#Quarles – Federal Financial Analytics

10 07, 2023

DAILY071023

Eliza Allen2023-07-10T16:43:24-04:00July 10th, 2023|2- Daily Briefing|

HFSC Lays Out Its ESG Priorities

The majority staff memo ahead of Wednesday’s HFSC hearing on ESG follows the outline anticipated last week and that laid out in the GOP agenda for ESG-related action (see Client Report ESG4).

OCC Concurs On Capital, Tries For The Merger Middle

Acting Comptroller Hsu today confirmed our assessment of Vice Chair Barr’s comments earlier today (see Client Report CAPITAL228) that the three banking agencies are aligned on the new capital construct to be shortly released for public comment.

Barr, Foster Demand Delay to Capital Rewrite

Anticipating Vice Chair Barr’s remarks this morning detailing near-term capital policy changes (see Client Report CAPITAL228), HFSC Financial Institutions Subcommittee Chair Barr (R-KY) and Ranking Member Foster (D-IL) sent a letter late Friday demanding that he appear before the Subcommittee to present the conclusions of his capital review and upcoming Basel III implementation plans prior to public release, asking also for details and likely outcomes for industry consolidation.

House Republicans Keep Spotlight On FRB-SF

Continuing the GOP’s attack on the San Francisco Fed’s supervision of SVB in the wake of what many believe are “woke” priorities, House Oversight Committee Chairman Comer (R-KY) was joined today by Financial Services Subcommittee Chairwoman McClain (R-MI) in sending a letter to FRB Chairman Powell taking serious issue with the Federal Reserve Bank of San Francisco and the Fed for what they describe as SVB-related transparency and communication failures.

BIS Survey: Most Central Banks Considering CBDCs

The BIS …

16 05, 2023

DAILY051623

Eliza Allen2023-05-16T17:44:43-04:00May 16th, 2023|2- Daily Briefing|

Hsu Presses Reg Harmonization, Resolution Reform, Merger-Policy Rewrite

We now add our assessment of Acting Comptroller’s Hsu’s testimony to our analyses of those from Messrs. Barr and Gruenberg ahead of HFSC’s hearing later this morning.

Yellen Says White House Supports Community-Bank Exemptions

Speaking today to the ICBA, Secretary Yellen today joined the parade of policy-makers affirming the national importance of community banks.

JEC GOP Counter FRB on SVB Causality

JEC Republican staff today released a memo finding that tailored liquidity rules did not contribute to SVB’s failure, a contrast to the FRB’s SVB report (see Client Report REFORM221).

LLPAs Set for GOP Frying Pan

The majority-staff memo for tomorrow’s Housing Subcommittee hearing makes it clear that, as anticipated, the sole topic will be FHFA’s controversial LLPAs and related GSE pricing.

Senate Banking: Tough Grilling For Failed-Bank CEOs, Growing Consensus For Clawback Bill/Tough Rules

As predicted, today’s Senate Banking hearing with the CEOs of SVB and SBNY was a feisty session in which Democrats built their case for executive clawback legislation and the failed bank executives defended management while repeatedly placing blame on what they called an “unprecedented series of events.”

Daily051623.pdf…

16 03, 2023

DAILY031623

Eliza Allen2023-03-16T17:11:59-04:00March 16th, 2023|2- Daily Briefing|

FedFin Assessment: One CS Consequence – LISCC Reinstatement For All Large Foreign GSIBs

In the wake of CS’s distress, we draw client attention to a 2021 exchange sure to factor heavily in the political response.

Brown Presses For In-Depth SVB, Signature Review

As anticipated (see Client Report RESOLVE49), Senate Banking Chairman Brown (D-OH) today called on all the banking agencies and Treasury quickly to undertake a review of SVB and Signatures failures.

Warren Heaps Still More Blame On Powell

In another letter today, Sen. Warren (D-MA) once again lambasted Chair Powell for what she claimed was his direct contribution to the collapse of Signature Bank and SVB as well as a “a culture of corruption” at the Fed.

Senate GOP Blames Fed, California re SVB

Senate Banking Republicans today tweeted a series of comments citing articles going back to last year identifying SVB risk and suggesting strongly that the Fed and California state supervisors are at fault for missing clear warning signs.

Bipartisan Senators Push Better Beneficial-Ownership Data Access

Senate Budget Committee Chairman Whitehouse (D-RI) was joined by Sens. Wyden (D-OR), Warren (D-MA), Grassley (R-IA), and Rubio (R-FL) late yesterday in submitting a comment letter to FinCEN taking serious issue with its proposed implementation of the Corporate Transparency Act (CTA) (see FSM Report AML135).

Senate Finance Hearing Deepens SVB Divide

At a heated Senate Finance hearing with Treasury Secretary Yellen, Members were quick to deviate from the hearing’s budget-focused agenda to address who should bear the …

12 01, 2022

FedFin Forecast: Prudential Regulatory Framework Set for Structural Change Largely Built on Current Standards

Arezou Rafikian2023-04-24T15:49:23-04:00January 12th, 2022|The Vault|

As promised, FedFin begins our 2022 forecasts with this in-depth report on bank regulation. In general, we conclude that the context of decisions in 2022 and beyond will shift from a focus on tailoring efficiencies and burden relief to one emphasizing risk mitigation, fairness, equity, and — for the very biggest banks — a smaller systemic footprint. This report looks at the impact of pending personnel decisions as well as the outlook for climate-risk, new capital rules, FBO standards, and other key issues….

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

12 01, 2022

REFORM211

Arezou Rafikian2023-04-24T15:49:07-04:00January 12th, 2022|5- Client Report|

FedFin Forecast: Prudential Regulatory Framework Set for Structural Change Largely Built on Current Standards

As promised, FedFin begins our 2022 forecasts with this in-depth report on bank regulation. In general, we conclude that the context of decisions in 2022 and beyond will shift from a focus on tailoring efficiencies and burden relief to one emphasizing risk mitigation, fairness, equity, and — for the very biggest banks — a smaller systemic footprint. This report looks at the impact of pending personnel decisions as well as the outlook for climate-risk, new capital rules, FBO standards, and other key issues. The only rule we think might get a near-term substantive rewrite is the stress capital buffer (see FSM Report CAPITAL225) via tougher CCAR standards and a reversal of the prior decision to end qualitative objections. The odds of a leverage rewrite are smaller, but not negligible.

REFORM211.pdf…

7 12, 2021

COVEREDFUNDS3

Arezou Rafikian2023-05-23T13:23:31-04:00December 7th, 2021|1- Financial Services Management|

Venture-Capital Investment Restriction

The OCC is “clarifying,” but also in many respects rescinding one aspect of controversial 2020 rules expanding the “covered funds” under which banks may make equity investments as provided by the Volcker Rule. Although the bulletin doing so is very brief, it is also decisive: regardless of the extent to which a venture-capital (VC) investment is permitted under the covered-fund rule, it is barred for national banks and other entities under OCC jurisdiction unless it fits into other, narrower authorizing standards.

COVEREDFUNDS3.pdf…

3 12, 2021

AL120621

Arezou Rafikian2023-05-23T13:45:10-04:00December 3rd, 2021|3- This Week|

CRYPTO CRASH-COURSE

After a series of seven crypto-focused hearings, HFSC will hold a high-profile session Wednesday covering essentially any issue in the digital asset arena Members target. We thus expect a wide-ranging session that will guide our assessment as to whether any legislation in 2022 is planned on the House side. As previously noted, Senate Banking Chairman Brown (D-OH) has also launched an inquiry into stablecoin trading-platform stability and conflicts. Chairwoman Waters’ (D-CA) focus is more likely aimed at consumer protection and CFPB’s planned initiative in this area. We expect Democrats also to advance recommendations in the PWG’s recent stablecoin report (see Client Report CRYPTO21), while Republicans will push back on grounds also cited by FRB Gov. Waller and former Gov. Quarles. We also expect Republicans to refute the SEC’s view that cryptoassets are securities (see Client Report INVESTOR19).

AL120621.pdf…

2 12, 2021

Daily120221

Arezou Rafikian2023-05-23T13:56:33-04:00December 2nd, 2021|2- Daily Briefing|

Fed Staff Assess Big-Bank Correlated Risk, Systemic Hazard
A new research note from the Federal Reserve looks at a critical question: how correlated have bank exposures become in the wake of stress testing and other rules many analysts, ourselves included, anticipated. To the extent exposures are correlated, systemic risk is likely to increase, especially if correlations are tightest at the biggest banks and/or correlated exposures are risky.

Quarles Defines Boundaries of Fed Emergency, Regulatory, Supervisory Policy and Politics
In parting remarks today, FRB Gov. Quarles not only defended his record, but also took a very different stand on future emergency facilities than another departing Fed official, Vice Chair Clarida. Unlike Mr. Clarida’s stout defense of 2008 and 2020 actions, Mr. Quarles argues that the credit facilities established in concert with those for emergency liquidity are problematic both in terms of central-bank mission and facility execution.

Daily12021.pdf…

18 11, 2021

Daily111821

Arezou Rafikian2023-05-26T10:32:35-04:00November 18th, 2021|2- Daily Briefing|

FSB Targets Crypto, TBTF, Systemic Leverage

At its final meeting of 2021 and the last one over which FRB Gov. Quarles presides as chair, the FSB today highlighted crypto-assets’ systemic risk and indicated that it will send the G20 an updated assessment of this sector next February.

Daily111821.pdf…

28 10, 2021

Daily102821

Arezou Rafikian2023-06-05T10:44:46-04:00October 28th, 2021|2- Daily Briefing|

Senate Democrats, Even Republicans Press Bigtech Consumer Protection
Senate Banking’s hearing with CFPB Director Chopra today largely rehashed the issues raised yesterday in HFSC (see Client Report CONSUMER37).

Buffers, NBFI Resilience, GSIB Resolution Remain Top FSB Priorities
The FSB’s final report today on pandemic lessons largely reiterates what it has been saying since the pandemic started.

Daily102821.pdf…