#Warren

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20 09, 2023

DAILY092023

2023-09-20T17:11:25-04:00September 20th, 2023|2- Daily Briefing|

Brown, Rounds Agree: AI Credit-Underwriting Warrants Regulatory Attention

At today’s Senate Banking hearing on AI in financial services, Chairman Brown (D-OH) argued that AI should be governed by the same rules as the rest of the financial system, with new law necessary if existing rules prove inadequate.

HFSC FinCEN Bills Draw Bipartisan Support

HFSC Chairman McHenry (R-NC) at today’s markup praised the scope of bipartisan support on today’s FinCEN, sanctions, and other national security bills.

HFSC Delays Bipartisan Sanction Bill Vote

Today’s HFSC markup also considered two bills addressing sanctions policy: H.R. 5512 from Rep. Sherman (D-CA) to require bank subsidiaries to comply with sanctions on Russia and Belarus and H.R. 760 from Rep. Barr (R-KY) imposing blocking sanctions on Chinese defense or surveillance companies and the third-party companies that supply them.

HFSC Dems Continue Strongly Opposing GOP Anti-CBDC Measure

The bipartisan spirit of today’s HFSC markup dissipated as Members fiercely debated H.R. 5403 from Majority Whip Emmer (R-MN), a bill that would bar the Fed from issuing a CBDC to individuals.

Gruenberg: New Shadow Bank Standards Would Cure a Capital Proposal Problem

FDIC Chairman Gruenberg today gave remarks arguing that FSOC along with OFR should establish a new reporting framework to assess the financial stability risks posed by nonbanks and ensure that public reporting is sufficient for market participants to understand nonbank counterparty risk.

HFSC Reports FinCEN, Sanctions, CBDC Bills

HFSC today unanimously reported H.R 760 sanctioning Chinese defense companies, H.R. 5512 requiring bank subsidiaries to comply with sanctions …

18 09, 2023

DAILY091823

2023-09-18T16:46:46-04:00September 18th, 2023|2- Daily Briefing|

Dems Slam Fed Climate Scenarios

Sens. Markey (D-MA), Warren (D-MA), Sanders (I-VT) and eight additional Democratic Senators and House Members sent a letter to Chair Powell today demanding that the Fed ensures that the financial institutions it oversees properly address the threat of climate change.  Claiming that the Fed’s climate pilot scenarios are not sufficiently rigorous, the letter demands that the Fed require banks to submit and execute plans to align their activities with climate targets, such as reducing financed emissions.

Top Treasury Official Sounds Big-Tech Payments Alarm

Treasury Assistant Secretary for Financial Institutions Graham Steele Friday warned that Big-Tech firms’ entry into financial services could result in increased market concentration and predatory pricing, highlighting their ability to leverage existing commercial relationships as well as network effects.  Mr. Steele also named consumer-data rights and junk fees as top priorities, praising the CFPB’s actions on personal data (see FSM Report DATA3) and credit-card late fees (see FSM Report CREDITCARD36).

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15 09, 2023

DAILY091523

2023-09-15T16:55:06-04:00September 15th, 2023|2- Daily Briefing|

Warren Adds Interest-Rate Risk to Fed Concerns

Heightening her attack on Fed interest-rate hikes, Sen. Warren (D-MA) yesterday pressed Treasury Secretary Yellen for FSOC action addressing interest-rate risks.  Those she highlights include unrealized bond losses, CRE hazard, and challenges in the leveraged-loan market.  Citing Moody’s recent credit downgrade of 10 regional banks, Ms. Warren voiced concern that interest rate risk still poses a systemic threat in these three areas and urged FSOC to act quickly to mitigate risk without suggesting specific actions.

Daily091523.pdf

30 08, 2023

Daily083023

2023-08-31T07:41:42-04:00August 30th, 2023|2- Daily Briefing|

FRB Chicago Study Finds Nonbanks Act as Global Shock Absorbers

A new empirical FRB Chicago study finds that nonbanks act as global shock absorbers during times of stress because tightening US monetary policy is associated with increased nonbank syndicated dollar lending compared to banks.  This of course frustrates monetary-policy transmission in the U.S., but the paper focuses on EMEs where the principal risk is macroeconomic and financial shock.

Comment Period Reopened on Controversial Custody Proposal

The SEC today reopened the comment period on its controversial investment-advisor asset custody NPR.  As noted (see FSM Report CUSTODY5), this thorough rewrite would redefine qualified custodians to exclude most crypto firms, as well as foreign firms and other entities the Commission does not believe ensures sufficient safeguards.

FSB Seeks Comment On Securitization Reforms

The FSB today announced that it will evaluate the impact of G20 securitization reforms (see FSM Report ABS37) on its financial-stability objectives as well as on securitization markets.  The evaluation will focus on regulatory capital regulation governing securitization exposures and RMBS and CDO/CLO market segments, although the FSB will also consider including other segments.

Warren Blasts Powell, Alleging Capital-Reg Delay, Concessions

Expanding on her longstanding criticism of Chair Powell, Sen. Warren (D-MA) sent him a letter today chastising him for what she views as undue deference to big-bank lobbying and demanding that he press for the rapid completion of tough new capital rules.

Daily083023.pdf

9 08, 2023

DAILY080923

2023-08-09T16:35:20-04:00August 9th, 2023|2- Daily Briefing|

Brown, Other Senate Dems Demand Fast Action on Fed Merger Policy Rewrite

Building on Sen. Warren’s (D-MA) longstanding Fed criticism, Chairman Brown (D-OH) along with Sens. Warren, Reed (D-RI), and Fetterman (D-PA) today directly demanded a substantive and speedy rewrite of Fed merger policy to ensure that statutory requirements related to financial-stability impact are met.  The letter not only criticizes past mergers Sen. Warren has long said are “rubber-stamped” and JPMorgan’s acquisition of First Republic, but also cites the Fed’s decision to allow UBS to acquire Credit Suisse.

Waters Doubles Down On Opposition To GOP Stablecoin Bill

In stark contrast to HFSC Chairman McHenry’s (R-NC) comments praising PayPal’s new payment stablecoin, Ranking Member Waters (D-CA) today sharply criticized the product and the risks its poses  given that the HFSC GOP has advanced a bill she thinks both highly problematic and unlikely to be enacted.

Daily080923.pdf

8 08, 2023

Daily080823

2023-08-08T16:56:31-04:00August 8th, 2023|2- Daily Briefing|

IMF Staff Presents New CCyB Trigger

A new IMF paper weighs into an important question inherent in the new construct of U.S. regulatory capital:  how to set the counter-cyclical capital buffer (CCyB) to anticipate financial stress.  As noted in a recent Karen Petrou memo, the Basel CCyB (see FSM Report CAPITAL173) is linked to a ratio of credit growth to GDP; the Fed’s CCyB (see FSM Report CAPITAL213) gives the Fed unlimited discretion to sound the capital alarm or release the buffer.

GAO Asks Banking Agencies To Focus On Blockchain, Alternative Data, PCA

The GAO today issued its annual policy recommendations to the federal banking agencies and the SEC.  All of the agencies are asked to coordinate policy on blockchain to better address risks; the agencies neither agreed nor disagreed, each flagging routine interagency engagement.  GAO maintains that coordination efforts have failed to address cryptoasset risks in a timely manner.

Warren Presses Goldman Hard on SVB Conflicts

Not letting one letter to Goldman Sachs suffice when it comes to SVB, Sen. Warren (D-MA) yesterday sent another letter to the bank taking serious issue with its response, particularly regarding the steps it took to avoid conflicts of interest.

OCC Targets Fintech Partnerships

Continuing its fintech-partnership crackdown, the OCC today clarified that its legal lending-limit standards apply to purchased loans and particularly to those purchased from nonbanks.

IMF Reiterates Need for U.S. Mid-sized Bank Regs, Better Contingency Funding

Building on its prior assessment of U.S. performance in …

4 08, 2023

DAILY080423

2023-08-04T16:31:03-04:00August 4th, 2023|2- Daily Briefing|

Fed Study: GSIB Leverage Ratios No Cause of Treasury-Market Stress

As regulators prepare to extend the supplementary leverage ratio (SLR) to all large banks (see FSM Report CAPITAL230), a new Fed staff research note concludes that the higher leverage ratio did not undermine dealer-bank capacity.

Warren, Dems Use North Korea Case to Press Crypto AML/Sanctions Bill

Ahead of a hard push next month to add crypto AML and sanction standards to the defense authorization, Sens. Warren (D-MA), Van Hollen (D-MD), and Kaine (D-VA) sent a letter to Treasury Under Secretary for Terrorism and Financial Intelligence Nelson and National Security Advisor Sullivan calling on the Administration to crack down on North Korea’s illicit crypto activity.

Warren, Porter Demand Stricter FDIC Crackdown on Uninsured Deposit Underreporting

Following last week’s FDIC financial institutions letter highlighting that some banks incorrectly estimated uninsured deposits in their Call Reports, Sen. Warren (D-MA) and Rep. Porter (D-CA) late yesterday sent a letter to FDIC Chairman Gruenberg taking serious issue with the agency’s “feeble” response.

Daily080423.pdf

26 07, 2023

DAILY072623

2023-07-26T16:37:20-04:00July 26th, 2023|2- Daily Briefing|

Senate Democrats Stand Firm On “Junk Fee” Campaign

Today’s lightly-attended Senate Banking Financial Institutions Subcommittee hearing on banking and consumer fees showcased broad Democratic alignment with the Administration’s “junk fees” campaign and persistent Republican aversion to this effort as well as to the CFPB.

CFPB Flags UDAAP, Other Problematic Practices for Enforcement

The CFPB’s latest supervisory report not only details recent actions and priorities, but also expressly stipulates that certain activities identified in the course of supervision that have yet to be addressed by formal agency action are UDAAP.

SEC Targets AI Advice

Acting as anticipated following Gary Gensler’s fiery talk last week about AI risk, the SEC today voted 3-2 to propose new rules curtailing what it believes to be broker dealer and investment-adviser conflicts of interest due to predictive analytics.

Crypto-Jurisdiction Bill to Advance; Stablecoin Measure Likely to do so Tomorrow

Chairman McHenry (R-NC) and Ranking Member Waters (D-CA) announced at today’s HFSC markup that bipartisan negotiations on the committee’s stablecoin bill continue and despite the absence of any breakthrough.

DOJ Officials Seeks Merger Answers

In remarks today, Policy Director David Lawrence of DOJ’s Antitrust Division went beyond new, draft DOJ/FTC merger guidelines (see FSM Report MERGER12) to lay out questions on which the agencies particularly seek answers.

Powell Stresses Bank Discount Window Readiness

FRB Chairman Powell’s press conference today focused almost entirely on monetary policy, but the chair agreed that the discount window performed badly during the recent crisis and that banks need to …

25 07, 2023

DAILY072523

2023-07-25T17:18:26-04:00July 25th, 2023|2- Daily Briefing|

Key Democrat Takes On Fed Rate Hikes

Ahead of today’s FOMC meeting, Joint Economic Committee Chair Heinrich (D-NV) yesterday sent a letter to Fed Chair Powell cautioning against additional policy tightening.

Second HFSC Markup Targets Stablecoins, Regulatory Restrictions, ESG

Thursday’s HFSC has now added another day to its mark-up calendar this week, moving the stablecoin and ESG bills to Thursday doubtless in order to avoid an endurance contest before the August recess and still meet Chairman McHenry’s (R-NC) commitments.

Senate GOP Tries to Block Capital Rewrite

Just days before the banking agencies take up new capital rules, Senate Banking Ranking Member Scott (R-SC) and ten other committee Republicans sent a letter to Chairman Powell demanding greater transparency and prior consultation.

Waters Presses FHFA for FHLB Reform

Following FHFA listening sessions and in anticipation of a final report this September on the FHLB system, HFSC Ranking Member Waters (D-CA) late yesterday sent a letter to FHFA Director Thompson laying out a series of recommendations to significantly reform the system.

Ag Committees Slam SEC Custody Proposal

In a letter to SEC Chairman Gensler released today, Senate Agriculture Committee Ranking Member Boozman (R-AR) and Chairwoman Stabenow (D-MI) along with House Ag. Committee Chairman Thompson (R-PA) and Ranking Member Scott (D-GA) raised strong objections to what they called serious flaws in the SEC’s proposed custody rule (see FSM Report CUSTODY5).

Warren, Scott Renew Fed-Ethics Campaign

Continuing their bipartisan campaign against the Fed, Sens. Warren (D-MA) and Scott (R-FL) yesterday sent a letter

21 07, 2023

DAILY072123

2023-07-21T17:06:34-04:00July 21st, 2023|2- Daily Briefing|

GOP’s Crypto Bills Still Face Significant Partisan Problems

HFSC is now set for a Wednesday mark-up of two controversial crypto bills, one with shared jurisdiction with the Agriculture Committee governing regulatory jurisdiction and the other setting federal standards for payment stablecoins.

Senior GOP Senator Proposes Sweeping FRB Reform

Going beyond bipartisan legislation with Sen. Warren (D-MA) to redesign Fed governance to increase  political accountability, Sen. Scott (R-FL) on his own has introduced a legislative package that would sharply contract the Fed’s monetary-policy and emergency-liquidity authority.

Clawback Bill Faces Tuberville Blockade

Reinforcing his stand against the executive-compensation clawback bill reported 21-2 by Senate Banking (see FSM Report COMPENSATION37), Sen. Tommy Tuberville (R-AL) today posted an op-ed laying out his reasoning.

Daily072123.pdf

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