• Facebook’s pending digital currency system bears watching by Fed, Senator Crapo says
    17 May 2019
    The head of the Senate Banking Committee urged top US financial regulators to monitor Facebook’s compliance with consumer and privacy protection rules as it prepares to start a cryptocurrency-based payments system.

    “It seems appropriate,” Idaho Republican Mike Crapo said at a hearing this week, “our federal financial regulators would need to understand the nature of Facebook’s financial-services activities, and engage to ensure that it follows all applicable laws and regulations.”

    The senator addressed his request to Randal Quarles, the Federal Reserve Board’s vice chairman of supervision; Jelena McWilliams, the Federal Deposit Insurance Corporation chief; and Joseph Otting, comptroller of the currency.

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  • US, EU contrasting adaptations of Basel III should be examined, global authority says
    16 May 2019
    Global authorities should review the US and EU’s differing approaches to adapting Basel III requirements to size and risk differences among banks, said Fernando Restoy, head of a Bank for International Settlements unit.

    The US is subjecting just over a dozen banks with at least $250 billion in assets to Basel’s capital and leverage requirements, he noted at a policy implementation meeting.* The EU, on the other hand, is requiring nearly all institutions, regardless of size, to adhere to these standards.

    “These vastly different approaches, while well within each jurisdiction’s purview, illustrates the need to achieve a common understanding of the pros and cons of the varied proportionality approaches,” said Restoy, chairman of Basel-based Financial Stability Institute.

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  • Fed reliance on bank examiners’ judgment can be `risky,’ congressional report says
    15 May 2019
    The Federal Reserve alone among US bank regulators lacks specific guidelines for bank examiners to use in deciding whether to escalate a supervisory concern to a possible enforcement action, the nonpartisan Government Accountability Office said.

    The Fed counts instead on the judgment and experience of examiners, Reserve Bank management and Fed staff, Congress’s research and analysis arm said yesterday.

    “Reliance on a single mechanism or tool can be risky,” the 74-page report said. “For instance, institutional knowledge can disappear in times of turnover, such as occurred after the 2007-2009 financial crisis. In addition, reliance on judgment alone can produce inconsistent escalation practices”.

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  • CFTC’s Giancarlo says cyber is top budget priority
    14 May 2019
    Christopher Giancarlo, head of the US Commodity Futures Trading Commission, said his top budget priority is a $3 million cybersecurity increase for the year to begin Oct. 1.

    “Of all the things we need, we really, really need that,” he told a Senate Appropriations subcommittee last week. “If I could ask amongst all our requests, if that one you could give special attention to, because we really do need that.”

    Giancarlo is seeking a cyber defense boost from about $7 million to roughly $10 million as the chief US derivatives regulator tries to fend off about 200,000 attacks a month from across the world.

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  • Treasury’s Mnuchin backs plan to ease nonbank oversight despite predecessors’ criticism
    13 May 2019
    US Treasury Secretary Steven Mnuchin endorsed a regulatory plan to erect barriers to deeming a nonbank systemically important even as it was decried as a “substantial weakening” of post-crisis reforms by his two predecessors.

    Mnuchin expressed support today for the US Financial Stability Oversight Council plan to rely on an “activities-based approach” that assesses economic risks across a broad set of insurers and asset managers.

    “Treasury strongly believes in the activities-based approach to evaluating financial stability,” he told state insurance commissioners.* “Treasury and the Financial Stability Oversight Council continue to work on the activities-based approach – rather than an entity-based approach – to the evaluation of potential systemic risk in the financial sector”.

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