#S&LHC – Federal Financial Analytics

27 06, 2023

FedFin on: Failed-Bank Compensation, Resolution

Arezou Rafikian2023-06-27T16:13:11-04:00June 27th, 2023|The Vault|

The Senate Banking Committee has overwhelmingly approved bipartisan legislation to reform executive compensation following larger insured-depository institution (IDI) failures, with parent-company executive compensation also at risk in some circumstances. Unlike previous bipartisan claw-back legislation, this measure is targeted to incentive compensation, not salary, expressly exempts “white knights,” institution-affiliated persons and directors, and gives the FDIC discretion also to allow senior officers to retain affected compensation in certain other circumstances…

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

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27 06, 2023

COMPENSATION37

Eliza Allen2023-06-27T16:00:07-04:00June 27th, 2023|1- Financial Services Management|

Failed-Bank Compensation, Resolution

The Senate Banking Committee has overwhelmingly approved bipartisan legislation to reform executive compensation following larger insured-depository institution (IDI) failures, with parent-company executive compensation also at risk in some circumstances. Unlike previous bipartisan claw-back legislation, this measure is targeted to incentive compensation, not salary, expressly exempts “white knights,” institution-affiliated persons and directors, and gives the FDIC discretion also to allow senior officers to retain affected compensation in certain other circumstances. Also unlike the prior bill, this measure would make it more difficult for the FDIC to resolve a failing IDI as it did for First Republic via an assisted acquisition by JPMorgan despite the overall prohibition on any U.S. institution holding more than ten percent of national deposits. The Senate bill also mandates that IDIs and parent companies adopt governance standards that give the firm power to claw back compensation in the event of weak condition or poor management practice.

COMPENSATION37.pdf…

24 03, 2023

FedFin Analysis: Whom and What the FDIC and Fed Can Save How

Arezou Rafikian2023-03-24T17:05:38-04:00March 24th, 2023|The Vault|

Recent editorials and other media have often said that the FRB and/or FDIC have powers or taken actions that is not the factual case as we understand it. Members of Congress also appear sometimes willing to make assertions about what agencies can do now even if it is unclear if there is statutory authority to do so. We have provided individual clients with key clarifications, but do so now more generally to support strategic and advocacy decision-making. Of particular importance is the authority the FDIC is said to have or lack related to uninsured deposits; as detailed below, the agency actually has significant authority to do so as well as even to back BHC debt, as long as certain stringent conditions are met. As detailed in FSM Report RESCUE65, Congress limited both the FDIC and Fed in hopes that….

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

24 03, 2023

RESCUE79

Eliza Allen2023-03-24T16:30:20-04:00March 24th, 2023|5- Client Report|

FedFin Analysis: Whom and What the FDIC and Fed Can Save How

Recent editorials and other media have often said that the FRB and/or FDIC have powers or taken actions that is not the factual case as we understand it. Members of Congress also appear sometimes willing to make assertions about what agencies can do now even if it is unclear if there is statutory authority to do so. We have provided individual clients with key clarifications, but do so now more generally to support strategic and advocacy decision-making. Of particular importance is the authority the FDIC is said to have or lack related to uninsured deposits; as detailed below, the agency actually has significant authority to do so as well as even to back BHC debt, as long as certain stringent conditions are met. As detailed in FSM Report RESCUE65, Congress limited both the FDIC and Fed in hopes that the Dodd-Frank orderly-liquidation authority (OLA, see FSM Report SYSTEMIC30) would permit orderly resolution of even the largest banks and nonbanks without long-term federal support; a subsequent FedFin report will bring the assessment of OLA powers into the current crises’ context given that Congress will surely seek to determine why the FDIC and its sister authorities chose to provide taxpayer support rather than deploy OLA.

RESCUE79.pdf…

22 08, 2022

FedFin on: FRB Crypto-Activity Constraints

Arezou Rafikian2023-01-04T10:52:55-05:00August 22nd, 2022|The Vault|

Reflecting the concerns voiced in a recent executive order from President Biden and a subsequent request for views from Treasury, the Federal Reserve has joined the OCC in demanding prior notice from banking organizations that wish to undertake cryptoasset activities. The OCC also warned national banks already engaged in these activities to ensure that they are safe and sound, but the Fed has gone farther. It also demands that state member banks and BHCs already engaged in this sector notify their lead supervisor and ensure that…

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

22 08, 2022

CRYPTO31

Eliza Allen2023-01-04T10:52:02-05:00August 22nd, 2022|1- Financial Services Management|

FRB Crypto-Activity Constraints

Reflecting the concerns voiced in a recent executive order from President Biden and a subsequent request for views from Treasury, the Federal Reserve has joined the OCC in demanding prior notice from banking organizations that wish to undertake cryptoasset activities. The OCC also warned national banks already engaged in these activities to ensure that they are safe and sound, but the Fed has gone farther. It also demands that state member banks and BHCs already engaged in this sector notify their lead supervisor and ensure that these activities meet safety-and-soundness, compliance, consumer-protection, and other standards. As with the Board’s new payment-system guidelines, Reserve Banks may interpret these cryptoasset thresholds differently, perhaps leading to a patchwork of activities across the banking system.

CRYPTO31.pdf…

8 10, 2021

FedFin on: Bank Merger Restrictions

Arezou Rafikian2023-06-20T15:33:46-04:00October 8th, 2021|The Vault|

Progressive Democrats in the House and Senate have introduced legislation demanding an array of new decision factors governing bank M&A transactions and new or even revised BHC activities. President Biden’s executive order demanding more competitive U.S. markets includes numerous bank-related provisions, but does so largely through requests of independent agencies such as the Federal Reserve to work with the Department of Justice to reduce bank consolidation and enhance community service. This legislation backs up these goals with binding requirements that dramatically alter the public-interest, financial, and competitive analyses on which M&A or BHC activities have long been assessed. Many more acquisitions, especially by or among large banks, would almost surely be rejected and the process might also become so public as to undermine the confidentiality essential to initial M&A agreement.

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

8 10, 2021

MERGER8

Arezou Rafikian2023-06-20T15:33:35-04:00October 8th, 2021|1- Financial Services Management|

Bank Merger Restrictions

Progressive Democrats in the House and Senate have introduced legislation demanding an array of new decision factors governing bank M&A transactions and new or even revised BHC activities. President Biden’s executive order demanding more competitive U.S. markets includes numerous bank-related provisions, but does so largely through requests of independent agencies such as the Federal Reserve to work with the Department of Justice to reduce bank consolidation and enhance community service. This legislation backs up these goals with binding requirements that dramatically alter the public-interest, financial, and competitive analyses on which M&A or BHC activities have long been assessed. Many more acquisitions, especially by or among large banks, would almost surely be rejected and the process might also become so public as to undermine the confidentiality essential to initial M&A agreement.

MERGER8.pdf…