Latest news with #BankPolicyInstitute
Finextra
23-05-2025
- Business
- Finextra
Industry groups call on SEC to ditch cyber disclosure rule
A coalition of US financial trade associations are calling on the Securities and Exchange Commission to rescind its cyber incident disclosure rule, claiming that it endangers victims. 0 The rule, which came into force two years ago, requires public companies to disclose material cyber incidents within four business days. At the time, then SEC chair Gary Gensler said the rule would "benefit investors, companies, and the markets connecting them". However, industry players have chaffed at the added cost and complexity of the rule, prompting the Bank Policy Institute, American Bankers Association, Independent Community Bankers of America, Institute of International Bankers, and Securities Industry and Financial Markets Association to file a petition. Contrary to protecting firms and investors, the rule puts cyberattack victims at greater risk and undermines the SEC's primary goal of protecting investors, say the associations. By requiring public companies to prematurely disclose breaches before the vulnerability has been remediated, the SEC risks further harming victims, they say. The rule also puts a strain on national security and law enforcement resources, creates market confusion, and chills internal communications. In addition, the petition argues that the rule actually gives ransomware groups a tool to extort victims, citing the example of the AlphV gang reporting its own victim, MeridianLink, to the SEC as a ransom payment extortion tactic. 'These requirements impose additional risks, cost and complexity on SEC registrants, undermining the SEC's mission to facilitate capital formation, while also failing to generate the type of decision-useful information which would advance the SEC's mission to protect investors,' write the groups.
Washington Post
15-05-2025
- Business
- Washington Post
U.S. preparing to relax big-bank capital rules
U.S. regulators are preparing to ease key financial requirements for Wall Street — a win for the industry's largest banks, which have long pushed for looser restrictions that advance Trump administration goals to ease regulations first put in place in response to the financial crisis. The Federal Reserve and two other agencies are expected as soon as next month to propose easing requirements for certain financial buffers that banks use to absorb losses. It would mark a significant step to ease capital standards for the biggest banks. Separately, the Fed has hired a trio of top banking industry officials tapped by Michelle Bowman, a Republican Fed governor whom President Donald Trump elevated earlier this year to serve as the central bank's top Wall Street overseer. The hirings offer an early indication of Bowman's regulatory priorities, which tilt toward a more industry-friendly approach. The new staff are also expected to bring expertise that some Fed watchers believe has been lacking inside the central bank. The new advisers are Francisco Covas of the Bank Policy Institute, a bank advocacy group, who formerly worked at the Fed; Aleksandra Wells of Goldman Sachs, who previously advised Bowman at the Fed; and Randall Guynn, a top banking lawyer at Davis Polk & Wardwell. Together, they are expected to help overhaul the Fed's approach to the way it regulates and supervises Wall Street. Bowman has been outspoken in arguing that the Fed's rules are unduly complex and has pushed for more in-depth review of the supervisory failures that led to the collapse of Silicon Valley Bank in 2023. In an internal email to staff last week, Bowman wrote that 'Aleks and Francisco will advise me as they work closely with the Supervision and Policy groups. Randy will leverage his extensive experience to help me assess opportunities to enhance the efficiency and effectiveness of the S & R function,' referring to the Fed's powerful Supervision and Regulation division. Work on the coming proposal to ease big-bank capital requirements began well before the trio of new staff were hired to join the Fed. The work has been endorsed by Fed Chair Jerome H. Powell, as well as the Trump administration, which has made deregulation a key economic goal. Treasury Secretary Scott Bessent, speaking to lawmakers last week, characterized easing bank capital rules as a 'high priority' for U.S. banking regulators. Currently, the highly technical rules in question don't distinguish between risky loans and ultrasafe assets banks hold such as U.S. Treasury securities. Banks and some regulators say the requirements have had unintended consequences, forcing firms to hold more capital or reduce their holdings of low-risk assets. Critics say this has inadvertently harmed the functioning of the nearly $30 trillion market for U.S. Treasury bonds, the bedrock of the global financial system that plays a critical role in financing U.S. budget deficits. They say banks that are required to manage to the ratio are inadvertently discouraged from buying or selling U.S. treasury securities in a way that could make the treasury market dysfunctional, particularly in periods of market tumult. Relaxing the requirements could theoretically prod more big banks to buy more Treasurys, which could have eased some of the upward pressure on bond yields that rattled markets in recent weeks amid Trump's trade wars and doubts about the U.S. status as a global safe haven. Banks say relief is important, since the Treasury market is forecast to grow dramatically over the next 10 years, with government deficits and the rising cost of interest payments pushing the market to around $50 trillion, according to the Congressional Budget Office. Outdated banking rules are 'negatively impacting liquidity in the Treasury market, raising U.S. borrowing costs, and contributing to dysfunction in financial markets during times of stress,' said Kevin Fromer, CEO of the Financial Services Forum, representing eight of the biggest financial institutions. 'The solutions are understood. We expect the issue will be addressed soon.' The effort is sure to generate pushback from congressional Democrats, including Sen. Elizabeth Warren (D-Massachusetts), who pushed for tougher rules for banks in the aftermath of the financial crisis. Reducing the requirements would grant Wall Street's first wish on their lobbying list, juicing shareholder payouts and executive bonuses while reducing money available for absorbing losses and lending to small businesses and households, she said in a statement.
Reuters
13-05-2025
- Business
- Reuters
Banking sector says easing of US leverage rules could support Treasury market
WASHINGTON/NEW YORK, May 13 (Reuters) - The banking industry is optimistic that U.S. regulators will soon move to change how much capital they set aside against typically safe investments, particularly after the turmoil in Treasury markets last month. Such a move to revamp the "supplementary leverage ratio" could reduce the amount of cash banks must reserve, freeing them up for more lending or other activities, and could incentivize banks to play a larger role in intermediating Treasury markets. "Current leverage-based capital requirements are outdated and at odds with financial stability and economic growth. Reform is needed quickly to better serve U.S. taxpayers, capital markets, consumers, businesses, and the economy," said Kevin Fromer, the president and CEO of the Financial Services Forum, which represents the nation's largest banks. Regulators have flagged the SLR as meriting reconsideration and are mulling whether to tweak the rule's formula to reduce big banks' burdens or provide relief for extremely safe investments, like Treasury bonds. The debate is driving industry hopes that agencies could as soon as this summer propose an overhaul, according to three sources familiar with the matter. Bank lobby groups, including the Forum and the Bank Policy Institute, which also represents larger banks, have been pushing for the change. Treasury Secretary Scott Bessent told lawmakers last week that a revamp was a "high priority" for the three regulatory bodies charged with the rule: the Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency. Banks have argued for years that the SLR, established after the 2007-2009 financial crisis, should be reformed. They contend it was meant to serve as a baseline, requiring banks to hold capital against even very safe assets, but has grown over time to become a binding constraint on bank lending. BPI President and CEO Greg Baer called reform "overdue and welcome" in a statement to Reuters. When asked by Congress in February if the leverage requirements discouraged banks from helping intermediate the Treasury market, Fed Chair Jerome Powell agreed, and said it was time to revisit the issue. Such reforms are on a long wishlist the banking industry hopes to advance with the Trump administration, which has made deregulation to spur economic growth a top priority. Spokespeople for the Fed, FDIC and Office of the Comptroller of the Currency, which shares responsibility for the SLR, declined to comment. Currently, all banks are required to hold 3% of their capital against their leverage exposure, which is their assets and other off-balance sheet items like derivatives. The largest global banks must hold an extra 2% as well in what is known as the "enhanced supplementary leverage ratio." Regulators could provide relief by simply exempting Treasury bonds and central bank deposits from calculations of the SLR. That is the approach the Fed took when it provided temporary emergency relief during the COVID-19 pandemic. Or, in what three industry sources believe is a more likely option, they could look at tweaking the "enhanced" SLR, which instead of exempting Treasuries broadly refines the formula, resulting in a lower ratio. Regulators tried to ease that requirement in 2018, during President Donald Trump's first term in the White House, setting the extra capital based on a bank's specific risk profile, but it ultimately failed to advance. The largest banks, which are also the most prominent Treasury market participants, would stand to benefit most directly from the second option. Banks hope any leverage relief coincides with a broader push to overhaul other capital requirements, including the so-called "GSIB surcharge" applied to the largest, most complex banks, and an ongoing effort to overhaul annual "stress tests" of big bank finances. While discussing quarterly earnings last month, several bank executives touted SLR reform alongside other capital relief. "The SLR requires us to hold capital to level against riskless assets and Treasuries and cash; that doesn't make a lot of sense," Bank of America CEO Brian Moynihan said in April. Proponents of the SLR argue it is critical to have a tool that is blind to risk as a key backstop, and a simple, direct requirement on leverage can help ensure no dangers are overlooked. But such relief could potentially lend more liquidity to Treasury markets, which have struggled to function amid periods of intense stress. The $29 trillion Treasury market, a cornerstone of the global financial system, saw an aggressive selloff in April, sending U.S. borrowing costs higher. Market expectations about potential reform helped push the spread of swap rates over Treasuries higher in recent months, as Trump's victory in the November 5 presidential election fueled hopes of broader deregulation in financial markets. Swap spreads, which reflect the gap between the fixed rate on an interest rate swap and the yield on a comparable Treasury security, are often used to hedge or bet on shifts in rates. They tightened dramatically, however, during the bond selloff that followed Trump's April 2 "Liberation Day" tariff announcement.
Finextra
06-05-2025
- Business
- Finextra
CFPB to revisit open banking rule
In its latest about-turn under the Trump administration, the Consumer Financial Protection Bureau is preparing to reopen its recently finalised open banking rule, according to Bloomberg Law. 0 In October, the CFPB published the Personal Financial Data Rights final rule, designed to give Americans the right to instruct their banks to share their financial data with third party providers. However, according to Bloomberg Law, citing sources, the Trump administration is now set to reopen the rule and potentially vacate it. The plan comes as banks raise concerns about potential liability for data breaches and the ability to charge for access to data, says Bloomberg. The banks also want to the ability to stop firms that abuse their access to customer data from the system. It is not known whether the rule will be amended or eliminated. Steve Boms, CEO of open banking advocates FDATA North America, says: 'Reopening this rulemaking means stalling financial innovation and prolonging uncertainty for both businesses and consumers in America." However, the plan has long proved unpopular with many in the traditional financial industry. Within days of the rule being finalised, the Bank Policy Institute and Kentucky Bankers Association filed a lawsuit against the CFPB, alleging that the regulatory agency overstepped its authority with the new rules. The suit argues the rule puts the entire responsibility of protecting customers on the banks, while the CFPB takes no accountability for the oversight or supervision of data recipients. For the CFPB, this is the latest example of a starkly different approach under Trump as it scales back its activities and reverses previous positions under acting Director Russell Vought. In March it ditched an interpretive rule declaring that pay-in-four BNPL lenders should be treated in the same way as credit cards. In recent weeks it has also dropped a host of lawsuits, including against JPMorgan Chase, Bank of America and Wells Fargo over fraud on the Zelle P2P payments network. Meanwhile, a rule that would give the watchdog oversight of tech giants such as Apple, Google and X, that offer digital payment apps and wallets has been killed off by the Senate and House of Representatives.
Zawya
09-04-2025
- Business
- Zawya
CEOs of top banks discussed fallout of Trump tariff, sources say
Chief executives of some global banks, including JPMorgan Chase and Bank of America , on Sunday discussed over a call the fallout of the hefty tariffs unveiled by U.S. President Donald Trump, four sources familiar with the matter said. The call was convened by the Bank Policy Institute, a trade association of large U.S. lenders, two of the sources said. CEOs of Barclays and HSBC were among the attendees, according to two other sources. The rare, behind-the-scenes talk underscores the growing alarm within the financial industry over the economic fallout of the sweeping tariffs. The sources declined to be identified as the details of the call were confidential. Shares of banks, whose fortunes are closely tied to the state of the economy, have been ravaged as investors fear that the tariffs could weaken consumer spending, raise recession risks and slow down capital markets activity. The KBW Bank index has dropped about 15.2% since the new levies were announced on April 2, which Trump touted as "Liberation Day". Prominent voices in the financial world have raised concerns about the tariff policy. JPMorgan CEO Jamie Dimon said it could have lasting negative consequences, while billionaire investor Bill Ackman warned the U.S. might be heading toward "a self-induced, economic nuclear winter". Details of the call were first reported by Sky News, which said Citigroup chief Jane Fraser was also present. Spokespersons for the banks did not immediately respond to Reuters requests for comment. (Reporting by Pritam Biswas and Niket Nishant in Bengaluru, Saeed Azhar and Nupur Anand in New York and Stefania Spezzati in London; Editing by Saumyadeb Chakrabarty, Shilpi Majumdar and Arun Koyyur)
