Newsletter

March 8, 2024

The House of Representatives passed (by a vote of 339-85) the Consolidated Appropriations Act, 2024, a group of six spending bills, in advance of today’s partial government shutdown deadline. The Senate will vote on the legislation today. The Consolidated Appropriations Act partially funds the government through September 30, 2024, when the U.S. government’s fiscal year ends. Following today’s vote, Congress must grapple with a second appropriations package prior to March 22. 

The Department of the Treasury’s Federal Insurance Office (FIO) launched a collaboration with state insurance regulators and the National Association of Insurance Commissioners (NAIC) to assess the effects of climate risk on U.S. insurance markets. The NAIC will be collecting, on behalf of participating state insurance regulators, ZIP Code-level data from the largest homeowners insurers. FIO will use this data to conduct a nationwide assessment of climate-related financial risks to consumers across the United States. 

The Federal Reserve Board (FRB) announced a final rule that updates risk management requirements for certain systemically important financial market utilities (FMUs) supervised by the Board. The final updates are intended to provide additional clarity and specificity to existing requirements in four key areas of operational risk management: incident management and notification; business continuity management and planning; third-party risk management; and review and testing of operational risk management measures.

FRB Governor Michelle Bowman delivered reflections on the economy and bank regulation at the New Jersey Bankers Association Annual Economic Leadership Forum. Governor Bowman discussed monetary policy and notable developments in bank regulation and supervision. Governor Bowman encouraged continued engagement on matters involving regulatory reform. 

The Federal Deposit Insurance Corporation (FDIC) published the Fourth Quarter 2023 Quarterly Banking Profile. The profile reported aggregate full-year 2023 net income of $256.9 billion, down $6 billion (2.3 percent) from the prior year, and fourth quarter 2023 net income of $38.4 billion, down $30 billion from the prior quarter.

FDIC Chairman Martin Gruenberg delivered remarks on the report, emphasizing that the banking industry has shown resilience after a period of liquidity stress in early 2023 and that full-year net income remained high, overall asset quality metrics were favorable, and the industry’s liquidity was stable. However, he also stated that positive top-line results were offset by higher noninterest expense, provision expense, and realized losses on securities.

The Commodity Futures Trading Commission (CFTC) Global Markets Advisory Committee (GMAC) met to hear progress updates and recommendations from its subcommittees, including its Digital Asset Markets Subcommittee, which proposed a taxonomy to classify digital assets.     

Securities and Exchange Commission (SEC) Chair Gary Gensler delivered remarks before the Investor Advisory Committee. Chair Gensler discussed the shortening of the settlement cycle to one day for most broker dealer transactions after Memorial Day, the updating of rule 605, the SEC’s proposal updating key features of the National Market System (NMS), the SEC’s proposal to adopt a best execution standard for broker dealers, the SEC’s proposal to bring greater competition for a segment of the market related to individual investors’ marketable orders, and the SEC’s proposed rule regarding exchanges’ volume-based rebates and fees.

SEC Commissioner Hester Peirce also delivered remarks at the meeting. Commissioner Peirce discussed the adoption of rule 605 amendments, which she supported, and the adoption of the climate risk disclosure rule, which she did not.  

Relatedly, the SEC adopted rule amendments that update the disclosure required under Rule 605 of Regulation NMS for order executions in national market system stocks, which are stocks listed on a national securities exchange. Rule 605 was adopted in 2000 to help the public compare and evaluate execution quality at different market centers.

Read SEC Chair Gensler’s statement here.
Read SEC Commissioner Peirce’s statement here.
Read SEC Commissioner Caroline Crenshaw’s statement here.
Read SEC Commissioner Mark Uyeda’s statement here.
Read SEC Commissioner Jaime Lizárraga’s statement here

The SEC postponed its decision on whether to approve options trading on spot Bitcoin exchange-traded funds (ETFs). The SEC extended its time to respond to Cboe Exchange and the Miami International Securities Exchange on their bids to offer options on Bitcoin ETFs, and delayed deciding on Nasdaq’s bid to offer options on BlackRock’s iShares Bitcoin Trust (IBIT), saying the delay ensures it has “sufficient time to consider” its request. The deferral gives the agency until April 24 to come to a final decision. 

The U.S. Chamber of Commerce and banking trade groups including the American Bankers Association and Consumer Bankers Association sued to block the Consumer Financial Protection Bureau’s (CFPB) rule to limit credit card late fees, which was finalized earlier this week.

House Financial Services Committee Ranking Member Waters Rep. Waters (D-CA) issued a statement applauding the CFPB’s rule.

The House of Representatives passed Chairman Patrick McHenry’s (R-NC) H.R. 2799, the Expanding Access to Capital Act, which would loosen securities regulations in an effort to increase access to capital markets. The bill would create new SEC registration exemptions, preempt state laws related to securities regulation and independent contractor status, and change the accredited investor definition to enable more individuals to invest in private companies. 

The CFPB finalized its rule affecting credit card late fees, primarily for larger card issuers. The rule sets an $8 late fee safe harbor threshold for card issuers with over one million open accounts and eliminates higher fees for subsequent violations within six billing cycles. The rule also amends various sections and comments in Regulation Z to align with this new late fee standard. The CFPB stated the adjustments aim to ensure fees are reasonable and proportional, as required by the Truth in Lending Act (TILA). The effective date is 60 days after publication in the Federal Register. 

House Financial Services Committee Chairman Patrick McHenry (R-NC) issued a statement that the rule will raise the cost of borrowing for all consumers and criticized the Biden Administration for “weaponizing financial regulators to play politics in an election year.”

Senate Banking Committee Ranking Member Tim Scott (R-SC) issued a statement that the rule will negatively affect consumers’ access to credit and stated that he would use the Congressional Review Act process to fight the implementation of the rule.

Read CFPB Director Rohit Chopra’s statement on the final rule here

Need to catch up on what happened earlier this week? Check out our March 6th Midweek Update here