#Reserve Banks

21 12, 2023


2023-12-21T16:29:00-05:00December 21st, 2023|2- Daily Briefing|

OFR Nomination Scuttled

Although Sen. Jack Reed (D-RI) recently called for his confirmation, Ron Borzekowski’s appointment as Director of the Office of Financial Research was scuttled yesterday in the Senate.

Treasury Payment-System Policy Addresses Resilience, Reserve-Currency Status, Inter-Operability

Providing an update on Treasury’s working group on the future of money and payments, Deputy Assistant Secretary for International Financial Markets Nicholas Tabor yesterday indicated that the working group is considering the implications of new payment technologies for smooth international financial system functioning, U.S. national security, privacy, and financial inclusion.

Reserve Banks Promise a Peek

Tidying up, the Federal Reserve Bank of New York today released a new “Transparency and Accountability” policy on behalf of all of the System’s Banks.

Regulators Clarify Bank BOI Expectations

FinCEN was today joined by the FDIC, FRB, OCC, NCUA, and State Bank and Credit Union Regulators in an interagency statement clarifying that FinCEN’s beneficial ownership information Access Rule does not create new regulatory requirements or supervisory expectations for banks to access BOI from the beneficial ownership IT System.


3 04, 2023


2023-04-03T11:07:12-04:00April 3rd, 2023|5- Client Report|

FedFin Forecast: Probable Changes to Bank Supervision, Regulation, Law

With Thursday’s White House announcement, we know that the Administration will do its best to support Fed and FDIC efforts to color recent events as a failure of Republican-led rulemaking, not also one of agency supervisory acumen, speed, and even competence.  So far, key Democrats are instead pursuing a two-track strategy:  complaining mightily about Trump-era rules but also joining with Republicans to cite an array of supervisory lapses they want quickly remediated by new standards, new rules, and – if need be – also by new law.  Indeed, on Friday, Democrats made it clear that they want considerably more from the Administration than the fixes on which the agencies prefer to focus.  Given how much is in motion and how much could advance, this report details FedFin’s forecast for near-term action in each of these arenas, focusing on matters with broad industry impact rather than specific SVB/Signature- enforcement issues.  We thus provide forecast for immediate supervisory actions, those Congress will demand, new rules (tailoring and beyond), and the few legislative initiatives we believe have a reasonable chance of passage and Presidential approval.


24 03, 2023


2023-03-24T17:13:54-04:00March 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 …

24 03, 2022


2023-04-03T12:54:18-04:00March 24th, 2022|2- Daily Briefing|

Waller Adds Residential Real Estate to Monetary Policy Criteria

In remarks today, FRB Gov. Waller addressed the impact of what he calls the “red-hot” housing market on monetary and fiscal policy.  Noting that nonbank servicers were able to survive the 2020 crisis due to the refi boom’s liquidity benefit and a Ginnie facility, Mr. Waller reiterates ongoing policy concern about nonbank-servicer resilience without detailing any preferred policy actions.

HFSC Expands Diversity Data Demands to Large Insurers

Chairwoman Waters and Diversity Subcommittee Chairwoman Beatty expanded the committee’s diversity efforts today to include insurers via a letter sent to the largest insurance companies.

IOSCO Decries DeFi, US Regulatory Intervention Likely

Going beyond the general DeFi concerns outlined in a February FSB report, IOSCO today released a detailed report arguing that most DeFi products are directly akin to regulated investment, lending, and clearing products, posing not only the risks otherwise captured within the prudential perimeter, but also numerous additional risks presented by the manner in which DeFi generally operates.

HFSC Wants Names re Russian Business Exposure, Sanctions Compliance

HFSC Chairwoman Waters sent a letter today to financial and business trade associations requesting detailed information on each sector’s efforts to divest from Russia.  The letter applauds current efforts, but states that HFSC must nonetheless seek additional details about exit strategies and sanctions compliance, along with the names of companies continuing to do business within the Russian Federation or with Russian-based firms.


9 03, 2022

FedFin Analysis: Payment-System Access

2023-04-04T10:54:03-04:00March 9th, 2022|The Vault|

Following considerable controversy surrounding how Federal Reserve Banks grant master accounts, the FRB has proposed a somewhat more explicit set of guidelines than provided in its initial notice seeking views on expanding payment-system access. The first proposal laid out the Fed’s policy goals for granting access but said only that insured depositories would get the most straightforward review and other institutions would be subject to more detailed scrutiny. The Fed has now reissued that proposal and differentiated applicants into three classes, getting the lightest to the strictest review…..

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

3 03, 2022


2023-04-04T12:53:47-04:00March 3rd, 2022|2- Daily Briefing|

LIBOR Transition Rescue Advances

Advancing a long-delayed effort to clarify the LIBOR transition, a bipartisan group of Senate Banking Members today introduced legislation dictating replacement rates for legacy contracts.  The language is a companion to a revised version of House-introduced standards (see Client Report LIBOR5)  that among other things reflects Sen. Toomey’s (R-PA) concerns that the bill be narrowly tailored to a defined class of legacy contracts rather than, as some feared, stipulating new benchmark rates across the financial market for new contracts.  The bill is supported by virtually all financial-industry advocacy organizations and should now advance quickly to the Senate floor since the Senate Banking Committee has already held hearings on this issue.  At today’s hearing (see FedFin’s report), Chairman Powell strongly endorsed the bill and reiterated the need for rapid action.

Powell Defends Fed’s Institutional Legitimacy, Continuing Function as Nominations Stall

Today’s Senate Banking hearing with Chairman Powell featured continuing partisan wrangling over stalled Fed nominations showed no sign of resolution after Republicans essentially forced Mr. Powell to concur that his powers to act pro tem ensured continuing central-bank function.  Ranking Member Toomey (R-PA) also renewed his campaign against Reserve Banks, arguing that they are anachronistic and have strayed from core mandate concerns.


1 03, 2022


2023-04-04T13:02:03-04:00March 1st, 2022|2- Daily Briefing|

HFSC Readies for Powell Testimony

Apart from a macroeconomic overview, much of the HFSC staff memo ahead of Chairman Powell’s appearance tomorrow details recent Fed actions to enhance diversity, and Fed-official trading problems and resulting policies.

Gruenberg Worries re Risks to Come

The FDIC released its usual quarterly report on IDI conditions, showing considerable strength in the fourth quarter.  Still, Acting Chairman Gruenberg’s remarks expressed considerable caution about industry resilience under growing macroeconomic and geopolitical stress.

Reach of U.S. Sanctions

Building on our report last week on new sanctions (see FSM Report SANCTION16) and Karen Petrou’s memo, we here address a frequently-asked questions as the Ukraine conflict rages and sanctions increase: the extent to which foreign banks without a U.S. presence must adhere to U.S. sanctions.

FRB Tries Anew re Payment-System Access

Responding indirectly but importantly to the controversies swirling around Sarah Bloom Raskin (see Client Report FEDERALRESERVE69), the FRB today released a supplement to its earlier proposal about the extent to which novel entities are granted Reserve Bank master accounts (see FSM Report PAYMENT17).

Congress Poised to Tighten Russia’s Financial Noose

Signaling that the U.S. Congress will add new sanctions to pending Ukraine relief, Senate Finance Chairman Ron Wyden (D-OR) today called for an array of financial actions to circumvent Russian finance.


10 02, 2022


2023-04-05T09:57:51-04:00February 10th, 2022|2- Daily Briefing|

KC Fed: 2020 Capital-Distribution Constraints Worked
Touching on a subject of considerable sensitivity as well as a policy issue subject to change under a new Fed, the Kansas City Federal Reserve Bank has released a study arguing that 2020’s limits on capital distributions contributed to greater systemic resilience.  The paper tracks both share buy-backs and dividends over recent years, noting that GSIBs often distributed more than their income.  Repurchases succeeded dividends as the principal capital-distribution medium since the great financial crisis, a shift found to give banks more flexibility to adjust distribution levels without significant investor backlash.

FHFA Leads Way on U.S. AI/ML Standards
FHFA today issued the first U.S. financial-agency supervisory guidance on AI/ML use by Fannie Mae, Freddie Mac and Common Securitization Solutions (not also the FHLBs).  This goes well beyond the 2020 RFI released so far by the banking agencies (see FSM Report AI), with the standards also reflecting FHFA’s new equity focus in supervisory guidance specific to inclusive considerations.

Toomey Takes on the Entire Reserve-Bank System
In remarks today, Senate Banking Ranking Member Toomey (R-PA) heightened his critique of the Federal Reserve’s regional banks, suggesting that the System needs a sweeping overhaul.

CFPB Assesses Overdraft-Fee Marketplace
Reflecting the CFPB’s continuing critique of overdraft fees (see FSM Report CONSUMER38), the Bureau today posted a chart of overdraft and NSF fees at the largest banks, calling recent changes “encouraging.”  However, the release does not retract recent allegations about their anti-consumer or -competition impact, …

13 09, 2021


2023-08-03T16:18:36-04:00September 13th, 2021|6- Client Memo|

Are Federal Reserve Banks Forever?

After my latest opinion piece appeared in Barron’s on Thursday, I was stunned by the virulence with which Barron’s readers — not exactly a bunch of Democratic Socialists — agreed with me not because of my reasoning, but because they believe the Fed in general and Jay Powell in particular are engaged in a sweeping conspiracy on behalf of the wealthiest global capitalists.  The new controversy over Reserve Bank president stock holdings only adds fuel to this fire.  Are Federal Reserve Banks forever?  Their history suggests maybe not.


13 09, 2021

Karen Petrou: Are Federal Reserve Banks Forever?

2023-08-03T16:18:47-04:00September 13th, 2021|The Vault|

After my latest opinion piece appeared in Barron’s on Thursday, I was stunned by the virulence with which Barron’s readers — not exactly a bunch of Democratic Socialists — agreed with me not because of my reasoning, but because they believe the Fed in general and Jay Powell in particular are engaged in a sweeping conspiracy on behalf of the wealthiest global capitalists.  The new controversy over Reserve Bank president stock holdings only adds fuel to this fire.  Are Federal Reserve Banks forever?  Their history suggests maybe not.

Reserve Banks are creatures of 1913, created in concert with the Federal Reserve Board in Washington as part of the awkward compromise that persuaded those who feared a dominant federal banking powerhouse that the central bank would have roots outside the largest cities and thus be beyond the reach of New York’s powerful bankers.

This balancing act is in fact one reason the Board is headquartered in Washington, not New York, and also why the New York Fed is the most powerful among nominal equals when it comes to its fellow Reserve Banks.  The fundamental anachronism of the System is evident in its geographic footprint — a heavy concentration of Reserve banks up to Kansas City and St. Louis and then not a single Reserve Bank for all of the mountain and western states but the lone edifice still standing apart in San Francisco.

The ethics rules now at issue due to recent revelations are also artifacts of not just the Reserve …

Go to Top