16 05, 2024


2024-05-17T09:49:00-04:00May 16th, 2024|2- Daily Briefing|

Basel Again Contemplates Digitalization

In its first look at technology-enable finance since 2018 (see FSM Report FINTECH18), the Basel Committee today published a report acknowledging that much has happened in areas such as AI, tech platforms, and cloud services since it last looked at digitalization.

SCOTUS Decision re CFPB Also Upholds FDIC, OCC Funding

Although we defer to counsel for interpretation of the Supreme Court’s 7-2 decision today to uphold the CFPB’s funding mechanism, we note its application not only to preserving the Bureau, but also the premium funding mechanism behind the FDIC’s DIF and the OCC’s assessments.

SEC Coming for Bank Investment Funds

SEC Chair Gensler today announced that SEC staff are talking with bank regulators about risks posed by bank trust and retirement-plan collective investment fund offerings, noting that rules governing these funds do not address illiquidity or leverage nor do they provide sufficient investor disclosure or find dependent fund governance.

Senate Strikes Down SEC’s Custody Accounting Bulletin

In a rebuke to the White House and SEC, the Senate today voted 60-38 to approve H.J. Res. 109, the CRA resolution previously approved in the House to revoke the SEC’s Staff Accounting Bulletin 121 requiring balance-sheet recognition of custody assets (see FSM Report CUSTODY5).

FHFA Starts to Rewrite How and Who Home Loans Serve

Building on its FHLB 100 report, the FHFA today advanced codification of a new FHLB mission with a request for public input on how best to do so.

Dems Demand

1 05, 2024


2024-05-01T16:56:16-04:00May 1st, 2024|2- Daily Briefing|

Treasury Urged to Consider Green Bonds

The Treasury Borrowing Advisory Group’s latest report to the Treasury includes a proposal that the U.S. join other sovereigns and issue “green bonds.”  The recommendation comes in a “blue-sky” assessment of Treasury obligations suggesting that Treasury also explore other new instruments such as callable bonds.

Powell Says No Decision on Basel 3 Reproposal

Refuting coverage earlier today that the FRB does not plan to repropose the Basel end-game rules, Chair Powell today said that the central bank has made no decisions yet on either policy or process beyond a commitment to final standards faithful to the global rules and comparable to those in other jurisdictions.  The chair acknowledged that the end-game rules are taking up so much time that other initiatives may be on hold.


26 04, 2024


2024-04-26T16:53:42-04:00April 26th, 2024|2- Daily Briefing|

Treasury Slams PR Banking AML, Sanction Compliance

Providing an unusually blunt warning, Treasury Undersecretary Brian Nelson yesterday stated that further action is necessary in Puerto Rico to combat illicit finance, tighten supervision, and increase transparency.

BCBS Moves Forward With New Counterparty Risk Guidelines

As anticipated, the Basel Committee this week announced that it approved a consultation on proposed guidelines to strengthen bank counterparty credit risk management, replacing the Committee’s 1999 global guidance that failed to address the now-significant role of NBFIs and their heightened leverage.

HFSC Merger Hearing to Test Agency Proposals

The memo for Wednesday’s merger hearing before HFSC’s Financial Institution Subcommittee indicates that witnesses are senior attorneys from the OCC and FDIC sure to be grilled by Republicans on their agencies’ proposed merger-policy rewrites.


18 04, 2024


2024-04-18T17:08:48-04:00April 18th, 2024|2- Daily Briefing|

G7 Backs NBFI Reform

Although prioritizing Ukraine and broad statements about the global economy, the new statement from G7 finance ministers and central bankers also emphasizes the need to pursue the kind of NBFI reforms advanced yesterday by the FSB.

Bowman Battles New Liquidity Regs

FRB Gov. Bowman today reiterated her conviction that sufficient contingency funding should be a matter between banks and supervisors, not a cause for new rules.

Brown, Reed Press Big Banks on Wire Transfer Fraud

Building on their longstanding campaign pressing banks on Zelle, Senate Banking Chair Brown (D-OH) and Sen. Reed (D-RI) today sent letters to the CEOs of JP Morgan, Wells Fargo, Bank of America, and Citi stating that banks have a responsibility to proactively monitor and prevent fraudulent wire transactions and should reimburse customers when these obligations are not met.

House Select Committee Targets Index-Fund Chinese Investments

Building on its prior report pressing financial institutions to address exposures to China and potential systemic risks, the House Select Committee on the CCP today released a bipartisan report sharply criticizing index-fund and asset managers for investing American savings in sanctioned Chinese companies associated with the PLA and/or human-rights abuses.


16 04, 2024


2024-04-16T17:10:39-04:00April 16th, 2024|2- Daily Briefing|

House GOP Takes on New Merger Guidelines

The House Small Business Committee today sent a GOP letter to the FTC and Justice Department  strongly protesting new merger guidelines (see FSM Report MERGER13) on grounds that they sharply curtail needed small-business capital.

House Hikes Iran Sanctions

Working through a series of sanctions bills in the wake of recent geopolitical developments, the House yesterday voted 294-105 to advance H.R. 5921, a bill introduced by Rep. Huizenga (R-MI) that prohibits Treasury from authorizing transactions by U.S. financial institutions in connection with Iranian imports or exports other than food, medicine, and other humanitarian assistance.

House Passes Bill Targeting China-Iran Petroleum Trade

Continuing its response to recent geopolitical events, the House yesterday voted by a 383-11 margin to pass H.R. 5923, a bill from Reps. Lawler (R-NY) and Gottheimer (D-NJ) that would require the President to periodically determine if any Chinese financial institutions have purchased petroleum or petroleum products from Iran, stating that U.S. financial institutions also may not open or maintain certain accounts with Chinese institutions that have done so.

Warren Again Targets OCC Merger Decisions

Continuing recent attacks on the OCC’s approach to mergers, Sens. Warren (D-MA) and Blumenthal (D-CT) yesterday sent a letter to Acting Comptroller Hsu sharply criticizing the agency’s decision first to allow NYCB to acquire Flagstar bank and then do the same shortly thereafter for Signature.

OCC Toughens LCR, NSFR via New Reporting Requirements

The OCC today sought public comment as required by law for …

9 04, 2024


2024-04-09T15:41:41-04:00April 9th, 2024|5- Client Report|

Senators Search for Digital-Asset AML Compromise

Today’s Senate Banking Committee Hearing with Deputy Secretary Adeyemo reviewed the Administration’s request for additional digital asset AML/CFT authority.  Democrats were generally supportive of outlined statutory changes, citing various potential legislative solutions.  Republicans focused their criticism on the Biden Administration’s efforts to sanction Iran, noting the growth of Iranian oil exports to China as a major avenue of sanction evasion.  Although Ranking Member Scott (R-SC) called digital assets the “scapegoat” of this administration, Sens. Tillis (R-NC) and Hagerty (R-TN) floated a discussion draft of legislation to ensure that AML standards apply to centralized, consumer-facing digital asset financial institutions, calling this a good first step to ensuring the broader AML coverage sought in the Warren-Marshall bill (S.2669).  Chairman Brown (D-OH) gave no indication of whether he is prepared to give the GOP’s approach consideration as he and others work to include a digital-asset AML bill in legislative vehicles.  As noted earlier today, Sen. Warren (D-MA) made it clear that she has considerable problems with pending bipartisan House stablecoin legislation; we think compromise here is quite possible if something AML-related advances which Sen. Warren is willing to support.  Surprisingly, Republicans did not use the hearing to press Treasury on SAR surveillance despite Sen. Scott’s letter raising serious concerns in this arena.  Much of the hearing also addressed the committee’s bipartisan bill (S.1271) authorizing sanctions targeting fentanyl trafficking.


5 04, 2024


2024-04-05T16:26:55-04:00April 5th, 2024|3- This Week|

Crossing the AML Frontier

As the schedule below makes clear, Treasury Deputy Secretary Wally Adeyemo will bring his agency’s updated wish list before Senate Banking on Tuesday.  The principal focus of the session is sure to be digital assets, with Treasury refining its prior plan to bring them fully within the AML/CFT enforcement scope not just to the greatest extent possible under current law, but also after key revisions.  Democrats will be most receptive, with Sen. Warren (D-MA) using the session to propel her stalled bill to revise the law to bring what she calls cryptocurrency fully within it.  This is a bipartisan bill, but we still expect many Republicans to complain that data does not support Treasury’s concerns in this sector.  Republicans led by Ranking Member Scott (R-SC) are sure also to use the session to complain that big banks are using SARs to target January 6 protesters and others with whom they do not agree, alleging also that Treasury has pressed banks to do so for its own political purposes.  Sen. Scott has sent a strongly-worded letter on this topic and it is a still more high-priority issue in the House.  As always, an in-depth analysis will follow the hearing pointing to key actions and any changes to the challenging path ahead for the Warren-Marshall bill now that it was omitted from Majority Leader Schumer’s priority list.


5 04, 2024


2024-04-05T16:15:49-04:00April 5th, 2024|2- Daily Briefing|

CFPB Targets FHA, Refi Discount Points

The CFPB released a report finding that the percentage of homebuyers paying discount points roughly doubled from 2021 to 2023, with the increase more pronounced for buyers with lower credit scores.

Treasury KYC Proposal Coming This Year

In remarks, Treasury Undersecretary Brian Nelson made it clear that, as we anticipated, FinCEN’s pending RFI on KYC procedures will be reflected later this year in formal rulemaking as required by the 2021 law (see FSM Report AML133).

Bowman Focuses on Limited Liquidity-Resilience Reform

Building on her comments earlier this week regarding liquidity regulation, FRB Gov. Bowman said that regulators should “encourage, but not mandate” the exercise of contingent-funding plans, noting a fine line between bank supervision and interfering with bank management.

FSB Secretary General Calls For Tokenization Research

Reiterating the FSB’s ongoing stablecoin and digital-asset work, the Board’s Secretary General, John Schindler, today indicated that it would be useful for researchers to explore the potential use cases, benefits and risks of tokenization.


29 03, 2024


2024-03-29T12:07:52-04:00March 29th, 2024|2- Daily Briefing|

Treasury, FinCEN Pulled Into Firearm MCC Fray

Following her December letter to major payment networks, Sen. Warren (D-MA) and Rep. Dean (D-PA) lead 31 Democratic lawmakers urging Treasury, FinCEN, and the banking agencies to issue clear guidance instructing financial institutions and payment-card networks to implement the new Merchant Category Code (MCC) for firearm and ammunition retailers.   Notably, they now press Treasury to use powers they seem to presume Treasury has to set a federal mandate for code use that would then preempt state prohibitions on transaction identification in this high-impact political arena.  The letter also calls on FinCEN to issue an advisory about acts that may precede gun crime and firearm-purchase scenarios that should trigger SARs.  Answers to questions pressing these policies are due by April 11.


27 03, 2024


2024-03-27T16:47:24-04:00March 27th, 2024|2- Daily Briefing|

FRB-Cleveland Study: Banks Beat Capital-Rule Reaper

One of the major complaints banks have raised with the pending end-game capital rules is that the proposed transition period for final implementation does not soften the blow as the agencies argue.

Treasury Points to AI Fraud, Cyber Risk; Presses for New Rules, Best Practices

Adhering to the President’s AI executive order (see Client Report AI3), Treasury today assessed AI risk in the financial sector, concluding that further work is required to address AI-related fraud and cybersecurity risks.

FRB-NY: Mid-Size Regionals Show Deposit/Asset Recovery

A new report from Federal Reserve Bank of New York staff finds that the 2023 failures had little lasting impact on bank deposit costs and funding practices save for banks between the $50 to $250 billion level the study dubs “super-regionals.”

KC Fed: Core-System Providers May Have Undue Market Power

A new report from Kansas City Fed staff finds that three core-system providers dominate this critical sector, making it difficult for depository institutions and especially smaller banks to obtain better service levels.


Go to Top