#severability – Federal Financial Analytics

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…

21 10, 2022

Al102422

Arezou Rafikian2022-10-24T11:05:45-04:00October 21st, 2022|3- This Week|

Resolved…What Was That Again?

As evidenced again last week at the FDIC meeting (see Client Report DEPOSITINSURANCE115), structural change is under way in how larger regional banks are required to prepare for an orderly demise. This comes not just from the new FRB/FDIC request for views on what will clearly now be new resolution standards for these companies (see FSM Report RESOLVE48), but also how large M&A transactions are reviewed even while these standards undergo the lengthy comment-and-approval process kicked off by a release that hasn’t yet even hit the Federal Register. As we noted in our assessment of the approval of the USB/MUFG acquisition (see Client Report MERGER11), the FRB and OCC have altered the conditions they impose on super-regionals even if – as in this case – the Fed thinks the resulting company is already resolvable. Our analyses assess the strategic implications of what could be structural rewrites not only of how large regionals are resolved, but also even of how they operate while still in the pink.

Al102422.pdf…

21 10, 2022

FedFin on: DSIB-Resolution Requirements

Arezou Rafikian2022-10-21T15:51:53-04:00October 21st, 2022|The Vault|

The FRB and FDIC have moved beyond the resolution-planning requirements mandated in the Dodd-Frank Act then implemented over the years to what could be a new resolution regime for banking organizations considered category II or III companies under the inter-agency tailoring rules. Initially described as guidance when the agencies first announced this initiative, it appears likely that final standards will be more binding, which would almost certainly need to be the case under administrative procedures if the agencies decide not only to revise resolution planning on a sector or bank-by-bank case. This would be particularly likely if ….

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

21 10, 2022

RESOLVE48

Eliza Allen2022-10-21T14:12:50-04:00October 21st, 2022|1- Financial Services Management|

DSIB-Resolution Requirements

The FRB and FDIC have moved beyond the resolution-planning requirements mandated in the Dodd-Frank Act then implemented over the years to what could be a new resolution regime for banking organizations considered category II or III companies under the inter-agency tailoring rules. Initially described as guidance when the agencies first announced this initiative, it appears likely that final standards will be more binding, which would almost certainly need to be the case under administrative procedures if the agencies decide not only to revise resolution planning on a sector or bank-by-bank case. This would be particularly likely if the agencies decide to include them in total loss-absorbency capacity (TLAC) standard for covered banking organizations akin to those now governing GSIBs.

RESOLVE48.pdf…

19 10, 2022

MERGER11

Eliza Allen2022-10-21T14:03:33-04:00October 19th, 2022|5- Client Report|

USB/MUFG Orders Point to New Merger, Regulatory Policy

As promised, this analysis focuses on the OCC and FRB approvals of the acquisition by U.S. Bancorp of MUFG’s Union Bank in California. Derided in a tweet from Sen. Warren (D-MA) as another “rubber-stamp” approval, both the nature of the transaction – which included massive commitments to community support – and the approvals themselves suggest otherwise. We shall continue to evaluate agency action on larger transactions and shortly provide clients with an analysis of the FDIC/FRB advance notice of proposed rulemaking on new resolution standards approved for public comment by the FDIC (see Client Report DEPOSITINSURANCE115). However, while policy and politics formulate new standards, pending transactions are directly and immediately affected by the new approach epitomized in these orders. We thus note the financial-stability and resolvability conditions applied to this transaction, which clearly signal those – i.e., “severability” – for near-term deals as well as for future standards.

MERGER11.pdf…