#Omarova – Page 2 – Federal Financial Analytics

4 10, 2021

CBDC8

Arezou Rafikian2023-07-05T15:49:42-04:00October 4th, 2021|5- Client Report|

Central Banks “Envision the CBDC Ecosystem,” Like It a Lot

As we noted last week, the BIS and seven major central banks have advanced global CBDC policy with three new reports evaluating key design features. None of these central banks, including the Fed, has agreed to CBDC, but each has accepted conclusions which appear bound to propel most if not all of them soon to active CBDC development. This FedFin analysis thus assesses each of the BIS reports, all of which focus on retail-facing CBDC, which faces the most challenging operational, policy, and social-welfare questions. All of the reports not only assess critical policy questions ranging from consumer impact to systemic risk, but also reach conclusions that often reject suggestions that CBDC is unnecessary in friction-free banking systems or poses undue intermediation, bank-profitability, illiquidity, or financial-stability risk. Where problems are identified, the reports often proffer solutions to them, noting that risk analysis must not only consider the risks posed by CBDC, but also those that would result without it given the certain evolution of private digital currency.

CBDC8.pdf…

4 10, 2021

Karen Petrou: How to Ensure Equitable Fed Intervention in the Crisis Next Time

Arezou Rafikian2023-07-05T15:57:30-04:00October 4th, 2021|The Vault|

With her unerring instinct for the jugular on which media thrive, Sen. Warren on Tuesday called Jay Powell a “dangerous man.” This promptly sent many into still more feverish speculation about the Fed’s next chairman, blotting out coverage of an even more consequential development in the House: Democratic plans to rewrite the Fed’s powers in the next financial crisis. Last week, I pointed to the political price for Mr. Powell’s renomination: the Omarova appointment. A structural one with even more lasting impact is the rewrite of the Fed’s emergency-liquidity powers to, as Democrats demand, end backstops for “Wall Street” in favor of Fed facilities for everyone else.

Although little noticed, HFSC Chairwoman Waters on Thursday said for the second time in as many weeks that “Our committee is committed to ideas to ensure that facilities like these [the Fed’s in 2020] can more directly support workers and small businesses as well as state and local governments the next time there is a crisis.” Holding fire on Mr. Powell, Senate Banking Chairman Brown also targeted Fed support for Wall Street in his opening statement on Tuesday. This follows an inconclusive HFSC hearing a week or so ago on just what these new facilities might look like but make it clear that an array of reforms is under active consideration.

Importantly, these demands for people-focused facilities aren’t an isolated case of progressive pique. After the 2008 crisis, there was much bipartisan ire over whom the Fed helped how. This led to a …

1 10, 2021

AL100421

Arezou Rafikian2023-07-24T15:29:39-04:00October 1st, 2021|3- This Week|

Back to Work

Although Senate Banking (see Client Report REFORM208) and HFSC’s (see Client Report REFORM209) hearings this week with Secretary Yellen and Chair Powell ostensibly focused on the CARES Act, in reality they covered the waterfront. In between them, HFSC’s Consumer Protection Subcommittee considered risks from fintech and much more (see Client Report MERGER7). This session made clear that a bipartisan consensus is forming around the need to bring fintech inside the regulatory perimeter when not partnering with a bank. At the least, this consensus powers up the banking agencies’ efforts to use their third-party vendor powers to impose consumer-protection and safety-and soundness rules on fintechs linked to banks (see FSM Report VENDOR9). More importantly, they signal initial Congressional alignments that may well lead to substantive legislation in 2022 and, even if they don’t, will surely lead to a new regulatory framework

AL100421.pdf…

27 09, 2021

M092721

Arezou Rafikian2023-08-03T10:18:42-04:00September 27th, 2021|6- Client Memo|

The Powell Political Calculus

Although the quadrennial kerfuffle over appointment of the Federal Reserve chair gets a good deal of public attention, I cannot recall a time when anyone outside banking’s inner circles cared much about who might be the next Comptroller or Vice Chair of Supervision. And, although they’ve garnered more attention of late in the diversity context, Federal Reserve presidencies were of even less public interest. Not only are all of these appointments now proving remarkably consequential, but they also pose a particularly thorny political equation for President Biden.

M092721.pdf…

27 09, 2021

Karen Petrou: The Powell Political Calculus

Arezou Rafikian2023-08-03T10:18:53-04:00September 27th, 2021|The Vault|

Although the quadrennial kerfuffle over appointment of the Federal Reserve chair gets a good deal of public attention, I cannot recall a time when anyone outside banking’s inner circles cared much about who might be the next Comptroller or Vice Chair of Supervision. And, although they’ve garnered more attention of late in the diversity context, Federal Reserve presidencies were of even less public interest. Not only are all of these appointments now proving remarkably consequential, but they also pose a particularly thorny political equation for President Biden.

While all of these finance appointments are significant, that for Jay Powell as Fed chairman is of course the most important of them all. Although key lips are publicly zipped, Treasury Secretary Yellen would like to see Mr. Powell’s reappointment as would a host of other high-impact Democratic influencers. The plethora of coverage suggesting global financial markets will collapse if Mr. Powell is deposed peddle patent nonsense, but nonetheless signify the stakes some assign to his cause.

Despite this formidable support, the Powell reappointment was still proving difficult even before the Reserve Bank stock-trading disclosures. As I noted at the time, it’s a lot easier to understand individual financial bets than monetary-policy complexities. It’s thus unsurprising that Mr. Powell’s latest concessions are proving far from satisfactory to an array of high-impact Democratic influencers very emphatically not to be found on Wall Street. One of Mr. Powell’s strengths in the renomination battle has been divisions among Democratic progressives, making this resonant scandal particularly …

23 09, 2021

Daily092321

Arezou Rafikian2023-08-03T11:21:33-04:00September 23rd, 2021|2- Daily Briefing|

Democrats, GOP Agree on Need for 13(3) Change, But not on How
Today’s HFSC Subcommittee hearing largely examined the Fed’s 13(3) COVID facilities, generally side-stepping the draft bill posted along with the staff memorandum establishing a National Investment Authority (NIA).

CFPB Highlights Disparities in Credit Access
The CFPB today issued a study of consumer complaints that went well beyond its findings also to highlight structural differences in credit access and the U.S. racial wealth gap.

Omarova Appointment Faces Headwinds
Following a flurry of rumors this morning, the President today formally nominated Cornell professor Saule Omarova as the next Comptroller of the Currency.

Daily092321.pdf…