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22 05, 2023

M052223

2023-05-22T11:47:38-04:00May 22nd, 2023|6- Client Memo|

How to Ensure That Independent Study of Regulatory Mistakes Leads to Near-Term, Meaningful Redress and Reform

Last week, a moderate Senate Democrat was joined by a Republican in yet another letter demanding an independent investigation of regulatory actions related to recent bank failures.  But, as the absence of specifics in any of these letters makes clear, it’s a lot easier to call for independent inquiry than to lay out how to conduct one that might make a meaningful difference.  Precedent is not encouraging – for example, Congress created a Financial Crisis Inquiry Commission after 2008, but it was an unqualified waste of time and money.  Still, we urgently need an independent assessment of what went so wrong combined with another providing near-term, actionable reforms.  Having served on one post-crisis national commission that did a bit of good, I recommend separating the forensic inquiry from the one focused on the future, guarding against conflicts without eliminating expertise, and assessing only a few clear questions suitable for practical answers that can be readily accomplished under current law.

M052223.pdf

22 05, 2023

Karen Petrou: How to Ensure That Independent Study of Regulatory Mistakes Leads to Near-Term, Meaningful Redress and Reform

2023-05-22T11:47:33-04:00May 22nd, 2023|The Vault|

Last week, a moderate Senate Democrat was joined by a Republican in yet another letter demanding an independent investigation of regulatory actions related to recent bank failures.  But, as the absence of specifics in any of these letters makes clear, it’s a lot easier to call for independent inquiry than to lay out how to conduct one that might make a meaningful difference.  Precedent is not encouraging – for example, Congress created a Financial Crisis Inquiry Commission after 2008, but it was an unqualified waste of time and money.  Still, we urgently need an independent assessment of what went so wrong combined with another providing near-term, actionable reforms.  Having served on one post-crisis national commission that did a bit of good, I recommend separating the forensic inquiry from the one focused on the future, guarding against conflicts without eliminating expertise, and assessing only a few clear questions suitable for practical answers that can be readily accomplished under current law.

The first decision point determines all the rest:  whether the independent analysis is to be forensic – who dropped which heavy ball on whose toes – or focused on the future – what we learned and what to do about it.  Many of the proposals for an independent commission, including the Congressional letter noted above, want their commission to do both, but none could do so well and asking for this is thus asking for trouble.

A good forensic analysis will reduce the moral hazard enjoyed by federal supervisors long exempt …

17 03, 2022

SANCTION17

2023-04-03T14:38:13-04:00March 17th, 2022|5- Client Report|

Targeted Digital-Asset Standards Possible in Senate

The Senate Banking Committee’s hearing today on illicit finance focused as expected on cryptocurrency and suggests that targeted legislation addressing specific jurisdiction or compliance issues might advance on a bipartisan basis.  Sen. Warren (D-MA) is, though, seeking a much broader bill.  Joined by other panel Democrats but not Chairman Brown (D-OH), the bill would expand the reach of current sanctions to certain foreign firms, increase the President’s sanction power in this sector, and — most controversially — demand public reports on troublesome firms and individuals.  Ranking Member Toomey (R-PA) made it clear that he is not prepared to go this far, reiterating longstanding views that digital assets enhance innovation and should be more widely used in the U.S. to ensure global leadership in a fast-growing sector.

SANCTION17.pdf

9 03, 2022

Daily030922

2023-04-04T12:16:52-04:00March 9th, 2022|2- Daily Briefing|

President Presses Crypto, CBDC Buttons
We will shortly provide clients with an in-depth analysis of President Biden’s executive order setting the stage for substantive U.S. action across the digital-asset sector.  We note at the outset that, according to the fact sheet, the order comes as close to demanding a CBDC as the President’s authority over the Fed and Secretary Yellen’s reservations doubtless allowed.  The Fed is told to “place urgency” on its research, a demand likely to motivate the Fed to accelerate the very leisurely pace towards some sort of CBDC decision described in last month’s discussion draft (see FSM Report CBDC10).

Long-Awaited LIBOR-Certainty Bill Set for Enactment
Sen. John Tester (D-MN) today to ABA indicated that the Senate version of House-passed LIBOR-transition legislation is in the omnibus spending bill set to pass by the end of this week in order to keep the government open.

CFPB Targets Employer Financial Products, Data
The CFPB today detailed its agenda following meetings on the extent to which U.S. workers are placed at financial risk by their employers.

Daily030922.pdf

18 11, 2021

REFORM210

2023-05-25T16:00:56-04:00November 18th, 2021|5- Client Report|

Omarova Nomination Threatened

As expected, today’s hearing with Comptroller-nominee Saule Omarova included an unprecedented amount of fireworks for what is normally a low profile appointment.  In this report, we omit analysis of the debate on Ms. Omarova’s origins and alleged Marxism, instead assessing policy issues germane should Ms. Omarova succeed in what seems an increasingly difficult confirmation.  Notably, moderate Democrats such as Sens. Tester (D-MT) and Warner (D-VA) were clearly concerned with Ms. Omarova’s opposition to the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA), while Republicans lambasted her for previous comments about cutting off credit to the oil and gas industry and proposals they believed would nationalize U.S. banking.

REFORM210.pdf

18 11, 2021

FedFin on: Omarova Nomination Threatened

2023-05-25T16:01:16-04:00November 18th, 2021|The Vault|

As expected, today’s hearing with Comptroller-nominee Saule Omarova included an unprecedented amount of fireworks for what is normally a low profile appointment.  In this report, we omit analysis of the debate on Ms. Omarova’s origins and alleged Marxism, instead assessing policy issues germane should Ms. Omarova succeed in what seems an increasingly difficult confirmation.  Notably, moderate Democrats such as Sens. Tester (D-MT) and Warner (D-VA) were clearly concerned with Ms. Omarova’s opposition to the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA), while Republicans lambasted her for previous comments about cutting off credit to the oil and gas industry and proposals they believed would nationalize U.S. banking.

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

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