#Powell – Page 3 – Federal Financial Analytics

20 10, 2023

DAILY102023

Eliza Allen2023-10-20T17:21:03-04:00October 20th, 2023|2- Daily Briefing|

Senate AI Measure Tackles Financial Services

The text of the key Senate AI bill, S. 3050, has now become available.

Banking Agencies Offer Olive Branch

Reflecting strong pressure and recent FRB Chair Powell statements, the FRB today announced the launch of an open data collection assessing the rule’s effects – an issue on which many bank comment letters and Congressional Republicans have been scathing.

GOP Renew Funding Campaign vs. CFPB via Fed Losses

HFSC Vice Chairman Hill (R-AR) yesterday reintroduced legislation pressuring both the Fed and CFPB by prohibiting the Fed from transferring its earnings to the Bureau if the Fed incurs an operating loss.

FinCEN Highlights Hamas Sanction Red Flags

Reflecting ongoing Congressional pressure and recent Treasury sanctions, FinCEN today issued an alert reminding financial institutions to remain vigilant for suspicious activity related to Hamas funding sources.

Fed Stays Stoic on Financial-Stability Outlook

The FRB today released is semiannual financial-stability report differing little from the relatively-sanguine outlook in its May report (see Client Report SYSTEMIC94).

Daily102023.pdf…

20 10, 2023

Al102323

Eliza Allen2023-11-13T15:46:12-05:00October 20th, 2023|3- This Week|

Relentless Pressure and Resulting Concession

On Friday, the Federal Reserve offered an olive branch – small and partial, but still a branch – to Republican critics of pending standards and the big banks powering up all this pain. As we noted, the comment deadlines for the capital and GSIB-surcharge rules have been extended to January 16, a move also designed to thwart litigation based on procedural considerations. The Fed has also announced a new data-gathering exercise in which stakeholders can send in “data” but due to which much more input will also surely flow. This exercise also answers procedural critics and protects the bill, with the deadline here also January 16.

Al102323.pdf…

19 10, 2023

DAILY101923

Eliza Allen2023-10-19T16:30:42-04:00October 19th, 2023|2- Daily Briefing|

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…

18 09, 2023

DAILY091823

Eliza Allen2023-09-18T16:46:46-04:00September 18th, 2023|2- Daily Briefing|

Dems Slam Fed Climate Scenarios

Sens. Markey (D-MA), Warren (D-MA), Sanders (I-VT) and eight additional Democratic Senators and House Members sent a letter to Chair Powell today demanding that the Fed ensures that the financial institutions it oversees properly address the threat of climate change. Claiming that the Fed’s climate pilot scenarios are not sufficiently rigorous, the letter demands that the Fed require banks to submit and execute plans to align their activities with climate targets, such as reducing financed emissions.

Top Treasury Official Sounds Big-Tech Payments Alarm

Treasury Assistant Secretary for Financial Institutions Graham Steele Friday warned that Big-Tech firms’ entry into financial services could result in increased market concentration and predatory pricing, highlighting their ability to leverage existing commercial relationships as well as network effects. Mr. Steele also named consumer-data rights and junk fees as top priorities, praising the CFPB’s actions on personal data (see FSM Report DATA3) and credit-card late fees (see FSM Report CREDITCARD36).

Daily091823.pdf…

30 08, 2023

Daily083023

Arezou Rafikian2023-08-31T07:41:42-04:00August 30th, 2023|2- Daily Briefing|

FRB Chicago Study Finds Nonbanks Act as Global Shock Absorbers

A new empirical FRB Chicago study finds that nonbanks act as global shock absorbers during times of stress because tightening US monetary policy is associated with increased nonbank syndicated dollar lending compared to banks. This of course frustrates monetary-policy transmission in the U.S., but the paper focuses on EMEs where the principal risk is macroeconomic and financial shock.

Comment Period Reopened on Controversial Custody Proposal

The SEC today reopened the comment period on its controversial investment-advisor asset custody NPR. As noted (see FSM Report CUSTODY5), this thorough rewrite would redefine qualified custodians to exclude most crypto firms, as well as foreign firms and other entities the Commission does not believe ensures sufficient safeguards.

FSB Seeks Comment On Securitization Reforms

The FSB today announced that it will evaluate the impact of G20 securitization reforms (see FSM Report ABS37) on its financial-stability objectives as well as on securitization markets. The evaluation will focus on regulatory capital regulation governing securitization exposures and RMBS and CDO/CLO market segments, although the FSB will also consider including other segments.

Warren Blasts Powell, Alleging Capital-Reg Delay, Concessions

Expanding on her longstanding criticism of Chair Powell, Sen. Warren (D-MA) sent him a letter today chastising him for what she views as undue deference to big-bank lobbying and demanding that he press for the rapid completion of tough new capital rules.

Daily083023.pdf…

28 08, 2023

Daily082823

Arezou Rafikian2023-08-31T10:59:24-04:00August 28th, 2023|2- Daily Briefing|

HFSC GOP Strongly Protests New Fed Crypto-Supervision Policy

HFSC Chairman McHenry (R-NC) and Reps. Hill (R-AR) and Huizenga (R-MI) sent a letter to Chairman Powell today alleging that the Fed’s recent supervisory letters regarding novel activities (see FSM Report FINTECH32) and tokenization (see FSM Report CRYPTO45) undermine the Committee’s bipartisan stablecoin bill effort.

Daily082823.pdf…

28 07, 2023

Al073123

Eliza Allen2023-07-28T17:05:25-04:00July 28th, 2023|3- This Week|

Few Surprises, Much Consternation

There is little in the new capital framework we did not forecast for new capital rules after the March bank failures (see Client Report REFORM219) and what we missed was later presaged in Vice Chair Barr’s recent speech (see Client Report CAPITAL228). However, as we’ve also said many times, many devils lurk in regulatory-capital details. We know the agencies’ capital-impact bottom line because the FDIC and Fed each outlined this at contentious meetings approving the proposal for public comment. We also know that Republicans really don’t like the rule even if they haven’t read it and that key decision-makers – most notably Chair Powell – are hedging their affirmative votes for releasing the proposal with careful caveats of what they want to see in a final rule. Thus, careful analytics are essential to effective assessments of winners and losers as a result of this complex package, especially if one looks – as FedFin will – at big-picture implications – i.e., those for the economy, financial system, and economic equality – as well as at sector- and institution-specific provisions not just in key asset classes based on specific risk weightings.

Al073123.pdf…

27 07, 2023

DAILY072723

Eliza Allen2023-07-27T17:47:02-04:00July 27th, 2023|2- Daily Briefing|

FSB Tries to Calm CoCo Confusion

Doubtless responding to the CoCo chaos when Credit Suisse failed, the FSB today issued a report laying out how cross-border crisis-management groups are to handle unallocated TLAC (UTLAC) such as the “alternative Tier 1” bonds popular in the EU.

FDIC 3-2 Vote Presages Knock-Down Basel Battle

As anticipated, the FDIC today voted 3-2 to issue a sweeping rewrite of U.S. regulatory capital requirements.

Divided, Cautious Fed Advances End-Game, GSIB Rewrites

As anticipated, Gov. Bowman today voted against the new capital framework, as did Gov. Waller; as a result, the vote was 4-2.

Stablecoin Bill Advances, Compromises to Come

At a fiery HFSC markup today, Chairman McHenry (R-NC) announced that bipartisan negotiations had broken down largely due to the White House, choosing to proceed to a final package as he remains open to amendment before floor action.

House Republicans Skewer Basel Rules

Hill comment so far in response to the new capital rules is sparse.

Daily072723.pdf…

26 07, 2023

DAILY072623

Eliza Allen2023-07-26T16:37:20-04:00July 26th, 2023|2- Daily Briefing|

Senate Democrats Stand Firm On “Junk Fee” Campaign

Today’s lightly-attended Senate Banking Financial Institutions Subcommittee hearing on banking and consumer fees showcased broad Democratic alignment with the Administration’s “junk fees” campaign and persistent Republican aversion to this effort as well as to the CFPB.

CFPB Flags UDAAP, Other Problematic Practices for Enforcement

The CFPB’s latest supervisory report not only details recent actions and priorities, but also expressly stipulates that certain activities identified in the course of supervision that have yet to be addressed by formal agency action are UDAAP.

SEC Targets AI Advice

Acting as anticipated following Gary Gensler’s fiery talk last week about AI risk, the SEC today voted 3-2 to propose new rules curtailing what it believes to be broker dealer and investment-adviser conflicts of interest due to predictive analytics.

Crypto-Jurisdiction Bill to Advance; Stablecoin Measure Likely to do so Tomorrow

Chairman McHenry (R-NC) and Ranking Member Waters (D-CA) announced at today’s HFSC markup that bipartisan negotiations on the committee’s stablecoin bill continue and despite the absence of any breakthrough.

DOJ Officials Seeks Merger Answers

In remarks today, Policy Director David Lawrence of DOJ’s Antitrust Division went beyond new, draft DOJ/FTC merger guidelines (see FSM Report MERGER12) to lay out questions on which the agencies particularly seek answers.

Powell Stresses Bank Discount Window Readiness

FRB Chairman Powell’s press conference today focused almost entirely on monetary policy, but the chair agreed that the discount window performed badly during the recent crisis and that banks need to …

25 07, 2023

DAILY072523

Eliza Allen2023-07-25T17:18:26-04:00July 25th, 2023|2- Daily Briefing|

Key Democrat Takes On Fed Rate Hikes

Ahead of today’s FOMC meeting, Joint Economic Committee Chair Heinrich (D-NV) yesterday sent a letter to Fed Chair Powell cautioning against additional policy tightening.

Second HFSC Markup Targets Stablecoins, Regulatory Restrictions, ESG

Thursday’s HFSC has now added another day to its mark-up calendar this week, moving the stablecoin and ESG bills to Thursday doubtless in order to avoid an endurance contest before the August recess and still meet Chairman McHenry’s (R-NC) commitments.

Senate GOP Tries to Block Capital Rewrite

Just days before the banking agencies take up new capital rules, Senate Banking Ranking Member Scott (R-SC) and ten other committee Republicans sent a letter to Chairman Powell demanding greater transparency and prior consultation.

Waters Presses FHFA for FHLB Reform

Following FHFA listening sessions and in anticipation of a final report this September on the FHLB system, HFSC Ranking Member Waters (D-CA) late yesterday sent a letter to FHFA Director Thompson laying out a series of recommendations to significantly reform the system.

Ag Committees Slam SEC Custody Proposal

In a letter to SEC Chairman Gensler released today, Senate Agriculture Committee Ranking Member Boozman (R-AR) and Chairwoman Stabenow (D-MI) along with House Ag. Committee Chairman Thompson (R-PA) and Ranking Member Scott (D-GA) raised strong objections to what they called serious flaws in the SEC’s proposed custody rule (see FSM Report CUSTODY5).

Warren, Scott Renew Fed-Ethics Campaign

Continuing their bipartisan campaign against the Fed, Sens. Warren (D-MA) and Scott (R-FL) yesterday sent a letter…