#rfi – Federal Financial Analytics

17 05, 2023

DAILY051723

Eliza Allen2023-05-17T17:44:04-04:00May 17th, 2023|2- Daily Briefing|

Bipartisan Senate Consensus Demands Structural Change To Fed IG

At today’s Senate Banking Subcommittee on Economic Policy hearing on Fed accountability, Chairwoman Warren (D-MA) was unsparing in her criticism of the Fed and its current IG, Mark Bialek. She elicited the fact that he is the Fed’s highest-paid employee and, while he may be dismissed only by two-thirds of the Board, she argued that he is essentially captive and thus cannot be relied upon to investigate ethics challenges, bank failures, and internal operations.

HFSC GOP Demands LLPA Changes No Matter FHFA’s RFI

As anticipated, Chairman Davidson (D-OH) reiterated GOP demands that the FHFA rescind the entirety of its LLPA proposal at today’s HFSC Subcommittee on Housing and Insurance hearing, despite FHFA conceding to some Republican demands and issuing an RFI on the Enterprises’ single-family pricing framework earlier this week. Mr. Davidson also pushed back on FHFA’s assertion that LLPA pricing must be set with regard to private mortgage insurance, saying that MI does not reduce taxpayer risk or GSE capital even though it is required for risk reduction and captured in the GSE capital standards.

Daily051723.pdf…

17 05, 2023

GSE-051723

Eliza Allen2023-05-17T17:14:20-04:00May 17th, 2023|4- GSE Activity Report|

Setting Purpose Via Prices

With Republicans on the anti-LLPA warpath, FHFA is hoping to preserve as much of the current fee structure as possible without paying too high a political price, issuing a request for information (RFI) in hopes that letter-writing will keep everyone busy until Congress moves on to other matters. If FHFA does redefine the capital thresholds by which pricing is judged, it could well also redefine the products the GSEs will purchase.

GSE-051723.pdf…

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…

15 05, 2023

DAILY051523

Eliza Allen2023-05-15T17:23:44-04:00May 15th, 2023|2- Daily Briefing|

Yellen Highlights Investor – Not Uninsured-Deposit – Runs, Buoys Sector Mergers

In an interview over the weekend, Treasury Secretary Yellen struck a decidedly different tone on bank mergers than voiced in the Administration’s policy prior to recent failures.

Gensler Outlines Top Financial Stability Concerns

In remarks today, SEC Chair Gensler outlined his financial-stability priorities.

Failed-Bank CEOs Defend Themselves, Contest Need For Receivership

Ahead of testimony tomorrow before Senate Banking, the CEOs of SVB and Signature have filed statements defending their actions and those of their colleagues.

FHFA Seeks Views On New Pricing Framework

Following last week’s announcement that it would postpone its controversial decision to retain an upfront fee related to a borrower’s debt-to-income level, the FHFA today released a Request for Input on the Enterprises’ single-family pricing framework as well as the process for setting their upfront guarantee fees.

Barr Stands His Supervisory, Regulatory Ground

Vice Chairman Barr’s testimony for Congressional hearings this week has just been released along with the Board’s 2023 supervision-and-regulation report.

Gruenberg Sticks To His Guns

FDIC Chairman Gruenberg’s Congressional testimony largely recounts prior statements about the condition of the banking system, recent bank failures, the new special-assessment proposal (see FSM Report DEPOSITINSURANCE120), and the agency’s deposit-insurance reform conclusion (see Client Report DEPOSITINSURANCE119).

Daily051523.pdf…

22 03, 2023

DAILY032223

Eliza Allen2023-03-22T17:37:57-04:00March 22nd, 2023|2- Daily Briefing|

FTC Builds On Treasury Cloud Concerns, Seeks Competition, AI Views

Signaling apprehension about a number of risks outlined in a recent Treasury report, the FTC today requested comment on the business practices of cloud computing providers.

Scott, Warren Reach Over Partisan, Ideological Divide to Blast the Fed

Demonstrating the confluence of populist and progressive thinking about the Fed we anticipated at the start of this year, Sens. Rick Scott (R-FL) and Warren (D-MA) have introduced legislation mandating that the Fed’s inspector general be fully independent of the chair and board of governors.

Fed Under Still More Pressure to Boost Regional-Bank Supervision

Sen. Warren (D-MA) continued her prolific letter-writing campaign, today also joining with Sens. Duckworth (D-IL), Blumenthal (D-CT), Sanders (I-VT), Reed (D-RI), Hirono (D-HI), Markey (D-MA), King (I-ME), Whitehouse (D-RI), Smith (D-MN), Van Hollen (D-MD), and Schatz (D-HI) to call upon Vice Chairman Barr quickly to heighten regulatory standards for banking organizations between $100 and $250 billion.

Powell Protests Suggestions Of Fed Supervisory Error

At his press conference today, Chairman Powell sought to defend the Fed so vigorously that some of his comments may ignite still more criticism.

Yellen Denies FDIC-Coverage Rewrite, Suggests Need for Liquidity-Rule Revisions

In her appearance today before the Senate Appropriations Subcommittee on Financial Services and General Government, Treasury Secretary Yellen refuted press reports that Treasury is considering significant deposit-insurance coverage expansion, saying only that the banking system is safe and it is too soon to consider structural reforms.

Daily032223.pdf…

28 03, 2022

DAILY032822

Eliza Allen2023-03-27T15:53:58-04:00March 28th, 2022|2- Daily Briefing|

Hsu Open to New Merger Policy on Inter-Agency Basis

As noted on Friday, the FDIC has now officially released a controversial RFI on bank-merger policy (see FSM Report MERGER9). Press included a statement from Acting Comptroller Hsu indicating that he supports this public-comment effort, especially with regard to reconsidering financial stability at larger banks.

Progressives Propose a Treasury, not Central Bank, Digital Dollar

As anticipated when we reviewed a Brookings proposal for a “Treasury dollar“, legislation (H. R. 7231) has now been introduced to create what its sponsors call “ECASH” – that is, a digital currency issued by the U.S. Treasury, not the Federal Reserve. Introduced by Rep. Stephen Lynch (D-MA) and several progressives, the ECASH program would launch three Treasury pilots under a new high-level Treasury office to create a digital dollar with physical cash’s privacy and anonymity.

House Panel Presses CS on Sanctions Compliance

Signaling a new source of sanctions-related reputational risk, the House Oversight Committee today demanded information from Credit Suisse following assertions that the bank had ordered counterparties to destroy Russia-related documentation.

Chopra Goes after Charters, Activities, Officers for Repeat Enforcement Violations

CFPB Director Chopra today expanded his attack on large financial-services firms, arguing that those who repeatedly violate consumer-protection or other core standards should lose their charters.

Daily032822.pdf…

25 03, 2022

Daily032522

Arezou Rafikian2023-03-27T16:04:54-04:00March 25th, 2022|2- Daily Briefing|

Fed Puts Off Finalizing New DIHC Framework
The FRB today extended the comment deadline on a longstanding proposal crafting a new regulatory framework for depository institution holding companies principally engaged in insurance services.

CFPB Wants to Hear More re Pricing Practices
Saying it has been swamped with consumer tales about “junk fees,” the CFPB today extended the comment deadline until April 11 on its request for views on this hot topic.

Bipartisan Crypto Construct Harder to Build than Describe
On a Politico webcast last night, Sens. Kirsten Gillibrand (D-NY) and Cynthia Lummis (R-WY) announced a bipartisan alliance to craft cryptoasset standards they expect to see on the Senate floor by year-end.

Waller Still Wants Little to Do with a CBDC
At a feisty panel today, FRB Gov. Chris Waller stood by his view that a CBDC is “a solution in search of a problem.”

Senate Democrats Demand Overdraft-Fee Fix
Sen. Rev. Warnock (D-GA) and Chairman Brown (D-OH) joined other Democrats demanding lower or eliminated overdraft fees.

FDIC Starts Process of Revising Bank-Merger Policy

The FDIC today has officially released the bank-merger RFI that now-Acting Chairman Gruenberg and CFPB Director Chopra sought to release under Chair Jelena McWilliams.

Daily032522.pdf…

2 02, 2022

DAILY020222

Eliza Allen2023-04-05T14:10:54-04:00February 2nd, 2022|2- Daily Briefing|

BIS Outlines Regulatory Goals for More Tech-Based Lending
A new BIS paper approaches fintech’s financial-inclusion impact from a new angle: the extent to which personal-information collateral backing consumer debt can be governed to ensure that innovation also advances inclusion without leading to undue market power and/or disintermediation.

BIS Chief Calls for CBDC ASAP
The BIS today released a speech late last month from Managing Director Carstens saying that the “soul of money” – i.e., its essence and purpose – is best entrusted to central banks, not DLT or private issuers.

CFPB Redoubles Effort Against “Junk” Fees
The CFPB today posted a note standing firmly behind its RFI seeking input on the “junk” fees the agency believes pervade consumer finance (see FSM Report CONSUMER38).

Senate GOP Heighten Objections to FDIC Democrats
Senate Republicans today strengthened their objections to the December effort by FDIC Democrats to release a bank-merger RFI (see FSM Report MERGER9), introducing legislation to strip the Board of the Comptroller of the Currency and CFPB director.

Daily020222.pdf…

1 02, 2022

CONSUMER38

Arezou Rafikian2023-04-05T14:14:55-04:00February 1st, 2022|1- Financial Services Management|

“Fair-Fee” Policy

Taking action to advance President Biden’s competition order, the CFPB is seeking views on fees which it believes exploit consumers by virtue of unfair competition. Although many of the fees it cites are covered by statutory disclosure regimes designed to ensure both front- and back-end fee transparency, the Bureau believes that many of these fees are unfair due to large-bank market power. Unfairness is in part judged by the extent to which a fee exceeds the provider’s marginal cost with some recognition of possible risk, but how much of a profit margin above these break-even thresholds is neither specified nor discussed.

CONSUMER38.pdf…

1 02, 2022

GSE-020122

Eliza Allen2023-04-05T14:20:22-04:00February 1st, 2022|4- GSE Activity Report|

CFPB Goes for the Jugular

Nothing could do as much damage to a business based on fee revenue as a determined CFPB inquiry into fee revenue. Last Thursday, the Bureau’s new director, Rohit Chopra, launched just such an inquiry. Here, we assess its important to mortgage origination and servicing along with what’s next.

GSE-020122.pdf…