Thompson Reiterates Need for Climate-Risk Reduction
Acting FHFA Director Thompson today reiterated her near-term climate-risk agenda initially noted when FSOC put out its report (see Client Report GREEN11).
Comment Date Set for FHFA SCB Proposal
The Federal Register today includes FHFA’s proposed capital plan and stress capital buffer (SCB) for Fannie and Freddie, with comment now due February 25.
As noted on Thursday, FHFA continues to tread carefully through the big-bank rulebook, adopting standards said to be like-kind that aren’t quite so similar when it comes to critical details. The latest proposal demands capital planning in a construct akin to the one Democrats favored as the agencies finalized the big-bank stress capital buffer (SCB) minus express restrictions on capital distributions. Although the SCB will make Fannie and Freddie more resilient, it also steepens the climb out of conservatorship unless some new capital comes along.
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Building Buffers
As noted on Thursday, FHFA continues to tread carefully through the big-bank rulebook, adopting standards said to be like-kind that aren’t quite so similar when it comes to critical details. The latest proposal demands capital planning in a construct akin to the one Democrats favored as the agencies finalized the big-bank stress capital buffer (SCB) minus express restrictions on capital distributions. Although the SCB will make Fannie and Freddie more resilient, it also steepens the climb out of conservatorship unless some new capital comes along.
FHFA Constructs a GSE Stress-Capital buffer
Building on its pending rewrite of GSE-capital rules, FHFA today proposed capital-planning requirements for Fannie Mae and Freddie Mac akin in many ways to those governing large banks.
Campaign Advances to Oust McWilliams
Ramping up the FDIC battle, Public Citizen today called on President Biden to oust FDIC Chair McWilliams. Confirming those who have suggested that the fracas is about more than bank M&A, the letter is signed not only by many consumer-advocacy groups, but also by climate-change interest organizations.
Democrats Demand BNPL Review, CFPB Obliges
Acting quickly on Senate Democrats’ request, the CFPB today launched an inquiry into buy now, pay later (BNPL) credit, requesting information from five BNPL credit providers on BNPL risks and benefits.
FSB Says Global NBFIs are Stable, Shrinking vs. Banks
The FSB today released its annual NBFI monitoring report, concluding somewhat puzzlingly that balance-sheet NBFI vulnerability measures appeared broadly stable comparing 2020 and 2019 despite the market volatility at the pandemic’s outset and massive government intervention.
OCC Begins Climate-Risk Regulatory Build-Out
As promised, the OCC today issued draft climate risk-management principles that, when finalized, would guide future agency action starting next year.
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.
As noted yesterday, Treasury and the FHFA pulled the Trump PSPA’s plug, although importantly and widely overlooked is that this is true only when it comes to near-term asset-purchase considerations. Still, with this action atop all the others redefining Fannie and Freddie since Sandra Thompson took over, the GSEs are being reconfigured into agents of Administration policy in concert with being still more critical agencies for housing finance.
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GSEs Get a New, If Familiar, Gig
As noted yesterday, Treasury and the FHFA pulled the Trump PSPA’s plug, although importantly and widely overlooked is that this is true only when it comes to near-term asset-purchase considerations. Still, with this action atop all the others redefining Fannie and Freddie since Sandra Thompson took over, the GSEs are being reconfigured into agents of Administration policy in concert with being still more critical agencies for housing finance.