Acting Comptroller of the Currency Michael J. Hsu discussed large bank manageability in remarks at Brookings. The Acting Comptroller shared his views on detecting, preventing and addressing risks that can result in large banks becoming “too big-to-manage.” He reflected that large banks that repeatedly try but fail to fix their material deficiencies prolong risks to consumers, counterparties, and the financial system. Read the full remarks here.
The SEC charged Avraham Eisenberg with orchestrating an attack on Mango Markets, a crypto asset trading platform, by manipulating the MNGO token, a governance token which the SEC is alleging was offered and sold as a security. Investigations into other securities law violations and into other entities and persons relating to the alleged misconduct are ongoing.
The Office of the Comptroller of the Currency (OCC) published a notice in the Federal Register to adjust the maximum amount of each civil money penalty (CMP) within its jurisdiction pursuant to the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (2015 Adjustment Act). The adjusted maximum penalties are effective as of January 4, 2023, for violations occurring on or after November 2, 2015.
The Consumer Financial Protection Bureau (CFPB) published a blog discussing their recent enforcement action against Wells Fargo Bank and providing information to help consumers understand whether they are affected and how they might benefit from the enforcement action.
The Financial Crimes Enforcement Network (FinCEN) issued an order that identifies the virtual currency exchange Bitzlato Limited (Bitzlato) as a “primary money laundering concern” in connection with Russian illicit finance. The order prohibits certain transmittals of funds involving Bitzlato by any covered financial institution.
The Board of Governors of the Federal Reserve (FRB) provided details on how its pilot climate scenario analysis exercise will be conducted and the information on risk management practices that will be gathered over the course of the exercise. The six largest U.S. banks will analyze the impact of scenarios for both physical and transition risks related to climate change on specific assets in their portfolios. To support the exercise’s goals of deepening understanding of climate risk-management practices and building capacity to identify, measure, monitor, and manage climate-related financial risks, the FRB will gather qualitative and quantitative information over the course of the pilot, including details on governance and risk management practices, measurement methodologies, risk metrics, data challenges, and lessons learned.
Commodity Futures Trading Commission (CFTC) Commissioner Christy Goldsmith Romero delivered a keynote address at the University of Pennsylvania entitled “Crypto’s Crisis of Trust: Lessons Learned from FTX’s Collapse.” In her remarks, Commissioner Goldsmith Romero discussed future cryptocurrency legislation, and advocated for a complete ban on commingling customer assets with company assets; resolution of conflicts of interest with respect to insiders and affiliated entities; broad application of the Bank Secrecy Act (including its Anti-Money Laundering provisions); strong cybersecurity requirements; broker fiduciary duties to customers; clear, plain-English disclosures to customers, delivered in a manner that effectively informs customers of their rights and risks; and appropriate regulation of decentralized finance. Read her full remarks here.
Secretary of the Treasury Janet Yellen sent a letter to Congressional leadership on the debt limit. On January 19th, the Treasury began using the extraordinary measures of a “debt issuance suspension period” to last through Monday, June 5, 2023, which will suspend additional investments of amounts credited to, and redeem a portion of the investments held by, the Civil Service Retirement and Disability Fund (CSRDF). Additionally, Treasury will suspend additional investments of amounts credited to the Postal Service Retiree Health Benefits Fund (PSRHBF).
The Office of Financial Research (OFR) published its 2022 Annual Report to Congress. The OFR’s work supports the Financial Stability Oversight Council (FSOC). The report found that overall threats to U.S. financial stability were elevated in 2022, compared to 2021, highlighting the uncertainty financial institutions faced from “rising inflation, tight credit conditions, and the geopolitical landscape.” The report also discussed emerging threats posed by cybersecurity, digital assets, and climate-related financial risks.
On January 11, Rep. Patrick McHenry (R-NC), Chairman of the House Financial Services Committee, announced the Republican members selected to serve on the committee. “From oversight of the Biden Administration, to enhancing capital formation opportunities, to developing clear rules of the road for digital assets—we have a lot of work to do. I have no doubt these Members from across the conference and country will provide invaluable insight to accomplish these goals. The talent and real-world expertise of this group is an embarrassment of riches and I look forward to working with them to deliver on House Republicans’ Commitment to America,” Chairman McHenry said.