Senate Banking Questions Sanctions Impact
Today’s Senate Banking hearing on Russian sanctions showcased bipartisan concern that anti-Russian sanctions have yet to have meaningful impact and doubts about the extent to which oil-price caps will reverse this. Ranking Member Toomey (R-PA), joined by Sen. Van Hollen (D-MD), have thus introduced a measure to mandate secondary sanctions on financial institutions involved in a transaction with Russian oil above the price cap.
White House Reaffirms Anti-Algo Stand
The White House late yesterday announced core bigtech policy principles. These are extremely general and do not go as far in areas such as antitrust that progressives sought.
U.S. Announces Start of Work on Basel “End Game”
Ahead of what might otherwise have been a fractious Basel Committee meeting, the Fed, OCC, and FDIC today reaffirmed the U.S. commitment to finalize what FRB Vice Chair Barr Wednesday called the Basel III “end-game.”
Basel Chair Announces Preliminary AI Priorities
Pablo Hernández de Cos, Chair of the Basel Committee, announced today the work that regulators plan on AI and algorithmic decision-making.
OFR Details Climate Data-Sharing Efforts
Acting OFR Director James Martin today addressed the need for integrated climate-related financial data and challenges to forecasting and modeling climate risk.
Liang Stresses Climate-Resiliency
Treasury Under Secretary Liang today reiterated an array of agency and Administration climate-risk priorities, emphasizing ongoing Treasury and FSOC climate resiliency efforts and underscoring Treasury’s commitment to a net-zero economy.
Treasury To Issue Price-Cap Sanction Guidance
Deputy Treasury Secretary Wally Adeyemo today made it clear that enforcement of the anti-Russia oil-price caps will depend not only on restricting shipping insurance, but also doing so for financial and payment services.
OFAC Updates Counter-Terrorism Sanctions
OFAC today adopted a final rule that amends the Global Terrorism Sanctions Regulations to implement a 2019 executive order and make several minor technical changes.
Basel Crafts Stringent New Regime for Crypto Exposures
As promised, the Basel Committee today tried again to craft a global prudential regime for bank crypto exposures. We will shortly provide clients with an in-depth analysis of the new consultation, which replaces a controversial first round (see FSM Report CRYPTO19) with one that continues add-on capital requirements for higher-risk digital assets (now redefined for stablecoins).
FSB Frets About Commodity, Resilience Risk
The FSB’s plenary today is far more pessimistic about both macroeconomic and financial conditions than it was just a month ago. Although it then worried about commodity-market volatility, these concerns now are heightened by large margin calls, “undetected” leverage, and concentrated exposures.
CFPB Pledges Guidance on Wage Access Products
The CFPB today terminated the Sandbox Approval Order for Payactiv, an earned wage access company, removing an exemption for some of the company’s products from liability under the Truth in Lending Act. Payactiv requested the termination in order to make changes to its fee model, as changes to its products would require modifications to the order.
HFSC Campaign vs. Chopra May Clear Hsu
Continuing their campaign against CFPB Director Chopra, HFSC Ranking Member McHenry (R-NC) and Consumer Protection and Financial Institutions Subcommittee Ranking Member Luetkemeyer (R-MO) sent him a letter late yesterday accusing him of falsehoods related to legal opinions germane to the battle at the FDIC earlier this year on bank-merger policy (see FSM Report MERGER9).
FinCEN, Commerce Urge Strong Sanction Vigilance from Trade-Financing Banks
FinCEN and the Commerce Department Bureau of Industry and Security released a joint alert today urging increased financial-institution vigilance regarding Russian and Belarusian attempts to evade import sanctions.
CFPB Sets States Free to Interpret the FCRA
Using one of its new administrative procedures – an interpretive rule, the CFPB today expanded on its prior effort to encourage states to undertake vigorous consumer protection by establishing the principle that states may preempt federal standards pursuant to the Fair Credit Reporting Act except where federal preemption is clearly enunciated in the Act.
FRB Study: LMI Households Pay More for Transaction Accounts, Discrimination Not the Cause
A new FRB study finds that banks in LMI and majority-minority communities charge higher maintenance fees and require higher minimum account balances compared to other census tracts, with fee differences compounded for communities that are both LMI and majority-minority.
Treasury Issues Stern Sanctions Warning to Foreign Banks
In remarks today to UAE bankers, Deputy Treasury Secretary Wally Adeyemo warned that foreign financial institutions are subject to possible sanction if transactions touch sanctioned entities via any U.S.-domiciled point.
CFBP Follows Threats with Credit-Card Action Plan
Consistent with its promises as recently as last week, the CFPB today released an ANPR examining ways to govern what it calls excessive late fees charged by credit-card issuers and announced broader initiatives in this sector.
CBDC Authorizing Legislation Takes Shape
Building on his HFSC subcommittee’s CBDC hearing record (see Client Report CBDC13), Rep. Jim Himes (D-CT) today released a white paper outlining legislation he plans to advance to authorize and define CBDC for the United States.
House Set to Report Revised ILC Reform Bill
As anticipated, HFSC seems likely to report H.R. 5912, ILC-reform legislation introduced by Rep. Chuy García (D-IL) (see FSM Report ILC13). The measure subjects ILCs to bank regulation, rolling back the FDIC’s rule during the Trump Administration providing these charters with unique regulatory advantages (see FSM Report ILC15).
HFSC Set to Quiz Yellen on Sanctions, Global Finance
As anticipated, the HFSC memo ahead of tomorrow’s hearing with Secretary Yellen highlights many pending bills designed to increase sanctions against Russia and Belarus, as well as the companies, oligarchs, and others affiliated with them or found to be acting on their behalf. The memo includes not only a thorough compilation of bills to which we have alerted clients since the invasion began, but also a draft measure to bar an array of investment-banking or brokering activities related to Russia-based or -related obligations regardless of currency and to prohibit any such securities in investment funds.
IMF Official Urges Caution on CBDC Adoption
Bo Li, Deputy Managing Director at the IMF, urged caution today at an East African Finance Conference about building central bank digital currencies, referencing the findings of an IMF study on CBDC pilot programs.
Waters Demands Racial-Equity Action
As anticipated, the HFSC’s Oversight Subcommittee hearing on reparations featured considerable criticism of the financial services industry. Most notably, Committee Chairwoman Waters (D-CA) said that some banks that provided loans to finance the purchase of slaves are still in operation, solely singling out JP Morgan. She also stated that she was looking forward to discussing the actions of the financial industry and how it will remedy the lingering effects of profiting from slavery.
LOTS TO TALK ABOUT
Later this week, Janet Yellen will testify before the House Financial Services Committee on the global financial system. Typically, these hearings are sedate affairs at which Treasury Secretaries are grilled on Chinese exchange rates, foreign banks, the IMF and World Bank, and many other issues that have nothing whatsoever to do with global finance. This time will indeed be different.
FSB Stays Its Course
The FSB today officially published its 2022 work plan, making only one change in terms of topics and timing from the plan detailed in a February letter to G20 finance ministers and central bankers.
HFSC Democrats Don’t Like Overdrafts, But No Action Imminent
As anticipated, today’s HFSC Consumer Protection Subcommittee hearing reviewed Democratic complaints about overdraft fees and a general Republican defense of the importance of the private sector in setting consumer-finance charges.
Sanctions Now Reach Sectors
Treasury’s OFAC today sharply expanded U.S. sanctions against the Russian Federation.
Gensler Tackles Climate Disclosures, Crypto
Noting that the SEC is focused on disclosures, not the “merit” of what issuers may do, SEC Chairman Gensler today defended the controversial Scope 3 climate-risk disclosures, calling them “layered” because mandatory upstream and downstream disclosures would only be required if exposures are material or if a company had made a risk-reduction commitment.
GOP Bill Would Ban CBDC
Clearly still laying out the CBDC political divide, Sens. Cruz (R-TX), Braun (R-IN), and Grassley (R-IA) have introduced S. 3954, legislation essentially barring a retail-focused CBDC if it serves – as the senators expect – as a “financial surveillance tool.”
Thompson Open to FHLB Inquiry, New Mortgage Product
In the wake of another op-ed questioning the purpose of the home loan bank system, acting FHFA director Thompson said today that the creation of an advisory committee to review the system is a “great idea” to which she is open, saying also …
Overdraft Hearing Sure to Raise Fee, Inclusion Concerns
Although the HFSC memo on tomorrow’s overdraft hearing tees up legislation for possible action, we expect the Consumer Protection Subcommittee hearing to be a rhetorical exercise pressuring banks which still charge what Democrats, as well as Acting Comptroller Hsu and CFPB director Chopra, view as punitive fees.
FDIC Joins Campaign for Climate-Risk Management Standards
The FDIC today issued a request for comment on climate-risk management similar in many respects to the OCC’s outstanding release (see FSM Report GREEN12).
Senators Urge Treasury, SEC to Close Private Investment Sanctions Gap
Sens. Warren (D-MA) and Whitehouse (D-RI) today asked in a letter to Treasury and the SEC to accelerate closing the AML/CFT gap posed by private investment firms.
CFPB Revs Up Democratic Overdraft Anger
Ahead of tomorrow’s overdraft hearing, the CFPB today put out a strong blog post saying that, while some banks have properly addressed consumer risk, many have yet to do so.
Senate Dems Demand More Small-Business Lending
Senate Banking Committee Chairman Brown (D-OH), Majority Whip Durbin (D-IL), and eight other Democrats today wrote to all the banking agencies demanding that they do something to ensure that banks lend more to small businesses.
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.