#treasury – Page 3 – Federal Financial Analytics

14 12, 2023

DAILY121423

Arezou Rafikian2023-12-15T17:22:54-05:00December 14th, 2023|2- Daily Briefing|

Top Senate Democrats Heighten Payment App Scrutiny

Continuing to shift their focus from Zelle to payment-service providers, Senate Banking Chairman Brown (D-OH) along with Sens. Reed (D-RI) and Warren (D-MA) today sent letters to Paypal and CashApp urging them to adopt new scam-reimbursement policies.

Treasury Defends Russian Sanctions, Economic-Warfare Clout

Facing increasing assertions that U.S.-led sanctions are not meaningfully affecting Russia, Treasury today issued a blog stoutly defending sanctions effectiveness.

Reed Presses OFR to Subpoena Shadow-Bank Data

The principal sponsor of the Dodd-Frank provisions creating the Office of Financial Research, Sen. Jack Reed (D-RI), today defended the agency on grounds that it lacks a confirmed director, promising to push the appointment on the floor as quickly as possible.

Basel Targets Stablecoin Reserve-Asset Risk

Moving forward with “targeted” changes to current standards, the Basel Committee today outlined revisions to its crypto standards with significant practical implications.

Liang Disputes Over-Arching Need for New AI Regs

Treasury Under Secretary Liang today argued that AI is not fundamentally different than other financial innovations and is already subject to existing consumer-protection, safety-and-soundness, illicit-finance, and financial-stability guardrails.

FRB-NY Official Highlights AI Promise, Problems, Policy Action

Summarizing a recent Federal Reserve Bank of New York AI conference, the Bank’s chief risk officer, Mihaela Nistor, concluded that AI can now identify GSIB and GSIFI risk due to its ability to detect tail behavior not now captured by relevant models.

Democrats Urge CFPB to Take Second Stand Against Forced Arbitration

Sens. Warren (D-MA) and Sanders (I-VT) were today …

13 12, 2023

DAILY121323

Eliza Allen2023-12-13T16:50:12-05:00December 13th, 2023|2- Daily Briefing|

HFSC Oversight Subcomm Revisits Iran Sanctions

Today’s HFSC Oversight Subcommittee hearing focused on the Biden Administration’s recent efforts to limit terrorist funding from Iran. Chairman Huizenga (R-MI) questioned the need for the November 14^th renewal of a waiver that allows Iraq to pay Iran for electricity, calling for increased pressure on Iran following Hamas’s October 7^th attack.

SEC Sets Out Treasury Central-Clearing Construct

As anticipated, the SEC this morning voted 4-1 to mandate central clearing for Treasury securities used in many repo and reverse-repo transactions, modifying the proposal in key respects still unsatisfactory to Commissioner Peirce. The rule addresses continuing concerns about Treasury-market fragility, in part by reducing the number of highly-leveraged hedge-fund transactions.

GAO Reaches Equivocal Verdict on Digital-Asset Crypto Evasion Risk

Addressing Congressional concerns such as those in the Warren-Marshall crypto-compliance bill, the GAO today issued a report finding that digital assets pose risk to U.S. sanction implementation and enforcement despite mitigating factors that may reduce certain risks.

Brown Presses Bank CEOs on Servicemember Rights

A week after the GSIB CEOs came before the Senate Banking Committee (see Client Report GSIB23), Banking Committee Chair Brown (D-OH) today sent a letter to the CEOs of the four largest consumer banks encouraging them to ensure that active-duty servicemembers obtain all the financial benefits to which they are entitled.

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11 12, 2023

Daily121123

Shane Smith2023-12-11T16:51:51-05:00December 11th, 2023|2- Daily Briefing|

Treasury Broadens Illicit Finance Scope to CRE, Investment Advisors

In connection with an order sanctioning two Afghanis for transnational corruption, Treasury and FinCEN today issued a fact sheet on actions under way to address corruption and other illicit transactions.

White House Threatens Veto on Bill Curtailing OCC, Other Agencies

The House Rules Committee is expected today to clear H.R. 357 for floor action as soon as tomorrow, prompting the White House to issue a veto threat.

Warren Presses Case for Crypto Standards in NDAA

Strengthening her position ahead of a fight with HFSC Chair McHenry (R-NC) over crypto provisions in the NDAA, Sen. Warren (D-MA) today announced that Sens. Hickenlooper (D-CO) and Luján (D-NM) alongside Senate Banking Committee members Warnock (D-GA), Butler (D-CA), and Van Hollen (D-MD) joined Sen. Warren and 14 other Senators as co-sponsors of the Digital Asset Anti-Money Laundering Act.

CGFS Wants LTV-Related Capital Rules Adjusted to Reflect House Prices

Reviewing the link between housing finance and systemic risk, the BIS Committee on the Global Financial System’s report today focused on the need for automatic stabilizers that provide macroprudential controls in this high-risk sector.

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8 12, 2023

DAILY120823

Eliza Allen2023-12-08T16:54:36-05:00December 8th, 2023|2- Daily Briefing|

Basel Study Concludes Banks at Climate Risk Despite Lit-Survey Conclusions

A new Basel Committee working paper provides a literature review of recent analyses of climate risk’s impact on financial institutions to assess the drivers key to establishing the scenario analyses recently outlined in the Committee’s final climate-risk principles (see FSM Report CLIMATE14) and those recently finalized by U.S. banking agencies (see FSM Report CLIMATE17).

EU Regulators Seek AT1 Certainty

Treasury and the EU today issued a joint statement summarizing topics discussed at this week’s U.S.-EU financial regulatory forum. These included financial stability, bank-regulatory developments, AML, sustainable finance, supervisory coordination, and digital-finance operational resilience.

Senate GOP Tackles U.S. Participation in FSB Entities

Sens. Braun (R-IN), Hagerty (R-TN), and Marshall (R-KS) have introduced S. 3446, a bill to require the banking agencies to report on their interactions with nongovernmental international organizations. This is part of the broader campaign to block U.S. agencies from adhering to edicts such as the end-game capital rules, reaching also insurance and securities standards.

HFSC Leadership Blast Hsu’s Competence, Agency Operations

HFSC Subcommittee Chairs Barr (R-KY), Huizenga (R-MI) and Hill (R-AR) sent a letter today to Acting Comptroller Michael Hsu continuing their attacks (see Client Report FINTECH33) against the OCC for its recently reported hiring of an individual with falsified credentials to oversee the OCC’s Office of Financial Technology.

Daily120823.pdf…

29 11, 2023

DAILY112923

Eliza Allen2023-11-29T16:51:26-05:00November 29th, 2023|2- Daily Briefing|

FDIC’s OIG Presses for Non-Capital PCA Triggers, Additional Supervisory Reform

The FDIC’s OIG report on First Republic’s failure is at least as scathing as its SBNY post-mortem.

Treasury Launches Anti-Crypto Enforcement Campaign

In remarks today from Deputy Secretary Wally Adeyemo, Treasury officially launched its anti-crypto sanctions and AML campaign.

Basel Proposes Sweeping Climate-Risk Disclosure Standards

Following the FSB’s finding that most banks were failing to provide meaningful climate disclosures, the Basel Committee today issued proposed climate-risk disclosure standards.

3Q Report Highlights AOCI Risk

The FDIC’s 3Q banking-condition report includes a stunning 22.5 percent rise in the total of HTM and AFS unrealized losses, which now stand at $683.9 billion.

Senate Banking Opens Private-Credit Inquiry

Senate Banking Chair Brown (D-OH) and Sen. Reed (D-RI) today asked FRB Vice Chair Barr, Acting Comptroller Hsu, and FDIC Chair Gruenberg to look into the risks private credit poses to the banking system.

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28 11, 2023

DAILY112823

Eliza Allen2023-11-28T16:35:09-05:00November 28th, 2023|2- Daily Briefing|

FRB-Dallas: Reciprocal Deposits Require Policy Attention

The Federal Reserve Bank of Dallas today released a staff study revaluating reciprocal deposits in the wake of SVB’s failure, concluding that policy-makers should reconsider concentration limits imposed in 2018 in conjunction with brokered-deposit constraints (see FSM Report DEPOSITINSURANCE108).

FRB-NY: OEFs Create Run-Run Risk

The Federal Reserve Bank of New York today released a staff study concluding that open-end funds (OEFs) experienced acute outflows after SVB failed, bank deposits received de facto unlimited insurance, and the FRB established the TBFP.

Chopra Testimony Ducks Tough Questions Ahead of Hearings

CFPB Director Chopra’s testimony for forthcoming hearings with HFSC and Senate Banking this week largely recaps Bureau action since his last appearance before Congress in June, with Mr. Chopra focusing on consumer debt issues highlighted in the CFPB’s recent consumer credit card market report.

FSB Wants Action on Crypto Vertical Integration

The FSB today released a report concluding that, while multifunction crypto-asset intermediaries (MCIs) currently pose limited financial-stability threat, cryptoasset stress events such as those that occurred over the past year present spillover risks to banks with concentrated deposit exposures to firms reliant on cryptoassets.

Basel Presses Supervisors to Enforce GSIB Data-Aggregation Standards

The Basel Committee today released a report finding that only two of the 31 GSIBs are fully compliant with its Principles for effective risk data aggregation and risk reporting (see FSM Report RISKMANAGEMENT7).

Daily112823.pdf…

15 11, 2023

DAILY111523

Eliza Allen2023-11-15T16:42:07-05:00November 15th, 2023|2- Daily Briefing|

HFSC Advances Sanctions Bills

HFSC yesterday reported an array of Hamas-sanctions related measures, extending its reach to Iran, China, and other nations deemed to support Hamas. Bipartisan bills with some hope of advancing include measures to require Treasury to report on financial institution’s involvement with Iranian officials (H.R. 6245), mandate that OFAC develop a licensing program for private firms to conduct nominal transactions with sanctioned entities (H.R. 6370), and to expand secondary sanctions to Chinese banks financing the purchase of Iranian oil (H.R. 5923).

Basel Tackles Digital Fraud

The Basel Committee has released a discussion draft seeking views on supervisory and financial-stability implications of digital fraud. Discussion papers of this sort are often precursors to more formal standards, and this one appears to be no exception. While Basel seeks comment on broad questions such as the definition of digital fraud, it also wants views on the prevalence of digital fraud as commenters choose to define it and resulting risks.

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15 11, 2023

REFORM230

Eliza Allen2023-11-15T15:58:45-05:00November 15th, 2023|5- Client Report|

Bipartisan Capital Bashing Continues in the House

Following yesterday’s Senate Banking hearing (see Client Report REFORM229), today’s HFSC session with top bank regulators again highlighted growing bipartisan consternation over the unintended consequences of the agencies’ capital proposal (see FSM Report CAPITAL230). Although Ranking Member Waters (D-CA) echoed Chairman Brown’s defense, Democratic criticism today went beyond concerns about mortgages and green bonds also to address credit availability, new trading and derivatives standards, capital recognition of securities losses, and insufficient review of the proposal’s quantitative impacts. Republicans continued to bash the proposal for what they said is insufficient economic analysis. Unlike yesterday, attention to the FDIC’s harassment scandal most notably came from Democrats’ side of the aisle, with Ranking Member Waters using all of her questioning time to criticize the FDIC and request a report from each agency describing how they will review sexual-harassment. Reiterating concerns he and Subcommittee on Financial Institutions Chairman Barr (R-KY) recently raised regarding regulators’ interactions with international standard-setters, Chairman McHenry grilled Vice Chair Barr and Acting Comptroller Hsu about staff compensation and agency documentation practices at international events. Mr. Barr emphasized that all Board and staff member compensation comes from the Fed, while Mr. Hsu only said that his agency tracks participation in these bodies to ensure mission alignment. We continue to expect GOP pressure on the international-agency front but no action until GAO completes its report. Chair Gruenberg noted broad alignment with a new incentive-compensation proposal, but revised the initial timeline …

9 11, 2023

DAILY110923

Eliza Allen2023-11-09T17:11:08-05:00November 9th, 2023|2- Daily Briefing|

Bowman Outlines Capital-Comment Priorities

In remarks today, FRB Gov. Bowman reiterated many of her longstanding concerns regarding pending bank rules, going on now to lay out key points on which she believes comment are warranted on the capital standards.

OMB Now Demands Distributional Analytics

Following its order to federal agencies now to consider competitive-impact in regulatory assessments, OMB’s Office of Information and Regulatory Affairs (OIRA) today issued new standards also demanding distributional-impact analyses. As Karen Petrou’s memo this week made clear, it is our view that these are singularly and unfortunately absent from those accompanying the recent spate of banking proposals.

HFSC Plans Sanctions Markup

As anticipated, HFSC is proceeding next Tuesday to mark up a raft of bills addressing Iran and broader sanctions questions. Among the bills is one from Reps. Vargas (D-CA) and Hill (R-AR), H.R. 6245, to require Treasury to report on financial institution’s involvement with Iranian officials.

Daily110923.pdf…

7 11, 2023

DAILY110723

Eliza Allen2023-11-07T17:01:20-05:00November 7th, 2023|2- Daily Briefing|

Treasury Advances Financial-Inclusion Agenda

In conjunction with its read-out of yesterday’s meeting of its most recent financial-inclusion discussion group, Treasury announced that it will shortly release a request for information about how best to accomplish the national financial-inclusion strategy demanded in the Department’s FY23 appropriations.

HFSC GOP Challenges Motives, Process of Basel, NGFS Standard-Setting

As anticipated, today’s Financial Institutions Subcommittee hearing on global banking accords was acrimonious, with Republicans strongly attacking what they characterized as Democratic agency head’s participation in a range of global banking accords as well as the Network for Greening the Financial System.

CFPB Proposes to Extend its Supervisory Reach to Tech-Payment Providers

The CFPB today proposed a sweeping rule bringing tech-platform or fintech companies offering general-use digital-payment services under bank-like consumer-protection standards via more direct CFPB supervision.

Bowman Stands by Basel

Perhaps due to today’s HFSC hearing on global accords, FRB Gov. Bowman today went beyond her ongoing critiques of pending rules to defend participation in the Basel Committee and other forums.

FHFA Starts FHLB Redesign

FHFA today released its long-awaited assessment of the Federal Home Loan Banks, laying out an ambitious program of supervisory, regulatory, and statutory issues.

McHenry Slams CFPB Digital-Payment Proposal

HFSC Chairman McHenry (R-NC) today slammed the CFPB not for usual causes, but because he believes the agency’s proposed supervisory standards for nonbank general-use digital-payment providers will “entrench the status quo” – i.e., the role of banks – by eliminating consumer choice and impeding innovation.

Daily110723.pdf…