#Senate Banking

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21 11, 2022

DAILY112122

2022-11-21T17:37:05-05:00November 21st, 2022|2- Daily Briefing|

FRB-NY Considers Why Deposit Rates are Now So Sticky

As Karen Petrou’s talk last week noted, Democrats and the CFPB have charged that exploitation explains why bank deposit rates now lag Fed rate hikes.  Today’s post from the Federal Reserve Bank of New York finds a steady decline in bank deposit-rate matches to Fed rate hikes since 1994, but also identifies market factors that largely explain rate sluggishness.  The study estimates the “deposit beta” – i.e., the difference between FOMC hikes and all deposit rates (including non-interest paying funds) found in BHC data.

Senate Dems Demand Digital-Asset Crackdown

Following last week’s hearings with the banking agencies (see Client Report REFORM214), Chairman Brown (D-OH) and Senate Banking Democrats today sent letters urging Vice Chair Barr, Acting Chairman Gruenberg, and Acting Comptroller Hsu to review SoFi’s digital asset activities, accusing the firm of improperly expanding its crypto trading following commitments not to do so when it was granted licenses as a national bank and BHC.  Following the playbook of pressing for rules and enforcement rather than new law, Senators point to a new SoFi service they believe is not only an “expanded” digital-asset activity despite a commitment to wind down these impermissible activities, but also is dangerous to investors and unsafe and unsound.

Daily112122.pdf

15 11, 2022

REFORM214

2022-11-22T15:27:38-05:00November 15th, 2022|5- Client Report|

Crypto, Deposit Rates, Capital Top Senate Discussion

At today’s Senate Banking oversight hearing with the banking agencies, Chairman Brown (D-OH) generally applauded the work of regulators, emphasizing the need for tough standards, like-kind rules for bigtech companies, and an inquiry into why depositor interest rates lag Fed rate hikes along lines posed earlier by Sen. Reed (D-RI).  FDIC Acting Chairman Gruenberg concurred, criticizing banks for sluggish rates.  Ranking Member Toomey (R-PA) reiterated his longstanding complaints about regulators straying outside their mission in areas such as climate change.  He also called for SLR relief to reduce Treasury-market risk and opposed pending large-bank resolution guidance (see FSM Report LIVINGWILL19) on grounds that it is unnecessary.

REFORM214.pdf

14 11, 2022

DAILY111422

2022-11-14T17:00:05-05:00November 14th, 2022|2- Daily Briefing|

FSB Thinks 2020 Reg Relief Could Go, Stay – It All Depends

In conjunction with the G20 summit, the FSB has released a policy paper assessing the extent to which various pandemic-related regulatory forbearances should be continued.

FSB Reiterates Climate, Crypto, NBFI Plans

The FSB head’s letter to the G20 today reiterates all of the priorities expressed in its October letter to G20 finance ministers.

Regulatory Hearings to Address Last-Gasp 2022 Agenda, Position Panels for a Busy New Year

With GOP House and Democratic Senate control largely assured, this week’s hearings with Messrs. Barr, Gruenberg, Harper, and Hsu will illuminate not only current priorities – most notably what’s next for federal crypto law and rule – but also the very different priorities HFSC and Senate Banking will advance in the next Congress.

FRB-NY Staff: Big U.S. Banks Remain Extremely Resilient

In its latest assessment of the vulnerability of the fifty largest U.S. BHCs, Federal Reserve Bank of New York staff confirmed the overall rosy assessment of bank resilience in the Board’s latest financial-stability report (see Client Report SYSTEMIC94).

OCC Ramps Up Fair-Lending Enforcement

In remarks delivered for Acting Comptroller Hsu, Senior Deputy Comptroller for Bank Supervision Policy Grovetta Gardineer reiterated that ensuring fairness is a top OCC priority.

Gruenberg Finally Gets the Nod

Knowing now that he has secured Democratic Senate control into next year, President Biden today finally and formally nominated Acting FDIC Chairman Gruenberg to assume the chairmanship.

Daily111422.pdf

26 10, 2022

DAILY102622

2022-10-26T17:02:07-04:00October 26th, 2022|2- Daily Briefing|

BIS Announces Successful Multi-CBDC Platform Pilot

Following their retail crypto pilot last week, the BIS announced a successful pilot blockchain ledger – dubbed the mBridge Ledger – connecting twenty commercial banks in China, Hong Kong, Thailand, and the UAE via a multi-CBDC common platform.  Both domestic and foreign commercial banks are permitted to directly hold and transact in CBDCs on the platform to ensure seamless cross-border payments.  To protect monetary sovereignty, the platform allows governments to flexibly control CBDC issuance and redemption, transaction currencies and amounts, and visibility into usage.

With President at His Side, Chopra Sanctions Overdraft, Deposit Fees

President Biden today took aim at junk fees, slamming them in general even as he praised the CFPB’s initiative today sharply to limit “surprise” overdraft and deposit fees.  The agency did so by issuing a circular on unanticipated overdraft fee assessment practices and a bulletin on Returned Deposited Item Fee Assessment Practices, again using its non-regulatory tools to enact new policy and set stringent enforcement standards.  We will shortly provide clients with in-depth analyses of each release.

Daily102622.pdf

22 09, 2022

REFORM213

2022-10-12T17:04:04-04:00September 22nd, 2022|5- Client Report|

Senate Republicans Tackle Woke Banking; Democrats Turn Again to Zelle, Fees

Senate Banking’s hearing with big-bank CEOs proved much more combative than HFSC’s session yesterday (see Client Report REFORM212).  From the outset, Republican Senators condemned what they characterized as serious threats of banking politicization around social and cultural issues, with Ranking Member Toomey (R-PA) predicting a Republican counter-offensive should his party regain control.  He also said that the Fed’s decision to join other central banks and supervisors in implementing climate scenario analysis is a precursor to regulatory edicts pressuring banks to divest from energy companies.  Republicans also emphasized that high regulatory-capital requirements have undue macroeconomic effects.  As predicted, Democratic focused extensively on Zelle and bank fees.

REFORM213.pdf

21 09, 2022

DAILY092122

2022-09-27T16:31:10-04:00September 21st, 2022|2- Daily Briefing|

Liang Emphasizes Fed CBDC Views vs. Treasury Report

In remarks last night, Treasury Under-Secretary Liang took a decidedly more cautious stand on CBDC than Treasury’s recent report, emphasizing its caveats rather than over-arching conclusions.  Differing from the report (see Client Report CBDC14), she reiterated Fed concerns that CBDC might undermine financial intermediation even as the report argues that it might well not do so if nonbanks were given access to it and to instant payments.

Senate Democrats Lambast More Big Banks

Ahead of their hearing with big-bank CEOs tomorrow, Senate Banking Democrats today released additional “snapshots” similar to those published earlier this week, this time highlighting Wells Fargo and JP Morgan Chase. These “megabank” snapshots follow the same format as those for the large regional banks, providing a list of headlines highlighting not only alleged instances of consumer discrimination and abuse, but also Wells Fargo’s fake accounts scandal and JP Morgan’s oil lending practices.

Daily092122.pdf

20 09, 2022

DAILY092022

2022-09-27T16:49:38-04:00September 20th, 2022|2- Daily Briefing|

FedFin Assessment: Tales of a New TLAC

With press reports strongly suggesting that U.S. banking agencies will impose TLAC requirements on at least some regional BHCs, we think it helpful to provide an update on the 2016 rule imposing this resolution buffer (see FSM Report TLAC6) to note the implications of reopening the regulation.

HFSC Dems Attack Lack of Diversity in Insurance

Ahead of an HFSC hearing on Thursday, Chairwoman Waters (D-CA) and Rep. Beatty (D-OH) released a report sharply critical of the lack of diversity in the largest US insurance companies.  Noting an array of problematic practices, the report also calls for action on legislation to require insurance companies to report their diversity data and policies to their respective regulators and to publicly disclose the gender and race makeup of their board directors and senior executives.

Senate Banking Fires Another Shot at Big Banks

Following yesterday’s “snapshots” of Truist, PNC, and USB ahead of the Thursday big-bank hearing, Senate Banking Democrats today continued their attack on large banks, releasing similar reports on Citi and Bank of America.  These snapshots again focus on consumer issues such as Zelle fraud and also highlight recent enforcement actions.

Daily092022.pdf

20 09, 2022

SANCTION19

2022-10-12T17:09:15-04:00September 20th, 2022|5- Client Report|

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.

SANCTION19.pdf

16 09, 2022

Al091922

2022-10-13T10:10:12-04:00September 16th, 2022|3- This Week|

Question Time

Although cantankerous shareholders can be a bit of an annoyance, big-bank CEOs rarely go through wringers of unrelenting and sometimes downright unpleasant questioning.  This will, though, be their fate when a select group of GSIB and super-regional bank CEOs is called before HFSC and Senate Banking later this week.  Nothing will come of this inquisition in terms of legislation, but – as the shift in overdraft and racial-equity policy makes clear – big banks can feel compelled to change course even as regulators hear the wind at their back.

Al091922.pdf

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