hearing at which Karen Petrou testified.
Fed Data Show Increases in Household Financial Resilience, Profound Home-Affordability Gap
The Federal Reserve yesterday released its triennial Survey of Consumer Finances (SCF). As always, we here highlight data with financial-policy implications; Petrou blogs and other releases will update economic-equality indicators.
BIS Head Calls for Review of Large Bank Supervision
BIS General Manager Agustin Carstens today said that the mid-March failures show the need for nations to review how they supervise larger banks, specifically highlighting liquidity risk and setting frameworks for emergency liquidity assistance.
OCC Analysis Shows Broad IRR Resilience With Startling Risk Pockets
Showing some pockets of severe risk but overall resilience, the OCC today released a statistical analysis of interest rate risk based on projected changes in twelve-month net interest income as well as the economic value of equity in parallel interest rate shock scenarios ranging from -200 basis points to +400 bps.
CFPB Thinks Big on Open Banking
As anticipated, the CFPB today advanced from a review of consumer data rights (see FSM Report…
FRB FAQs Open a Small, But Significant Capital Window
In what Reuters takes as a sign of hope that the end-game rules may not be as crushing as banks fear, the FRB has issued a new FAQ related to credit-linked notes and SPVs.
Bowman Turns to Specific Supervisory Reforms
In remarks today, FRB Governor Bowman expanded on her prior comments about Fed supervisory lapses, but made it clear that she also opposes a “heavy-handed” supervisory approach that relies primarily on call report data, instead calling for a new approach to CAMELS and regular engagement with financial institutions to express areas of concern or to better understand a bank’s strategic direction.
Fed OIG re Silvergate: Far More Scathing re Supervision, Need for New Guidance
The OIG report today from the Fed regarding supervisory lapses at Silvergate is considerably less expansive than the prior report on SVB because the parent company remains open despite the IDI’s voluntary liquidation and relevant data are thus deemed confidential.
Barr Presses Emergency-Window Readiness
FRB Vice Chair Barr’s comments today on monetary policy and financial stability provide a detailed rationale for addressing the linkages between these two arms of the Fed’s mandate without any specific steps for doing so.