FedFin Assessment: Are Crypto’s Wins the Banks’ Losses?
One of the more striking results of the election is the enormous win crypto firms got for their $135 million of Congressional-campaign spending: victories so far in every race it entered. Much of this is due not just to crypto’s lure; instead, it reflects choices based not only on a candidate’s crypto sentiments, but also on the opponent’s vulnerability. As a result, at least some of crypto’s luster could fade when Congress gets back to work. However, Donald Trump campaigned on a pro-crypto platform, endorsing legislation such as the Lummis (R-WY) bill to create a “strategic reserve” for bitcoins…
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FedFin: Don’t Wait Up
Markets are ablaze with expectations that Trump II will bring back Fannie/Freddie 1.0. Could it be? Maybe, but markets were ablaze with like-kind expectations in November 2016, and it still took the White House until January of 2021 on its way out the door to lay out a privatization plan the Biden team promptly filed in the bin. A lot better will need to happen a lot faster for anything different to happen this time around. Given the complexities both financial and political, this seems unlikely absent statutory reform by a Congress perennially unable to bring itself to do so.
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FedFin Assessment: Trump II Financial-Policy Outlook
Given the likelihood of a Trump win, we turn in this report to our outlook for federal financial policy in a very different Administration than the one that has set it for the last four years. We will refine this outlook when final tallies determine Congressional control, but slim margins will dog both parties and thus significantly complicate the legislative outlook. Congress, like the White House, will also be preoccupied with nomination battles, immigration, geopolitical risk, and acute fiscal-policy challenges in areas such as the new president’s budget, planned tax breaks, and tariffs.
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FedFin Assessment: Election Uncertainty and Financial Policy
FedFin will continue our practice of providing in-depth analyses in this tumultuous election once key races are decided. However, clients have asked for an interim report on the outlook if election uncertainty persists and, worse, if it is accompanied by civil unrest. As detailed in this report, we see no near-term implications for what might be considered course-of-business financial policy decisions even though many of these are, like the capital rules, drivers of significant strategic import. Of more immediate concern are …
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FedFin on: Consumer Data Rights/Open Banking
The CFPB has finalized in largely unchanged form its very controversial proposal requiring banks, fintechs, and certain other parties holding retail-customer personal data to share that data with third parties such as data aggregators following a consumer’s request. The new rule will make it easier for consumers to obtain personal financial data from incumbent providers to assess alternative products and new providers or value-added services such as financial planning or other, higher-risk offerings (e.g., debt “reduction”). The rule may well also standardize APIs accessing bank data and essentially outlaw screen-scraping, simplifying data access and heightening both privacy and security if the Bureau’s intended constraints function as anticipated in these still largely-unregulated markets. The rule seeks to accomplish its objectives not only by these requirements, but also by….
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Karen Petrou: Why Open Banking Could Close a Door to Economic Opportunity
In the new and often just fervor to increase competition, trust-busters such as CFPB Director Chopra sometimes forget that too much competition can lead to the Hunger Games, not to the “fair” and “inclusive” sectors they seek. Defending the new open-banking rule, Mr. Chopra said that he was willing to accept even a good deal more fraud risk for consumers because his rule humbles incumbent financial-services companies. This is like saying that one is fine with a few more dangerous drugs since that’s what it takes to loosen Big Pharma’s strangle-hold. Yes, the U.S. drug market is rife with abuses in how pharmaceuticals are priced and distributed and the FDA is problematic, but it seems irrefutable that drugs must be demonstrably safe and effective before we take them. Do you want to fly on any airline a group of speculators concocts even if it opens up pricing at your congested hub? Of course not, but that’s what antitrust zealots propose to do to banking even though we’ve learned the hard, hard way that footloose companies taking other people’s money often don’t give it back.
One of the humorless ironies of this election is the alignment between radical populists and progressives that squeezes out moderate, temperate, and – yes – imperfect policies that do the best they can for the most they can with the fewest possible side-effects. Populists want “free” markets and progressives such as Mr. Chopra want tightly-regulated ones, but the goal in each case is to cut powerful companies down to bite-size pieces that somehow return economic power to the people.
As is often the case, these radical views are in many ways the inevitable reaction to decades of policies that concentrated economic power in far too few hands at the cost of far too much economic inequality and […]