TOP OF THE AGENDA
Momentum Building for Legislation to End Anonymous Shell Companies
Robust and bipartisan support to end anonymous shell companies characterized a June 20th Senate Banking, Housing and Urban Affairs Committee hearing, with BPI President and CEO Greg Baer testifying in support of legislative efforts requiring business owners to provide their name, date of birth, address, and driver’s license or passport number when forming a company. The hearing followed the announcement of bipartisan legislation (“Improving Laundering Laws and Increasing Comprehensive Information Tracking of Criminal Activity in Shell Holdings Act” – ILLICIT CASH Act) circulated by Senators Mark Warner (D-VA), Tom Cotton (R-AR), Doug Jones (D-AL), and Mike Rounds (R-SD) to end anonymous shell companies and modernize anti-money laundering laws. The Senators echoed their announcement with an op-ed on CNBC, noting their legislation “would modernize our antiquated money-laundering laws and ensure that public and private sector resources are used where they matter most.” The Senate action came after a June 12th House Financial Services Committee bipartisan vote of 46-16 on legislation to end anonymous shell companies.
According to a BPI sponsored survey, conducted by Morning Consult, reform is broadly supported by small business owners. Of small business owners with an opinion, 75% said that they support providing their personal information when forming a company, and two-thirds believe that a requirement to provide personal information would not be burdensome.
5 Stories Driving the Week
1. Federal Reserve to Release Stress Test Results
The Federal Reserve will release the results for the supervisory stress tests conducted as part of the Dodd Frank Act today, and on June 27, it will release the results for the Comprehensive Capital Analysis Review. As a reminder, BPI previously published a blog showing that the Federal Reserve’s stress test scenario is much more severe than the 2007-2009 financial crisis. In advance, BPI Chief Economist Bill Nelson and Head of Research Francisco Covas sat down for a video to discuss what’s changed in the 2019 stress test and what to expect. Early next week, Covas will release analysis of the Dodd Frank Act stress tests (DFAST) and what it could mean for the CCAR results.
2. BPI Submits Comment Letter on OCC Innovation Pilot Program Proposal
In Case You Missed It
This BPI blog post examines the effects of the pending regulatory proposal that provides tailoring of enhanced prudential standards for the U.S. operations of foreign bank organizations (FBOs). The post identifies two components of the proposal (the CUSO measure and the inclusion of interaffiliate transactions) that artificially inflate the risk characteristics of an FBO’s U.S. operations, which, as the post shows, results in overly stringent liquidity requirements imposed on the FBO’s U.S. intermediate holding company (IHC). Finally, the post asserts that calibrating liquidity requirements appropriately matters because increased bank liquidity requirements can have important costs for the U.S. economy in terms of both reduced credit availability and less liquid capital markets.
American Banker’s latest Bankshot podcast examines claims that “regulators have been avoiding using a transparent public process to implement new regulations, opting instead to use informal guidance that has the impact of policy.”
Federal Reserve Chairman Jerome Powell said on June 19 the greatest risks posed by corporate debt is “outside the banking system,” American Banker reported. Speaking at a press conference for the Federal Open Market Committee meeting, Powell said banks understand their regulatory expectations for leveraged loans. “The issue is that the risk isn’t in the banks. It’s out in those market-based vehicles,” Powell said.
On June 20, the Senate confirmed Bimal Patel as Treasury Department assistant secretary for financial institutions and Dino Falaschetti as director of the Office of Financial Research. The Senate also confirmed Allison Lee to be a Democratic commissioner on the Securities and Exchange Commission. On June 18, the Senate Banking, Housing and Urban Affairs Committee approved Federal Reserve Governor Michelle Bowman to a 14-year term and Thomas Feddo to be Treasury Department assistant secretary for investment security.
6/25/2019 — Agriculture Committee Holds CFTC Reauthorization Hearing
6/25/2019 — Senate Banking Holds GSE Hearing
6/25/2019 — House Subcommittee Convenes Hearing on Diversity of Asset Managers
6/25/2019 — House Task Force Convenes Fintech Hearing
6/26/2019 — House Task Force Holds AI Hearing
6/27/2019 — Senate Banking Holds EXIM Hearing
7/16/2019 — Senate Banking Holds Facebook Digital Currency Hearing
11/19/2019 – 11/21/2019 — The Clearing House + BPI 2019 Annual Conference