Dodd-Frank News Center

Quarles speaks at European Banking Summit on work of Financial Stability Board

This story appeared in Bank Digest.                                   

Federal Reserve Board Vice Chair for Supervision and Financial Stability Board Chair Randal K. Quarles spoke at the European Banking Federation’s European Banking Summit in Brussels, Belgium, on Oct. 3, 2019. The subject of his prepared remarks was “The Financial Stability Board at 10 Years—Looking Back and Looking Ahead.”

Noting that 2019 marks the 10th anniversary of the founding of the Financial Stability Board, Quarles said he wanted to “look back on the experiences of the past 10 years, what the FSB has accomplished, and also offer some perspective on just how it contributed to the construction of the post-crisis global financial architecture.” He also discussed “the new challenges facing the global regulatory community, such as innovations in financial technology, shifts in financial globalization and integration, and increasing nonbank financial intermediation.”

Shelby speaks on Dodd-Frank Act at Harvard Law School

This story appeared in Bank Digest.

Senate Banking Committee Chairman Richard Shelby (R-Ala) gave a speech entitled "The Trouble with Dodd-Frank" at Harvard Law School on Oct. 14, 2015. Shelby criticized the law, saying: "Since its passage, the nation's biggest banks have become even bigger, and even more concentrated." He also said the power and size of financial regulators have grown and that these regulators have "become more independent and insulated from meaningful congressional oversight." He went on to criticize the operations of the Consumer Financial Protection Bureau, the Financial Stability Oversight Council, and the Financial Stability Board.

Towards the end of the speech, Shelby said: "As Chairman of the Banking Committee, I am leading an effort to address a number of concerns identified during the implementation of Dodd-Frank. We now have better information on how financial regulation should be tailored to help prevent another crisis and reduce systemic risk. We also know where it should be pared back to provide relief to smaller and regional financial institutions, and where transparency and accountability are needed the most at regulatory agencies."

Shelby expresses concerns about FSB to agency heads

This story appeared in Bank Digest.

Senate Banking Committee Chairman Richard Shelby (R-Ala) sent a letter to Treasury Secretary Jacob Lew, Federal Reserve Board Chair Janet Yellen, and Securities and Exchange Commission Chair Mary Jo White concerning the influence and transparency of the Financial Stability Board. Shelby mentioned three specific concerns: that the FSB is reviewing and designating U.S. entities as systemically risky without due process; that some actions by the FSB may unfairly benefit European entities over U.S. market participants; and that the role U.S. regulators play in international regulatory discussions is unclear.

Shelby indicated that he was concerned about a "lack of transparency" because decisions by the FSB seem to influence deliberations by the Financial Stability Oversight Council and its designations. Shelby requested responses to several questions "to provide greater transparency of the international processes that involve U.S. entities."

Supplementary Leverage Ratio Standards Proposed

This story appeared in Bank Digest.

The federal regulators have proposed a rule to strengthen the leverage ratio standards for the eight largest, most systemically significant U.S. banking organizations. The eight banking organizations that would be subject to the supplementary leverage requirements are JPMorgan Chase & Co., Citigroup Inc., Bank of America Corp., Wells Fargo & Co., Goldman Sachs Group Inc., Morgan Stanley, Bank of New York Mellon Corp., and State Street Corp. These banking organizations have been deemed to be Global Systemically Important Banks by the Financial Stability Board.

Fed Finalizes Rule on Supervision of Financial Market Utilities

By J. Preston Carter, J.D., LL.M., Editor, Financial Privacy Law Guide, CCH Federal Banking Law Reporter, State Banking Law Reporter and Bank Digest; co-author, Dodd-Frank Wall Street Reform and Consumer Protection Act—Law, Explanation and Analysis.

The Federal Reserve Board has finalized a rule, Reg HH--Financial Market Utilities (12 CFR 234), that establishes a regulatory regime for financial market utilities that the Financial Stability Oversight Council has deemed to be systemically important. Financial market utilities (FMUs) are entities such as payment systems, central securities depositories and central counterparties that provide the essential infrastructure to clear and settle payments and other financial transactions. Under the Dodd-Frank Act, the FSOC can deem such an entity to be systemically important if its failure or a disruption of its activities could create, or increase, the risk of significant liquidity or credit problems spreading among financial institutions or markets and thereby threaten the stability of the U.S. financial system.

LEI Milestone Highlighted

This story appeared in Bank Digest.

Writing in a Treasury Notes blog entry, Dessa Glasser, Acting Deputy Director and Chief Business Officer for the Data Center of the Office of Financial Research, noted that the Financial Stability Board (FSB), which brings together global financial regulators and policymakers, reached a critical milestone in the initiative to establish a worldwide standard for creating a Legal Entity Identifier (LEI) which will allow financial companies and financial regulators to better understand true exposures and counterparty risks across the global financial system. The FSB recommended that a 20-digit identifier be created. Glasser noted the LEI standard allows market participants to begin preparations for the eventual implementation of the global LEI identifier next year. The identifier will contain references to a core set of reference data, such as the legal entity's name and the address of its headquarters.

Blog Discusses Financial Transaction Party Identification

This story appeared in Bank Digest.

A new “Treasury Notes” entry discusses the Financial Stability Board's creation of a Legal Entity Identifier Expert Group, calling it “another step forward in the global initiative to increase transparency in financial transactions.” A legal entity identifier is a global standard that will allow regulators to quickly and accurately identify parties to a financial transaction. “The LEI will improve the ability of both regulators and market participants to mitigate risks posed to the financial system by, for example, providing a better understanding of true exposures and interconnections among and across financial companies,” according to Dessa Glasser, Acting Deputy Director and Chief Business Officer for the Data Center of the Office of Financial Research.

Financial Stability Oversight Board Minutes Released

This story appeared in Bank Digest.

The Financial Stability Oversight Board has released the minutes of its March 28, 2011, meeting. As part of the meeting, the FSOB members discussed the contents and conclusions of the final Congressional Oversight Panel report with respect to the cost of the Troubled Asset Relief Program to taxpayers. Another item discussed was the status of AIG’s ongoing efforts to repay the assistance provided to the company by the U.S. government. Members and officials discussed, among other things, AIG’srecent repayment to the Treasury Department of approximately $6.6 billion, drawn from the $9.6 billion of proceeds AIG received from the March 8, 2011, closing of AIG’s previously announced sale of its entire equity holdings of MetLife, Inc.

Fed Proposes Rule on Supervision of Financial Market Utilities

This story appeared in Bank Digest.

The Fed has proposed a rule that would establish a regulatory regime for financial market utilities that the Financial Stability Oversight Council has deemed to be systemically important. Financial market utilities are entities such as payment systems, central securities depositories and central counterparties that provide the essential infrastructure to clear and settle payments and other financial transactions. Under the Dodd-Frank Act, the FSOC can deem such an entity to be systemically important if its failure or a disruption of its activities could create, or increase, the risk of significant liquidity or credit problems spreading among financial institutions or markets and thereby threaten the stability of the U.S. financial system. The proposal would establish risk management standards governing the payment, clearing and settlement activities of systemically important utilities not regulated by the Securities and Exchange Commission and the Commodity Futures Trading Commission. It would also establish requirements and procedures for advance notice of material changes to the rules, procedures or operations of a systemically important financial market utility for which the Fed is the primary supervisor.

FSOB Meeting Minutes Released

This story appeared in Bank Digest.

The Treasury Department has released the minutes of the Financial Stability Oversight Board meeting held Oct. 29, 2010. Among the topics discussed were: an agreement-in-principle reached between American International Group (AIG), the Treasury, Federal Reserve Board and the AIG Credit Facility Trust whereby AIG will repay and terminate the revolving senior secured credit facility from the Federal Reserve Bank of New York; and updates on the Making Home Affordable and other and other related housing initiatives/