#Waller – Federal Financial Analytics

14 02, 2023

DAILY021423

Eliza Allen2023-02-14T16:52:49-05:00February 14th, 2023|2- Daily Briefing|

What’s Next At The Post-Brainard Fed

Clients have asked us to advise on what may be next for the Fed if Vice Chair Brainard is indeed named as head of the White House NEC, which now seems certain. In our view, there will be no change to FOMC policy given unanimity on this question and the leadership not only of the vice chair, but also of the Fed chairman and FRB-NY president. However, there could be a significant shift in the likelihood of a U.S. CBDC. Ms. Brainard has been the most outspoken advocate of a CBDC (see Client Report CBDC13), but her successor as head of the Fed payment committee is likely to be either Gov. Waller or Bowman, each of whom is a strong CBDC skeptic.

Daily021423.pdf…

10 02, 2023

DAILY021023

Eliza Allen2023-02-10T17:02:31-05:00February 10th, 2023|2- Daily Briefing|

Waller Reiterates Fed’s Wary Cryptoasset Policy

In remarks today, FRB Governor Waller reiterated the Fed’s wary approach to cryptoassets, repeating the Fed’s requirements (see FSM Report CRYPTO31) for banks that wish to engage with crypto customers or activities. Following the collapse of FTX and its ripple effect on banks such as Silvergate (see Client Report CRYPTO38), Mr. Waller stressed that banks engaging with crypto customers must have a thorough understanding of their client’s business models, risk management systems and corporate governance.

Hsu Reprises, Expands Bank Merger Reform

In remarks today, the OCC Chief Counsel on behalf of Acting Comptroller Hsu stressed the need to update competition metrics, financial stability considerations, and community assessments in bank merger reviews, but gave no indication of when new merger policy may be finalized. Mr. Hsu argued that while HHI is an objective and transparent metric, it is no longer suitable for measuring competition because its deposit share-based approach fails to capture the competitive effect of nonbanks and online banking.

FHFA Outlines Substantive FHLB Reform Agenda

As anticipated earlier this week, FHFA Director Thompson today called the status quo of the FHLB system unacceptable and said that FHFA will make “meaningful” recommendations to improve the sector. This will take shape in a report following completion of FHFA’s roundtable series concluding in March. FHFA’s report will make statutory recommendations to Congress and lay out its own regulatory objectives, perhaps starting with an ANPR and/or regulatory guidance or supervisory actions.

Daily021023.pdf…

20 01, 2023

DAILY012023

Eliza Allen2023-01-20T16:43:26-05:00January 20th, 2023|2- Daily Briefing|

Waller Throws Fuel on IOR-Recapture Fire

The American Banker today reports that FRB Gov. Christopher Waller answered a question by saying that the Fed does not need the $2 trillion or so housed in the ONRRP to conduct monetary policy. Mr. Waller also said the Fed does not need the level it now holds of central-bank deposits from banks, noting that QT should continue with very significant reductions even though the precise amount of reserves needed to ensure market liquidity is unknown.

Daily012023.pdf…

2 12, 2022

DAILY120222

Eliza Allen2022-12-02T16:51:39-05:00December 2nd, 2022|2- Daily Briefing|

Menendez Blasts FRB-Chicago Choice

Continuing his campaign for increased diversity and transparency at the Federal Reserve, Sen. Bob Menendez (D-NJ) issued a fiery statement criticizing the Federal Reserve Bank of Chicago’s decision to name a non-Latino president.

Fed Revises PSR to Prepare for FedNow

The FRB today finalized changes to its Policy on Payment System Risk (PSR) to expand access to collateralized intraday credit. These reduce the administrative steps associated with requesting collateralized capacity, action the Fed says would improve intraday liquidity management and payment flows while also assisting the Reserve Banks managing intraday credit risk.

GOP Expands CBDC Attack to Project Hamilton

Readying an inquiry intended to block CBDC when the GOP takes over the house next year, Ranking Member McHenry (R-NC) and six other HFSC Republicans sent a letter to FRB Boston President Susan Collins demanding answers to allegations that private companies are abusing their work on Project Hamilton to position themselves for product sales to financial companies once a CBDC begins.

Fed Finally Outs Climate-Risk Principles

As long anticipated and likely late on Friday in hopes of avoiding critical GOP scrutiny, the Federal Reserve Board today released proposed climate-risk principles. These are “high-level” as is also the case for global edicts in this contentious arena (see FSM Report CLIMATE14), also tracking the OCC’s longstanding like-kind proposal (see FSM Report GREEN12).

Daily120222.pdf…

14 10, 2022

DAILY101422

Eliza Allen2022-10-14T17:04:18-04:00October 14th, 2022|2- Daily Briefing|

Along with a Squeaker Merger Approval, Fed/FDIC Begin Work on Large-Bank Resolvability

As anticipated in Karen Petrou’s speech yesterday, the Fed today unanimously approved and the FDIC will shortly do the same on an advance notice of proposed rulemaking re-enforcing large-bank resolvability. That this complex rulemaking will not slow near-term merger decisions was made clear today also by the Fed and OCC decisions to clear USB’s acquisition of MSFG’s California banking organization.

Covid Comm Presses CFPB for Still More Credit-Reporting Reform

The Chairman of the Select Subcommittee on the Coronavirus Crisis, Rep. James Clyburn (D-NC) sent a letter to CFPB Director Chopra requesting that the Bureau investigate the three nationwide consumer reporting agencies (NCRAs) for failing to properly address credit reporting errors. Citing data, the Subcommittee obtained from the NCRAs, Chairman Clyburn alleges that reporting errors occurred far more often than previously thought, that the majority of disputes do not result in consumer relief, and that the NCRAs discarded “tens of millions” of submissions without investigation by claiming they came from unauthorized third-parties.

Waller Dismisses Threat To Reserve Dollar Without A CBDC

In remarks today, FRB Governor Waller reiterated his skepticism of foreign-issued CBDCs and stablecoins, arguing that the underlying reasons for dollar dominance are non-technological and CBDCs will not affect them. He dismisses concerns that foreign CBDCs would undermine dollar dominance because they could neither reduce payment frictions nor prevent illicit finance.

Daily101422.pdf…

3 06, 2022

DAILY060322

Eliza Allen2023-02-10T16:02:13-05:00June 3rd, 2022|2- Daily Briefing|

Agency Heads Stress Need for CRA Reform

Acting Comptroller Hsu, Fed Vice Chair Brainard, and Acting FDIC Chairman Gruenberg today took questions on the controversial, far-reaching inter-agency CRA regulatory rewrite (see FSM Report CRA32).

FRB-Cleveland Study: Small-Business Lending Continues Race/Ethnic Disparities

A new paper published by the Federal Reserve Bank of Cleveland finds evidence that race-based lending disparities persisted through the pandemic, concluding that Black business owners in particular struggled to receive loans compared to whites, fintechs have not overcome credit disparities, and minority-owned businesses were less likely to receive the PPP amounts for which they applied.

Waller Seeks Balance in Crypto Rules

FRB Gov. Waller today described the advantages of innovative, unregulated markets such as that created by cryptography at its outset.

FinCEN Takes Baby Step to No-Action Letters

Reflecting demands from Congress in recent AML law (see FSM Report AML133), FinCEN today issued an advance notice of proposed rulemaking outlining how a no-action letter process might work.

Daily060322.pdf…