BPInsights: April 16, 2022

Stories Driving the Week

CFPB Fees Measure Ignores Existing Transparency

The CFPB’s recent request for information on fees charged by financial institutions fails to take into account the robust transparency framework that exists regarding the pricing of banking products and services, a group of financial trades including BPI wrote in a letter this week. “[T]he RFI does not discuss, or even acknowledge, the significant work that both the CFPB and financial institutions have undertaken to advance consumer understanding of the cost of consumer financial products and services, which is an essential backdrop to any initiative designed to enhance consumer choice and competition in the marketplace,” the trades wrote. “The Associations stand ready to support evidence-based efforts of the CFPB to increase consumer understanding, consistent with the CFPB’s authority, and urge the CFPB to consider and weigh the views of all stakeholders in the consumer financial services marketplace.”

  • CFPB Places Hand on the Scale: In a separate joint-trade effort, BPI, the Consumer Bankers Association and the U.S. Chamber of Commerce, among others, submitted a letter to the CFPB stating that the Bureau should immediately rescind changes it made earlier this year to the rules governing its internal administrative process for deciding enforcement cases; instead, the Bureau should begin a new notice and comment process seeking input from stakeholders. The unilateral changes, made without an announcement or press release, expand the Director’s powers and reduce protections for defendant companies in ways that will lead to a lack of due process, the letter said.

Michael Barr to Be Nominated for Fed Supervision Post

President Biden will nominate former Treasury official Michael Barr, now a University of Michigan law professor, to be the Fed’s vice chair for supervision. President Biden’s previous nominee for the position, Sarah Bloom Raskin, withdrew from consideration for the role.

Yellen Warns Countries ‘Sitting on Fence’ Not to Help Russia Skirt Sanctions

Treasury Secretary Janet Yellen in a speech this week issued a stern warning to nations “who are currently sitting on the fence” not to help Russia evade sanctions. “Let’s be clear, the unified coalition of sanctioning countries will not be indifferent to actions that undermine the sanctions we’ve put in place,” she said. The U.S., European Union and other allies have imposed a raft of sanctions against the country after its invasion of Ukraine. Yellen cautioned China in particular, saying the nation “cannot expect the global community to respect its appeals to the principles of sovereignty and territorial integrity in the future if it does not respect these principles now when it counts.” In the speech, Yellen also proposed modernizing multilateral trade integration, expediting the green energy transition, investing in developing countries and ensuring the IMF can respond to financial crises around the world.

SEC Climate Proposal Could Have ‘Chilling Effect’

The SEC’s new climate disclosure proposal could have a “chilling effect” on companies’ climate commitments, according to a recent POLITICO article citing concerns from corporate issuers. The concerns center on Scope 3 – or indirect — emissions disclosures. “If you haven’t made a Scope 3 commitment, will this make you hesitate … even with safe harbor, you’re now going to be required to report,” Cynthia Curtis of real estate services firm Jones Lang LaSalle said in the article. SEC Chairman Gary Gensler said in the article that the SEC is open to adjusting the proposed rule based on public feedback.

DOJ Russia Task Force Chief Sees ‘Sea Change’ in Global Cooperation

Andrew Adams, head of the U.S. task force targeting Russian oligarchs’ assets, has seen a “sea change” in international cooperation on Russian oligarch investigations, he said in a Bloomberg interview this week. Adams, who runs the Department of Justice’s “KleptoCapture” task force, said the U.S. may reach President Vladimir Putin’s personal wealth by targeting third-party cutouts or people who have agreed to hold assets on his behalf. Half of the task force’s efforts could target “facilitators” of money laundering and other illicit activities, he said.

In Case You Missed It

What’s New in Crypto

Here are the latest developments in cryptocurrency and stablecoins.

  • Crypto researcher sentenced: A crypto expert who gave a presentation in North Korea on how to evade U.S. sanctions with blockchain was sentenced to more than five years in prison this week. The expert, Virgil Griffith, was previously a researcher for the Ethereum Foundation.
  • Circle nearing bank charter application: Stablecoin firm Circle will apply for a U.S. bank charter in the “near future,” CEO Jeremy Allaire said in a Bloomberg interview. Circle has discussed several topics with the OCC, he said, including interoperability between blockchains and how to assess a specific blockchain’s operational risk.
  • Prudential regs for stablecoins? In a POLITICO Q&A this week, Allaire suggested an “HQLA-LCR model” for stablecoins, referring to key liquidity requirements for banks to hold certain amounts of safe assets. He also said stablecoins need to be “held to a higher standard” in terms of what reserves back their tokens – but he called critiques of the changes in Circle’s monthly reserve-composition attestations “ridiculous.” He said there is “hypersensitivity” around stablecoin reserves because of illegal and misleading actions by bad actors in the space. Allaire also said Senate Banking Committee Democrats Sherrod Brown (D-OH) and Elizabeth Warren (D-MA) have “a very weak and limited view” on stablecoins.
  • State capitols: Crypto industry lobbyists are pushing for legislation in state capitols from Florida to Illinois, according to a New York Times article this week.

‘PNC’s Ironman’: Bank Director Profiles BPI Chairman Demchak

PNC CEO Bill Demchak, chair of BPI’s board, was profiled in a piece by Bank Director magazine this week. The piece highlights Demchak’s professional accomplishments, including PNC’s sale of its BlackRock stake and acquisition of BBVA USA; his personal achievements, such as his participation in Ironman races; and his support for the homeless population in Pittsburgh, PNC’s headquarters. “He’s very sharp, but he’s also very candid and he manages to ask the tough questions, but in a way that engages rather than repels people,” BPI CEO Greg Baer said in the article. “He’s a terrific interlocutor when we have senior policy people in. I find him to be intellectually curious, which is a truly valuable skill, particularly as it relates to policy issues.”

Wells Fargo Aims to Boost Racial Equity in Homeownership

Wells Fargo unveiled a new initiative this week to help close the racial equity gap in homeownership. The bank will develop a special purpose credit program to help minority homeowners refinance their mortgages. Wells Fargo will also commit $150 million to decrease mortgage rates and reduce refinancing costs to help these homeowners achieve additional benefits from refinancing.

Incoming Fifth Third CEO Discusses Goals, Vision in American Banker Article 

A group of Republican lawmakers on the House Financial Services Committee sent a letter to the Tim Spence, who will take the helm as Fifth Third’s CEO in July, plans to continue the bank’s investment in market expansion, digital capabilities and nonbank acquisitions, according to American Banker. “We have to sustain the discipline and focus that has made us as successful as we have been,” Spence said in the article.

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The views expressed do not necessarily reflect those of the Bank Policy Institute’s member banks, and are not intended to be, and should not be construed as, legal advice of any kind.