#SLR – Page 3 – Federal Financial Analytics

10 11, 2021

TMARKET2

Arezou Rafikian2023-06-01T14:24:09-04:00November 10th, 2021|5- Client Report|

Treasury-Market Reform Construct Leaves Much to Decide, Do

In this report, we build on our initial analysis of Monday’s report from the Inter-Agency Working Group on Treasury Market Surveillance (IAWG). Comprising the Treasury, the Fed, the SEC, the CFTC, and the Federal Reserve Bank of New York, the Working Group’s report narrows the scope of reforms to be discussed at next week’s closed FSOC meeting and then taken up by both the Group and FSOC. Hints about what staff may think best may be inferred from the report by virtue of where attention is focused and hints about near-term decisions are offered. From this, we infer that central clearing is a top-priority consideration and that all of the agencies support SEC Chairman Gensler’s announced plans to bring many broker-dealers in the Treasury sector under SEC authority.

TMARKET2.pdf…

8 11, 2021

Daily110821

Arezou Rafikian2023-06-01T14:52:06-04:00November 8th, 2021|2- Daily Briefing|

BIS Research Survey Finds Few Structural, Policy Impediments to Fast-Acting CBDC
A new BIS paper assesses CBDC’s impact across the full spectrum of economic activity given the centrality of data, moving the research discussion beyond the “reserves for all” approach (i.e., FedAccounts) on which much public debate focuses. This work thus tackles critical privacy, competition, integrity, and stability issues largely left aside in the BIS’s recent formulation of retail-facing CBDC. Press today indicate that the French have given tentative support to a wholesale-facing CBDC even as they raise the questions this BIS paper seeks to answer.

HFSC Dems Urge LGBTQ+ Financial Guidance
Ahead of its hearing examining financial-inclusion barriers for the LGBTQ+ community, HFSC’s majority staff memo indicates the Diversity and Inclusion Subcommittee will tomorrow debate draft legislation that would require federal financial regulators to issue guidance on LGBTQ+ inclusion.

Inter-Agency Treasury-Market Rewrite Takes Shape
Ahead of a conference next month, the Intra-Agency Working Group on Treasury Market Surveillance today set principles to guide further action to stabilize the U.S. Treasury marketplace.

Hsu Demands Top-Down Climate-Risk Management
Acting Comptroller Hsu today followed up last week’s announcement of near-term OCC climate-risk guidance for big banks with a set of questions he urges directors use to press senior management to action. Noting that directors should challenge any managerial confidence that climate risk is indeed being well addressed, the goal of this inquiry is climate-risk readiness by the end of next year.

Bowman Reiterates Need for Servicer Readiness, Regulation
Fed Gov. Bowman today …

3 11, 2021

Daily110321

Arezou Rafikian2023-06-02T12:54:06-04:00November 3rd, 2021|2- Daily Briefing|

Fed Acknowledge Climate Threat, Avoids Near-Term Commitments
The Federal Reserve today supported the most recent NGFS statement on global central-bank climate initiatives, emphasizing that the global statement allows each central bank to tailor its climate-risk efforts to its mandate and that the Fed’s mandate circumscribes efforts it recognizes to be of great importance.

Omarova Nomination Clears Formal Hurdle
Late yesterday, the White House officially nominated Saule Omarova as the next Comptroller of the Currency. As previously noted, we view this appointment to be part of a larger political negotiation over Jay Powell’s second term and the broader slate of Fed nominees.

Comment Date Set for FHFA Capital-Disclosure Proposal
The Federal Register today includes FHFA’s proposed capital-disclosure regime for Fannie and Freddie, with comment now due January 3. As previously noted, the proposed disclosures would better align the GSEs’ releases with those mandated for large banks, requiring transparency regarding standardized approach, operational, market, and leverage capital requirements.

OCC Climate Guidance Imminent
In his statement today supporting the NGFS Glasgow Declaration (see our earlier alert), Acting Comptroller Hsu expands on his comments about FSOC’s climate-risk report (see Client Report GREEN11).

Powell: Fed No Longer Contemplating SLR Rewrite
While FRB Chair Powell’s press conference today largely focused on the economy and monetary policy, he was also asked if the Fed still plans to seek comment on ways the SLR could be adjusted to increase Treasury-market liquidity.

Daily110321.pdf…

30 09, 2021

GSE-093021a

Arezou Rafikian2023-07-31T15:48:19-04:00September 30th, 2021|4- GSE Activity Report|

Crazy for CRT

Now that we have FHFA’s comment deadline – November 26 – we expand our initial analysis of FHFA’s capital rewrite into a more detailed assessment of its strategic impact. How key industry sectors view this new approach will very much depend on what each sector wants – those who want CRT got almost all they desired while those who want bank capital parity lost still more ground to Fannie and Freddie. Assuming the final rule advances ASAP along proposed lines – and we think it will – and combined with the liberalized PSPA, CRTs will define mortgage securitization across anything close to a conventional conforming loan and all the higher-risk products the GSEs can purchase again.

GSE-093021a.pdf…

28 09, 2021

REFORM208

Arezou Rafikian2023-07-31T16:03:27-04:00September 28th, 2021|5- Client Report|

Warren Launches Fiery Anti-Powell Fight; Brown Non-Committal, But Critical

Although today’s Senate Banking hearing with Chairman Powell and Secretary Yellen was largely taken up by the debt ceiling, Sen. Warren (D-MA) made it very clearly that progressives will mount an aggressive campaign against Mr. Powell, calling him a “dangerous” man. Chairman Brown (D-OH), whose position is perhaps most important, said nothing about the renomination even as he blasted the Fed under Mr. Powell for what he called his pro-Wall Street policies. Sen. Brown also criticized the Fed for “rubber-stamping” mergers and market-friendly policies. Ranking Member Toomey (R-PA) may have changed his view on CBDC, now expressing interest in a “properly-designed” CBDC. Responding to Sens. Brown and Warren, Mr. Powell resisted all suggestions that stress tests have been weakened but said that changing current rules is “fair game” going forward. Asked to name her top systemic-risk worry, Secretary Yellen cited open-end funds and shadow banks.

REFORM208.pdf…

27 09, 2021

Daily092721

Arezou Rafikian2023-07-31T16:11:17-04:00September 27th, 2021|2- Daily Briefing|

FRB-NY Climate Stress Test Reveals Large Capital Shortfalls
A new Federal Reserve Bank of New York paper proposes a climate stress-test methodology which, when deployed, finds significant systemic risk due to large bank capital shortfalls during periods of sharp transition risk.

Timeline Set for GSE Capital Rewrite
The Federal Register today includes FHFA’s proposed changes to the GSEs capital framework. As detailed in our in-depth report, the rule would actively promote CRT and rewrite the leverage ratio, making risk-based capital the GSEs’ binding constraint.

Gensler Ramps Predictive-Analytics Threat Up to Systemic Risk
Following his Senate Banking appearance earlier this month (see Client Report INVESTOR18), SEC Chairman Gensler today reiterated his focus on digital engagement practices (DEPs), warning that predictive data analytics could increase systemic risk due to increased data- source concentration, herding, and interconnectedness.

McHenry Attacks Treasury for “Social Agenda,” Warns of Chinese Threat
Ahead of Treasury Secretary Yellen’s appearance before HFSC this Thursday, Ranking Member McHenry (R-PA) blasted Biden administration financial policy on grounds that it advantages China at cost to U.S. national interest.

Daily092721.pdf…