#Waters – Federal Financial Analytics

20 03, 2023

DAILY032023

Eliza Allen2023-03-20T17:07:20-04:00March 20th, 2023|2- Daily Briefing|

HFSC Sets Plan For Crisis Review

In what may be an effort to buy some time as the banking crisis hopefully eases and tempers cool, HFSC Chairman McHenry (R-NC) and Ranking Member Waters (D-CA) late Friday asked GAO to conduct an immediate review of recent bank failures, insider actions, and related policy actions such as the March 12 systemic rescue and new Fed facility.

Warren Piles On To Powell With New IG Study

Sen. Warren (D-MA) in a letter Saturday applied even more pressure on the banking agencies by urging the Fed’s, FDIC’s, and Treasury’s IGs to conduct independent investigations of the bank as well as “regulatory and supervisory problems” leading to failures, renewing claims that Chair Powell is especially culpable.

McHenry, Scott Take Gloves Off For Fed, FDIC Investigation

HFSC Chairman McHenry (R-NC) and Ranking Senate Banking Member Scott (R-SC) today sent letters to Chair Powell and Chair Gruenberg, making it clear that – for all Mr. McHenry’s more conciliatory statements – Republicans are launching an investigation premised on potential missteps by the Fed and/or FDIC warranting rapid remediation.

House GOP Conservatives Oppose Liberalized FDIC-Coverage Ceiling

Countering demands for an end to FDIC insurance ceilings not only from Sen. Warren (D-MA), but also from their GOP peers, the very conservative House Freedom Caucus today released a statement demanding an end to what it calls “big government bailouts.”

Daily032023.pdf…

17 03, 2023

DAILY031723

Eliza Allen2023-03-17T16:53:13-04:00March 17th, 2023|2- Daily Briefing|

Biden Positions White House On Side Of SVB/SBNY Enforcement Actions

Reflecting growing political heat as SVB/SBNY revelations continue, President Biden today called on Congress to toughen enforcement penalties for senior management at failed banks. As noted on the fact sheet accompanying the formal request to Congress, the White House believes current law makes it unduly difficult for regulators to claw back executive compensation following a receivership and/or to bar individuals from further banking-industry employment.

HUD Reinstates Tough Disparate-Impact Standard

HUD today announced a final rule rescinding a 2020 rule governing Fair Housing Act disparate impact claims (see FSM Report FAIRLEND8) and restoring a 2013 discriminatory effects rule (see FSM Report FAIRLEND4). The fact sheet accompanying the announcement claimed that the complications added in 2020 rule would have made it “virtually impossible” for HUD and private plaintiffs to prove discrimination.

Waters Pledges Bill on Failed-Bank Execs, Pushes Incentive-Comp Regs

Shortly after the President called on Congress to toughen penalties for failed bank executives, HFSC Ranking Member Waters (D-CA) sent a letter today to Fed, FDIC, and SEC leadership announcing she is crafting legislation to do so. The letter also reiterated Democratic calls for the agencies to hold SVB and SBNY executives accountable and urged them to finalize longstanding compensation rules (see FSM Report COMPENSATION30), which Ms. Waters demanded include strong clawback provisions.

Daily031723.pdf…

15 03, 2023

DAILY031523

Eliza Allen2023-03-15T16:58:30-04:00March 15th, 2023|2- Daily Briefing|

Waters Reiterates ICE/BKI Opposition

HFSC Ranking Member Waters (D-CA) released a statement today applauding the FTC’s move to block Intercontinental Exchange from acquiring the mortgage software company Black Knight.

Progressives Press For Tailoring Redo

Cementing prior denouncements of 2018 Dodd-Frank “rollbacks” into legislative action, 17 Democratic senators and 31 House Members today took direct aim at Trump-era banking policy by introducing legislation that would repeal Title IV of the Economic Growth, Regulatory Relief, and Consumer Protection Act.

Bowman Presses Small-Bank Mergers, Climate Caution, Third-Party Guardrails

In remarks today, FRB Governor Bowman noted that delays in merger reviews cause significant operational and reputational risks and suggested considering all competitors when evaluating a small bank merger’s competitive effect to reduce delays.

New CFPB RFI Brings Data Brokers Under Scrutiny

Ahead of a planned rulemaking, the CFPB today released an RFI seeking comments on the business practices of data brokers, focusing on new business models to determine if certain practices fall under the scope of FCRA.

Warren, Blumenthal Call on DOJ, SEC to Investigate SVB

Although media reports indicate that an investigation is already under way, Sens. Warren (D-MA) and Blumenthal (D-CT) sent a letter today to Attorney General Garland and SEC Chairman Gensler urging them to investigate senior SVB officials if they are not already doing so.

FHFA Delays New DTI-Based Upfront Fee

Following an announcement this January that FHFA would implement changes to Fannie and Freddie’s single-family pricing framework, Director Thompson today announced that the Agency will delay the effective …

15 03, 2023

FedFin Assessment: Post-SVB Deposit Insurance Reform

Arezou Rafikian2023-03-15T16:58:47-04:00March 15th, 2023|The Vault|

Cementing prior denouncements of 2018 Dodd-Frank “rollbacks” into legislative action, 17 Democratic senators and 31 House Members today took direct aim at Trump-era banking policy by introducing legislation that would repeal Title IV of the Economic Growth, Regulatory Relief, and Consumer Protection Act. But, while this initiative is gaining considerable attention, its legislative prospects are dim – indeed, even Senate Banking Committee Chairman Brown (D-OH) suggested as much…

The full report is available to retainer clients. To find out how you can sign up for the service, click here and here.

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15 03, 2023

DEPOSITINSURANCE118

Eliza Allen2023-03-15T12:48:33-04:00March 15th, 2023|5- Client Report|

FedFin Assessment: Post-SVB Deposit Insurance Reform

As promised in our first post-SVB impact assessment (see Client Report RESOLVE49), this report begins a series of analyses of specific policy issues. We start here with possible changes to FDIC insurance based on comments from Reps. Maxine Waters (D-CA), Blaine Luetkemeyer (R-MO), and other arguing either that the $250,000 limit for FDIC coverage needs to be eliminated or sharply increased. We also analyze the prospects for shifting the burden of higher DIF premiums to large banks as recommended by the ICBA, ending the FHLB’s super-lien due to the resulting, significant increase in FDIC resolution costs in recent failures, changes to the treatment of brokered deposits, and revisions to the FDIC’s overall risk-based assessment system (see FSM Report DEPOSITINSURANCE96). Other resolution issues – e.g., the future of proposed regional-bank standards (see FSM Report RESOLVE48) and bank merger policy will be covered in future reports along with the prospects for significant changes in bank capital, liquidity, and other prudential standards.

DEPOSITINSURANCE118.pdf…

13 03, 2023

DAILY031323

Eliza Allen2023-03-13T17:25:04-04:00March 13th, 2023|2- Daily Briefing|

Biden Promises Regulatory Revamp

In an effort to restore confidence in the banking system, President Biden announced that he will ask Congress and the banking regulators to strengthen regulations that were rolled back by the Trump administration.

Political Battle Lines Take Shape

In the wake of yesterday’s decision to protect all SVB depositors, Members of Congress are now positioning themselves for future action.

Biden Presses Stability in Wake of SVB, Signature Rescues

Reflecting ongoing uncertainties and political fallout, President Biden later this morning reiterated comments from earlier today noted in our prior alert.

Comment Deadline Set for GSE Capital Proposal

The Federal Register today includes the FHFA’s proposal to refine Fannie and Freddie’s capital construct.

Fed Tries to Get Ahead of SVB Storm

Even as Sen. Hagerty (R-TN) led calls to review Fed supervision, the Fed today announced that Vice Chair Barr will lead a review of SVB’s supervision and regulation.

Daily031323.pdf…

10 03, 2023

DAILY031023

Eliza Allen2023-03-10T16:57:08-05:00March 10th, 2023|2- Daily Briefing|

Anti-Woke Is Worse Than Woke When It Comes To Financial Distortion

A new study released by the Federal Reserve Bank of Chicago concludes that anti-woke policies distort financial outcomes by looking at 2021 Texas law prohibiting municipalities from conducting certain businesses with financial institutions that violated the law’s anti-woke criteria.

CFPB Opens Mortgage Servicing to Regulatory Rewrite

The CFPB today published an RFI seeking the effect of TILA mortgage loan originator rules on small businesses as part of a regular ten-year review.

FedFin Assessment: SVB’s Failure And Its Aftermath

As clients will recall, we predicted Silvergate’s failure, but not its contagion risk for Silicon Valley Bank, which failed earlier this morning following the combination of a run and capital shortfall.

SVB Rumors Stoke Treasury Response

Following the sudden failure of Silicon Valley Bank, Treasury Secretary Yellen today convened the heads of the Fed, FDIC, and OCC to discuss its ramifications.

Congress Begins SVB Inquiry

In the first of a series of statements sure to come from Congress, HFSC Ranking Member Waters (D-CA) today said that she was alarmed by the collapse of SVB and that she is monitoring and convening Committee members with regulators.

Daily031023.pdf…

9 03, 2023

DAILY030923

Eliza Allen2023-03-09T16:52:09-05:00March 9th, 2023|2- Daily Briefing|

Barr Emphasizes Steep Barriers to Bank Crypto, Retail CBDC

In remarks today, FRB Vice Chair Barr reiterated that banks should take an extremely cautious approach when engaging with cryptoassets or counterparties and stressed the need to include stablecoins within the regulatory perimeter. For the first time, the Fed made it clear that, while it is open to DLT, smart-contract, and similar payment-system innovations, it is dubious that any will have near-term benefits and all require careful regulatory design.

Expected Battle Lines Form Over CFPB Future

As predicted, today’s HFSC Subcommittee hearing on the CFPB was a partisan and raucous session, with Republicans focusing most strongly on legal and constitutional issues around the Bureau’s funding and enforcement authority and Democrats defending both its legality and effectiveness. Much will come of this in terms of HFSC and floor votes, but we expect no statutory change in this Congress under this President.

Hill Sets Table for Bipartisan Crypto Action

Today’s Digital Assets Subcommittee hearing was considerably more conciliatory than the CFPB session earlier today, with Chairman Hill (R-AR) making clear in his opening statement that he is not launching a partisan attack against the SEC, the banking agencies, or the White House. He hopes instead to press bipartisan legislation, thanking former Chair Waters (D-CA) for her work on stablecoins and emphasizing the need not only for new law there, but also across the array of pending digital-asset questions.

Daily030923.pdf…

28 02, 2023

DAILY022823

Eliza Allen2023-02-28T17:16:34-05:00February 28th, 2023|2- Daily Briefing|

CFPB Treads Gingerly on Mortgage-Disclosure Exceptions

In a notice emphasizing the CFPB’s distaste for allowing regulatory exceptions, the Bureau asks for comment on an application for one to which it seems a bit more sympathetic.

FDIC Sees Sunny Side of Bank Earnings Data

In its review of banking-industry fourth-quarter results, the FDIC today notes a sharp increase in the gap between bank loan yield and deposit interest costs.

Basel Forecasts End-Game Capital Shortfalls

The Basel Committee today issued its latest monitoring report, finding that large global banks saw capital decreases to pre-pandemic levels even as liquidity ratios continued to improve.

Bipartisan China Bills Fly Through HFSC Markup

As anticipated, HFSC today reported five bills to censure China and protect Taiwan, along with bills addressing drug-trafficking financing, biomedical security and bank service company examinations.

Democrats Stand Firm versus Privacy Preemption

Following an orderly and bipartisan start to today’s HFSC markup, Democrats and Republicans today came to verbal blows over the Chairman’s data privacy bill.

Daily022823.pdf…

7 02, 2023

DAILY020723

Eliza Allen2023-02-07T16:53:41-05:00February 7th, 2023|2- Daily Briefing|

CFPB Extends Digital Marketing Reach To “Pay-To-Play” Platforms

Expanding its reach to other forms of digital marketing (see FSM Report FINTECH30), the CFPB today issued an advisory opinion stipulating that what it calls “pay-to-play” consumer platforms presenting mortgage and settlement options are likely to violate the law.

High-Impact Fed Charter Policy Takes Effect

The Federal Register today includes the FRB’s policy statement rejecting the “states as laboratories for change” construct by conforming state member bank powers largely only to those authorized for national banks. The statement is now effective.

GOP, Democrats Vie for Toughest Anti-China Stance

As we anticipated, at today’s full HFSC Committee hearing on China, Chairman McHenry (R-NC) made it clear that he intends action addressing emerging financial and economic risks, reiterating principles such as a commitment to free markets, opposing policies that stifle innovation, and preventing “malign” financial activities or interests.

Barr Backs Short-Term, Small Dollar Lending, Flexible Public-Welfare Option

In remarks today, Fed Vice Chair Barr stressed the need to eliminate discrimination in banking, noting the importance of the CRA rewrite (see FSM Report CRA32) to address redlining and community development. However, he was silent as to the date by which the agencies are likely to issue the long-awaited final rule.

Daily020723.pdf…