#sanction – Federal Financial Analytics

28 02, 2023

DAILY022823

Eliza Allen2023-02-28T17:16:34-05:00February 28th, 2023|2- Daily Briefing|

CFPB Treads Gingerly on Mortgage-Disclosure Exceptions

In a notice emphasizing the CFPB’s distaste for allowing regulatory exceptions, the Bureau asks for comment on an application for one to which it seems a bit more sympathetic.

FDIC Sees Sunny Side of Bank Earnings Data

In its review of banking-industry fourth-quarter results, the FDIC today notes a sharp increase in the gap between bank loan yield and deposit interest costs.

Basel Forecasts End-Game Capital Shortfalls

The Basel Committee today issued its latest monitoring report, finding that large global banks saw capital decreases to pre-pandemic levels even as liquidity ratios continued to improve.

Bipartisan China Bills Fly Through HFSC Markup

As anticipated, HFSC today reported five bills to censure China and protect Taiwan, along with bills addressing drug-trafficking financing, biomedical security and bank service company examinations.

Democrats Stand Firm versus Privacy Preemption

Following an orderly and bipartisan start to today’s HFSC markup, Democrats and Republicans today came to verbal blows over the Chairman’s data privacy bill.

Daily022823.pdf…

24 02, 2023

Al022723

Eliza Allen2023-02-24T16:57:09-05:00February 24th, 2023|3- This Week|

The Bull In China’s Shop

As we noted as Russia sanctions were introduced almost exactly a year ago and again on Friday, the U.S. is using this “soft-power” tool not only to punish Russia for invading Ukraine, but also to deter other nations – and most especially China – from going beyond rhetorical to military support. This, combined with the subsequent oil-price cap, has kept most neutral nations on the military sidelines, also forcing China to navigate carefully between anti-Taiwan bellicosity and pro-Russian sympathy. However, China has now gone beyond floating the spy balloon that so peeved Members of Congress at an earlier hearing at which sanction sabers were noisily rattled. The House Financial Services Committee will mark up the mildest of its sanctions bills on Tuesday, but China is now in full-throated alliance with Russia, possibly soon sending it armaments and other essentials in express violation of current G7 sanctions. What’s next?

Al022723.pdf…

24 02, 2023

FedFin on: Custody Reform

Arezou Rafikian2023-02-24T16:53:29-05:00February 24th, 2023|The Vault|

Making full use of powers granted in the 2010 Dodd-Frank Act, the SEC is proposing a wholesale rewrite of the rules dictating how investment advisers must place assets in custody and which institutions are considered qualified for this purpose. Although the proposal was sparked first by controversies surrounding custody for cryptoassets and then by significant investment losses, the NPR reaches most assets held in the direct or indirect possession of investment advisers or to which the adviser may gain possession, also redefining qualified custodians to exclude not only most crypto platforms, but also foreign firms and other entities the Commission believes do not ensure sufficient safeguards protecting investor assets in the event of the adviser’s malfeasance, insolvency, or operational failure….

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

24 02, 2023

CUSTODY5

Eliza Allen2023-02-24T11:15:03-05:00February 24th, 2023|1- Financial Services Management|

Custody Reform

Making full use of powers granted in the 2010 Dodd-Frank Act, the SEC is proposing a wholesale rewrite of the rules dictating how investment advisers must place assets in custody and which institutions are considered qualified for this purpose. Although the proposal was sparked first by controversies surrounding custody for cryptoassets and then by significant investment losses, the NPR reaches most assets held in the direct or indirect possession of investment advisers or to which the adviser may gain possession, also redefining qualified custodians to exclude not only most crypto platforms, but also foreign firms and other entities the Commission believes do not ensure sufficient safeguards protecting investor assets in the event of the adviser’s malfeasance, insolvency, or operational failure. Many of the proposal’s new requirements – e.g., control over beneficial-ownership changes, strict segregation – are already followed by those bank custodians with fiduciary obligations due to their own protocols and regulatory requirements, perhaps giving banks a head-up complying with new standards. However, the new standards may be problematic for at least some custody banks – the SEC wants them to resume fiduciary obligations and does not appear wholly satisfied with bank rules governing qualified custodians.

CUSTODY5.pdf…

3 02, 2023

DAILY020323

Eliza Allen2023-02-03T16:59:55-05:00February 3rd, 2023|2- Daily Briefing|

House GOP Bill Sanctions Digital Yuan

Ahead of a major HFSC anti-China push next week, Chairman of the Subcommittee on National Security, Illicit Finance, and International Financial Institutions Luetkemeyer (R-MO) today introduced H.R. 804 to bar money servicing businesses from engaging in any transaction involving Chinese CBDC.

HFSC Plans Wide-Ranging China Attack

Emphasizing the priority Republicans have placed on U.S.-China policy, HFSC’s staff memo for Tuesday’s full committee hearing details numerous initiatives the panel may advance to isolate China and the Communist Party from the U.S. and global financial system.

HFSC Anti-Woke Group Targets SEC, Proxy Voting

Following his promise to go after “woke” policies during the HFSC organizational meeting, Chairman McHenry (R-NC) today announced the formation of a Republican ESG working group. It has no legislative jurisdiction and will instead combat the “far-left” influence over capital markets by addressing SEC regulatory “overreach,” reinforcing the materiality standard for disclosures, and preventing the misuse of the proxy process.

Daily020323.pdf…

6 06, 2022

DAILY060622

Eliza Allen2023-02-10T15:53:41-05:00June 6th, 2022|2- Daily Briefing|

US Sanctions Bosnians for “Destabilizing Action”

In an unusual move, Treasury today sanctioned two officials from Bosnia and Herzegovina for “destabilizing behavior.” The order cites various actions related to efforts to reawaken conflicts from the 1990s, noting for example that the sanctioned individuals refused to nominate judges to fill court vacancies and changes in jurisdiction designed, the U.S. asserts, to undermine what the 1995 Dayton Agreement advocated for.

Daily060622.pdf…

25 05, 2022

DAILY052522

Eliza Allen2023-02-21T13:42:48-05:00May 25th, 2022|2- Daily Briefing|

Hsu Renews, Heightens Crypto Criticism

Late yesterday, Acting Comptroller Hsu pointed to recent stablecoin collapses to reaffirm his crypto skepticism, arguing that – until a better regulatory construct is established in this sector – strict controls such as those recently instituted for national banks are necessary and appropriate. Although crypto may offer benefits for both innovation and inclusion, Mr. Hsu described fundamental challenges made evident by recent events.

Treasury to Revisit Investment-Adviser AML/CFT Standards

In remarks today, Treasury Under-Secretary of Terrorism and Financial Intelligence Brian Nelson underlined Treasury’s commitment to working with the private sector to maximize sanctions impact, mentioning the long-delayed beneficial ownership rule only in passing and without providing any timeline. However, Mr. Nelson did provide additional insight into Treasury’s latest priority relating to investment advisers.

CFPB Calls Out Credit Card Lenders for Payment Data Reporting Practices

Combining its campaign against credit-card lenders, the CFPB today sent strongly-worded letters to large credit-card lenders inquiring about the alleged practice of suppressing or neglecting to report the actual payment-amount field. The Bureau is concerned that this makes it more difficult for consumers to obtain optimal products, phrasing its release as a direct appeal to consumers.

Daily052522.pdf…

13 05, 2022

DAILY051322

Eliza Allen2023-02-21T15:19:42-05:00May 13th, 2022|2- Daily Briefing|

GOP Fuels FDIC Battle With New Letter To Chopra

Following up on their scathing letter yesterday to Acting Comptroller Hsu, leading House Republicans today sent another letter to CFPB Director Rohit Chopra demanding significantly more transparency around the Bureau’s Policy Fellowship Program and accusing the Director of using the Program as a means to circumvent civil service laws. Signatories of the letter, which include HFSC Ranking Member McHenry (R-NC) along with Reps. Emmer (R-MN), Luetkemeyer (R-MO), and Timmons (R-SC), sharply question Director Chopra over possible favoritism in the Fellow selection process.

Treasury Reiterates Need for Shell-Company Transparency

Treasury today announced its 2022 national illicit-finance strategy, now governing the rest of a year in which Russia-related transactions have assumed far greater importance than when risks underlying this strategy were first identified. Four priority recommendations emphasize shell companies and all-cash real estate transactions, with the release reiterating Treasury’s first-ever order sanctioning accountants and other service providers related to corporate formation if they support sanctioned individuals or entities.

Daily051322.pdf…

12 05, 2022

DAILY051222

Eliza Allen2023-02-21T15:21:53-05:00May 12th, 2022|2- Daily Briefing|

Basel Heading Towards Tough New Crypto Standards

In remarks today, Basel Committee Director Pablo Hernández de Cos reiterated that Basel’s latest cryptoasset consultation will be out in “coming months,” going on to say that while global negotiations have yet to resolve various controversies raised in the consultation (see FSM Report CRYPTO19), he emphasized that he is not persuaded by comments urging lenient capital treatment to prevent crypto activity from migrating outside banking.

House Codifies Sanctions for Subsidiaries

The House yesterday passed H.R. 7066, legislation sponsored by Rep. Sherman (D-CA) to tighten secondary sanctions against Russia and its allies. Approved on a 418-2 vote, the bill stands high odds of inclusion in the omnibus Ukraine and sanctions legislation wending its way through Congress.

GOP Takes on Hsu, Merger Policy

Republicans today made it clear that the blame they directed for what they called the “FDIC coup”, so far directed only to CFPB Director Chopra, has now ensnared Acting Comptroller Hsu.

Daily051222.pdf…

12 05, 2022

FSOC27

Max Camateros-Mann2023-02-21T15:27:56-05:00May 12th, 2022|5- Client Report|

Demand for Stablecoin Rules, Legislation Ramps Up

With stablecoin markets even more distressed than earlier in the week, today’s HFSC hearing with Secretary Yellen was even more emphatic than senators two days before on the need for action (see Client Report FSOC26). Chairwoman Waters (D-CA) urged FSOC quickly to implement the key regulatory recommendations in the PWG report (see Client Report CRYPTO16). Ranking Member McHenry (R-NC) emphasized instead the need for federal legislation to define this new framework but did not clearly object to any regulatory action. Instead, he and Rep. Torres (D-NY) argued that fully reserved stablecoins do not engage in financial intermediation and, since this makes them different than banks, bank regulation for any such stablecoins would be inappropriate. Secretary Yellen countered that there are many different types of banks and this business model distinction is thus not grounds for different regulation. She demurred on the extent to which stablecoins pose systemic risk, but urged rapid action to ensure that this does not prove the case.

FSOC27.PDF…