Washington Report 360 | May 13, 2022

Key Highlights

• Agency leadership. The Senate confirms Jerome Powell to serve as Chairman of the FRB and Lisa Cook and Philip Jefferson to serve as FRB Governors; the Senate also confirms Alvaro Bedoya to serve as an FTC Commissioner.
• Crypto and digital assets. SEC reiterates most crypto assets are securities that fall under the SEC’s regulatory authority; Treasury reiterates the need for a regulatory framework to guard against crypto market risks. FRB Financial Stability Report highlights vulnerability of stablecoins to runs and outlines considerations for a CBDC. The FASB adds a project to examine standards for accounting for digital assets, the focus of which will include 1) recognition, measurement, presentation, and disclosure of digital assets in financial statements, and 2) measuring certain digital assets at fair value. (See associated KPMG FRV Web Article here.)
• Flood risk. The FRB, OCC, FDIC, NCUA, and Farm Credit Administration release revised interagency Q&As regarding federal flood insurance law and implementing regulations; the agencies note that climate change is outside the scope of the Q&As.
• Financial stability. The FRB issues the Financial Stability Report, highlighting the Russia-Ukraine war, persistent information and monetary tightening, and asset valuations/corrections as key risks.
• Fair lending. The CFPB publishes it’s 2021 Fair Lending Report noting that the Bureau will be "sharpening its focus on digital redlining and algorithmic bias"; A new Advisory Opinion from CFPB clarifying ECOA protections apply to all aspects of a credit arrangement; CFPB is expanding its staff of attorneys and recruiting individuals with fair lending expertise.

Financial services regulatory and policy news

Banking

• Interagency:
  • FRB, OCC, FDIC, NCUA, and Farm Credit Administration issued revised Q&As on flood insurance
• FRB:
  • Published its Financial Stability Report
  • Published its Supervision and Regulation Report
  • Published a research paper on cyber attacks and financial stability
  • Released the quarterly senior loan officer opinion survey on bank lending practices
• OCC:
  • Spoke about:
    
    • “Bank Mergers and Industry Resiliency,” suggesting a need to update the analysis framework
    • Expanding diversity and inclusion, and minority homeownership
• CFPB:
  
  • Published its 2021 Fair Lending Report
  • Issued an Advisory Opinion clarifying ECOA provides protections in all aspects of a credit arrangement
  • Published a Data Spotlight Report on older adults living in mobile homes
  • Published a blog on Spanish-language disclosures

Capital Markets

• SEC:
  • Spoke before the ISDA Annual Meeting, highlighting the intersection of crypto assets and derivatives
  • Extended and reopened the comment periods for three proposed rules, including climate-related disclosures, private fund advisers, and the definition of ‘exchange’ and ATSs
• CFTC:
  • Announced the first Voluntary Carbon Convening to discuss high quality carbon offsets
  • Issued a proposed rule to modify swap clearing requirements referencing LIBOR

Other

• Treasury
  • Noted the need for a regulatory framework for stablecoins in testimony before the Senate Banking Committee
• U.S. Congress:
  • Senate:
    • Confirmed Jerome Powell as FRB chair along with two new FRB governors and an FTC commissioner
    • Banking Committee held hearing on the 2021 FSOC’s annual report
  • House Financial Services Committee:
    • Conducted hearings on the 2021 FSOC Annual Report, the Bond Rating Industry, and AI and Effective RegTech
• Federal Accounting Standards Board (FASB):
  • Added a project to it’s technical agenda on accounting for exchange-traded digital assets
• Federal Trade Commission (FTC):
  • Conducted a listening forum on Mergers and Acquisitions in the technology industry/markets
• FHFA:
  • Announced membership in the Network of Central Banks and Supervisors for Greening the Financial System (NGFS)
• FSB:
  • Announced a virtual outreach event covering its interim report on supervisory and regulatory approaches to climate-related risks
• BIS:
  • Published a report on payment system operating hours and cross-border payments

Industry news headlines

(Some links may require subscription)

• FASB to Consider Setting Rules on Companies’ Crypto Accounting, Disclosure (WSJ)
• Regulators omit climate change from updated flood insurance guidance (American Banker)
• Senators call for FinCEN to accelerate money laundering reforms (American Banker)
• Yellen Cites UST Breakdown While Calling for Stablecoin Rules (Bloomberg)
• AI Hiring Tools Can Violate Disability Protections, Government Warns (WSJ)
• CFPB Ramps Up Enforcement Hiring (American Banker)