TOP OF THE AGENDA
American Bar Association Opposes Anti-Money Laundering Efforts. Objection!
Last week, the American Bar Association released a letter opposing H.R. 2513, the Corporate Transparency Act (Maloney D-NY), a bipartisan proposal that would end the creation of anonymous shell companies, which are routinely used to facilitate money laundering, terrorist financing and other criminal activities. H.R. 2513 is strongly supported by a wide and diverse variety of groups, including from the Fraternal Order of Police to the FACT Coalition. These supporters recognize that the bill would impose minimal requirements on businesses yet provide law enforcement and national security officials an important and much-needed tool to track criminals and their activities. BPI responded to some of the factual inaccuracies and misleading statements.
5 Stories Driving the Week
1. CAP IS WRONG ABOUT NEW REGULATORY REFORMS
This blog post rebuts a Center for American Progress post that mischaracterizes recent regulatory reforms that are both quite modest and whose benefits greatly outweigh their costs. Our blog demonstrate that recent reforms and proposals are not a threat to financial stability; indeed, the greater threat is the continued push of risk outside the banking system. CAP’s hyperbole polarizes the debate and hinders a rational discussion about how banks can best foster economic growth for all Americans.
2. MALONEY, KING, FACT COALITION, BPI HIGHLIGHT NEED TO CRACK DOWN ON ANONYMOUS SHELL COMPANIES
On May 14, BPI President and CEO Greg Baer joined Representatives Carolyn Maloney (D-NY) and Peter King (R-NY) and the FACT Coalition at a news conference to introduce legislation to end anonymous shell companies. Representative Maloney has introduced a form of her legislation the last five congresses. At the event, Maloney said she expects the House Financial Services Committee to vote on her shell company bill at the end of June during the next markup.
3. GAO: REGULATORS IMPROVED SUPERVISION OF MANAGEMENT ACTIVITIES BUT ADDITIONAL STEPS NEEDED
On May 14, the Government Accountability Office released a report that said the Federal Reserve and Federal Deposit Insurance Corporation should strengthen their supervision and management of large banks. The GAO also said the regulators were falling short when it came to explaining to banks the cause of deficiencies identified by government supervisors and that “often communicating supervisory concerns to institutions varied among regulators.”
4. BPI JOINS LETTER TO PRUDENTIAL REGULATORS ON INTER-AFFILIATE INITIAL MARGIN REQUIREMENTS
On May 13, BPI joined the Securities Industry and Financial Markets Association (SIFMA) and several other trades in submitting a letter to the Federal Reserve, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, Federal Housing Finance Agency, and Farm Credit Administration, requesting that they modify their margin requirements for uncleared swaps to more closely align them with international standards. Specifically, the letter requests an exception from initial margin requirements for swaps between affiliates (“inter-affiliate swaps”), noting that such an exception would aid risk management and is currently provided by the Commodity Futures Trading Commission, as well as by regulatory authorities in the European Union, Japan, and most other G20 jurisdictions.
5. BPI SUBMITS COMMENT LETTER TO CFPB ON PAYDAY LENDING RESCISSION PROPOSAL
On May 15, BPI submitted a comment letter to the Consumer Financial Protection Bureau (CFPB) in response to its proposal to rescind the mandatory underwriting provisions of its 2017 payday lending rule. The letter requested that the CPPB use the same legal and evidentiary basis for the payment provisions of the rule that it is proposing to use for the mandatory underwriting provisions. This would limit the application of the rule to traditional safe and sound bank products, which do not pose the same risks the rule intends to address.
In Case You Missed It
In an op-ed, J.W. Verret describes why the initial justifications for the Federal Reserve to be involved in the payments services no longer hold. He writes that the Fed’s involvement is delaying arrival of real-time payments and impeding innovations across the U.S. payments system.
On May 14, BITS, the technology policy division of the Bank Policy Institute, published the BITS Cloud Access Security Brokers (CASB) Use Case Matrix. CASBs are an emerging technology that assist financial services firms in managing cloud computing cyber risk to protect customer data and other sensitive assets. The BITS CASB Matrix tool offers a granular set of diagnostic questions to help firms match business requirements to service provider capabilities to ultimately mitigate enterprise risk across sanctioned and unsanctioned cloud applications.
On May 10, 15 senators sent a letter asking the Federal Reserve Board and Federal Deposit Insurance Corporation to delay implementation of the current expected credit losses (CECL) accounting standard until after the completion of a study analyzing how the new rules could impact lending.
In a May 14 quarterly report on “Household Debt and Credit,” the Federal Reserve Bank of New York examines the prevalence of various loan types over time, finding that Americans’ credit card participation rate has climbed to 60% following a sharp reduction—particularly for younger borrowers—in the wake of the financial crisis and the CARD Act of 2009. The report also finds that mortgage prevalence, tracking the housing cycle, has been declining since its peak in 2006, while student loans spiked both in participation and balances following the financial crisis and have been steadily growing throughout the covered period.
5/20/2019 — Powell Speech at Atlanta Federal Reserve Conference
5/20/2019 — Fed’s Clarida “Fed Listens” Monetary Policy Speech
5/21/2019 — Senate Banking Committee Holds Hearing on Shell Companies
5/21/2019 — House Financial Services Holds HUD Oversight Hearing
5/22/2019 — Mnuchin Returns to House Financial Services Testimony