#transparency – Federal Financial Analytics

13 02, 2024

DAILY021324

Eliza Allen2024-02-13T17:42:19-05:00February 13th, 2024|2- Daily Briefing|

Durbin Tries Another Approach to Advance Card-Fee Limits

After trying various ways to bring his credit-card fee bill to the floor, Senate Judiciary Committee Chair and Majority Leader Durbin (D-IL) has scheduled a hearing on this controversial bipartisan measure (see FSM Report INTERCHANGE10).

FinCEN Reaches SEC Agreement to Bring Investment Advisers Under AML/CFT Standards

As it has repeatedly promised, FinCEN today revised a 2015 proposal and issued a new one to subject investment advisers to AML and CFT requirements similar to, but still less restrictive than, those that have long governed banks.

HFSC Rallies to Crypto AML/CFT Defense

The HFSC staff memo on Thursday’s Digital-Assets Subcommittee hearing makes it clear that cryptoasset entities will be given a strong platform from which to resist calls in the Senate to subject cryptoasset transactions to AML and sanctions law.

Gensler Reinforces AI Concerns

In remarks today, SEC Chair Gensler acknowledged AI’s benefits in a manner consistent with the President’s executive order (see Client Report AI3), but then launched into a sharp critique of its risks in line with the agency’s pending rule in this arena.

Bowman Takes Fed Accountability, Transparency to Task

In an essay today, FRB Gov. Bowman emphasized that regulatory accountability does not undermine the independence also essential to a sound, innovative banking system.

Gensler Turns to Bank/Hedge-Fund Interconnection

In addition to his speech on AI earlier today, SEC Chair Gensler today engaged in a wide-ranging discussion of key financial policy questions.

Daily021324.pdf…

22 01, 2024

DAILY012224

Eliza Allen2024-01-22T16:57:16-05:00January 22nd, 2024|2- Daily Briefing|

FRB Reconsiders Interchange-Fee Cuts

Bowing to critics in the banking industry and on the Board, the Federal Reserve today extended the comment period on its debit-card interchange fee proposal (see FSM report INTERCHANGE12) by a surprisingly-long ninety days to May 12. The extension is in part due to the Board’s decision to publish additional interchange fee cap data which may have persuaded the Board that the initial data analysis supporting a mandatory pricing reduction was incorrect.

OIG Finds Reserve-Bank Trades Legal, But Problematic

The Federal Reserve’s Office of the Inspector General (OIG) today released long-awaited reviews of personal trades by former Dallas and Boston Reserve Bank Presidents two years ago that raised numerous and often vociferous assertions of conflicts of interest. Indeed, Sen. Warren (D-MA) stated that she believed these epitomized a “culture of corruption” at the Fed, introducing bipartisan legislation to force considerably more transparency at the Reserve Banks.

FSB Plans Global Run-Risk Buffers

The head of the Financial Stability Board, Secretary General John Schindler, today briefed media on the global regulator’s plans to brief the G20 in October about viral-run risk and the standards needed to avert it. Mr. Schindler said little about what the FSB is likely to propose although the Basel Committee is now considering rewrites to global LCR and NSFR standards likely to be reflected in the FSB’s recommendations.

Daily012224.pdf…

9 01, 2024

DAILY010924

Eliza Allen2024-01-09T16:48:15-05:00January 9th, 2024|2- Daily Briefing|

Bowman Now Tackles Supervisory Transparency

In remarks late yesterday, FRB Gov. Bowman added a new concern: supervisory transparency. She indicated that the Fed’s supervisory expectations have changed to the point at which some state agencies think the Fed goes too far, but banks have no way of anticipating possible supervisory injunctions. As a result, she argues for near-term transparency via public notice-and-comment guidance or rulemaking.

Barr Bows a Bit

Answering questions today, FRB Vice Chair Barr indicated that the BTFP may well close on March 11, emphasizing the importance of adhering to the Fed’s emergency-liquidity mandate. That said, loans will be extended until the one-year anniversary and may remain until 2025. He also outlined a significant compromise on the operational-risk section of the end-game rules (see FSM Report OPSRISK22), more closely aligning the proposal with the Basel standards as our outlook anticipated.

Daily010924.pdf…

21 12, 2023

DAILY122123

Eliza Allen2023-12-21T16:29:00-05:00December 21st, 2023|2- Daily Briefing|

OFR Nomination Scuttled

Although Sen. Jack Reed (D-RI) recently called for his confirmation, Ron Borzekowski’s appointment as Director of the Office of Financial Research was scuttled yesterday in the Senate.

Treasury Payment-System Policy Addresses Resilience, Reserve-Currency Status, Inter-Operability

Providing an update on Treasury’s working group on the future of money and payments, Deputy Assistant Secretary for International Financial Markets Nicholas Tabor yesterday indicated that the working group is considering the implications of new payment technologies for smooth international financial system functioning, U.S. national security, privacy, and financial inclusion.

Reserve Banks Promise a Peek

Tidying up, the Federal Reserve Bank of New York today released a new “Transparency and Accountability” policy on behalf of all of the System’s Banks.

Regulators Clarify Bank BOI Expectations

FinCEN was today joined by the FDIC, FRB, OCC, NCUA, and State Bank and Credit Union Regulators in an interagency statement clarifying that FinCEN’s beneficial ownership information Access Rule does not create new regulatory requirements or supervisory expectations for banks to access BOI from the beneficial ownership IT System.

Daily122123.pdf…

24 05, 2023

DAILY052423

Eliza Allen2023-05-24T17:16:58-04:00May 24th, 2023|2- Daily Briefing|

New Fed Paper Shows Link Between Twitter, Market Sentiment, Run Risk

A new FRB staff paper uses natural-language models and social-media data to craft a “twitter sentiment index” (TSI) that is then compared to actual market conditions.

Democrats Press Clawback, Regulatory Fixes as HFSC Considers Transparency Measures

Today’s HFSC mark-up so far has focused on one of Rep. Barr’s (R-KY) three regulatory transparency bills, with Democrats proposing a series of amendments without any deciding votes.

House Oversight Panel Focuses On Supervisory Accountability, Reform

At today’s hearing of the Financial Services Subcommittee of House Oversight on bank failures and supervision at the San Francisco Fed, Subcommittee Chairwoman McClain (R-MI) opened with a series of sharply-worded questions on who oversaw the bank, what factors might have distracted them from traditional supervision, why glaring risk factors were not more forcefully addressed, whether regulators were unduly complacent, whether the Fed and FDIC used all of their regulatory tools, and if the agencies have been objective and transparent in their bank failure post-mortems as well as their accounts of the systemic risk exception.

Markup Votes Postponed for Transparency, LLPA Bills

Since our last alert, Democrats continued to submit amendments for Rep Barr’s (R-KY) transparency bill at today’s HFSC markup and party lines cemented over Rep. Davidson’s (R-OH) LLPA bill.

Daily052423.pdf…

19 05, 2023

Al052223

Eliza Allen2023-05-19T17:03:18-04:00May 19th, 2023|3- This Week|

Well, That Was Interesting!

As we anticipated, a series of hearings last week clarified what the banking agencies plan, what Congress thinks about it, and what’s soon to come. Based on the reports cited below, we draft the following conclusions from the hearings, testimony, and reaction thereto:

Al052223.pdf…

19 05, 2023

DAILY051923

Eliza Allen2023-05-19T17:03:07-04:00May 19th, 2023|2- Daily Briefing|

Bowman Strengthens Stand Against New Rules, Possible Supervisory Overkill

In case anyone doubted her meaning last week, FRB Gov. Bowman today repeated her strong opposition to the regulatory rewrites spelled out in what at first seemed the Fed’s but is now apparently only Vice Chairman Barr’s report (see Client Report REFORM221). Ms. Bowman also reiterates her call for an independent study, continued tailoring, and improved supervision.

Bills To Reduce Regulatory Independence Advance

As anticipated at his last hearing, HFSC Financial Institutions Subcommittee Chairman Barr (R-KY) has now formally introduced three regulatory transparency bills. We will shortly provide clients with in-depth analyses of these bills, which we expect quickly to proceed to mark-up on largely party-line votes.

Warren Pounces On Reports Of Treasury-Bond Assessment Proposal

Sen. Warren (D-MA) yesterday sent a strongly-worded letter to FDIC Chairman Gruenberg demanding that the FDIC reject reported big bank plans to replenish the DIF with at-par Treasury bonds rather than the proposed special assessment (see FSM Report DEPOSITINSURANCE120).

BIS’s Carstens Dismisses Crypto, Calls For Tighter Non-bank Controls

In a wide-ranging speech today, BIS General Manager Agustín Carstens sharply criticized cryptocurrencies and called for greater regulation of the nonbank sector to avert a systemic financial crisis.

Daily051923.pdf…

17 05, 2023

REFORM225

Eliza Allen2023-05-17T16:03:47-04:00May 17th, 2023|5- Client Report|

HFSC Subcommittees Plow More Ground for Supervisory Accountability, Capital Reform, Clawbacks

A joint hearing today of HFSC’s Financial Institutions and Oversight Subcommittees expanded on themes at yesterday’s full Committee session with bank regulators (see Client Report REFORM224) and Senate Banking’s session with SVB’s and SBNY’s CEOs, with First Republic’s CEO now added to the Congressional firing line. Much in this session repeated prior themes, with Rep. Dave Scott (D-GA) going beyond prior, sharp criticism to accuse SVB’s CEO of being the worst CEO in U.S. financial history. Democrats demanded that he give up the bonus he received the day SVB failed and he went to Hawaii, receiving little satisfaction on this score and continuing demands for clawback legislation. Rep. Bill Foster (D-IL) continued to argue that contingent-capital instruments would ensure smooth resolutions, a position he said is shared by Chairman McHenry (R-NC) even though it supports a controversial Fed/FDIC proposal for regional-bank TLAC (see FSM Report RESOLVE48).

REFORM225.pdf…

19 04, 2023

DAILY041923

Eliza Allen2023-04-19T17:26:14-04:00April 19th, 2023|2- Daily Briefing|

Hsu Treads Carefully Into Open Banking

In remarks today, Acting Comptroller Hsu highlighted the liquidity, cybersecurity, and even structural challenges that may arise from open banking. He argues that account portability may lead to heightened retail deposit liquidity risk and increased retail outflows, noting that online and mobile banking may well have facilitated the large outflows experienced by SVB and SBNY. Banks could require new cyber-risk controls due to the increase in volume and complexity of consumer data.

Chopra Expands Anti-Discrimination Campaign

Under heavy fire today from a staff data breach, CFPB Director Chopra nonetheless emphasized the agency’s strong stand against credit discrimination. Building on a recent statement of interest in a filing related to student loan litigation, the Bureau is now not only combatting traditional forms of discrimination, but also the targeting Mr. Chopra describes as reverse redlining across the spectrum of consumer-finance products and every contact point in the credit origination, servicing, marketing, and technology process.

Daily041923.pdf…

31 03, 2023

DAILY033123

Eliza Allen2023-03-31T16:49:24-04:00March 31st, 2023|2- Daily Briefing|

Senate Presses Fed Transparency, Accountability

Responding in part to testimony earlier this week (see Client Report REFORM217), Sens. Tillis (R-NC), Warren (D-MA), and seven colleagues have introduced legislation (S. 1160) to bring Federal Reserve Banks under the FOIA and force greater responsiveness to Congress – a response also to last year’s battle over master-account data and continuing crypto controversies. The measure would also mandate an independent IG, force the Fed to respond to Congressional ethics inquiries, and allow Senate Banking and HFSC bipartisan leadership to review confidential supervisory data. Sen. Tillis and three other Republicans also introduced S. 1155 to redesign the Fed.

Senate Dems Implicitly Chide Administration Reg-Reform Agenda, Demand Holistic Assessment

Following one of the somewhat surprising lines of inquiry at Senate Banking’s SVB hearing, Senate Banking Chairman Brown (D-OH) and all the Committee Democrats today pressed back against the list of rules the White House yesterday prioritized for rewrites. While they did not take issue with that list, they also want FSOC to undertake a holistic review of banking, consumer, and systemic rules, noting the importance in this effort of also protecting small banks from undue harm. The senators expressly want FSOC to go beyond the President’s focus on what they call “traditional” prudential standards also to examine non-quantifiable risks such as social media and AI.

Daily033123.pdf…