Recently Silvergate Capital announced it would complete a voluntary liquidation only days after stating it was unsure it could continue. Crypto-friendly Silvergate was already at the heart of two different policy debates—one questioning whether cryptocurrencies should be allowed to be part of the traditional financial services system; the second concerning whether the Federal Home Loan Banks had gotten “off mission.” (Silvergate received $4.3 billion in advances from the FHLB of San Francisco, a debt that was recently repaid.) Now that Silvergate is calling it quits, look for both policy discussions to continue gaining momentum.
Fed Vice Chairman Michael Barr recently said the Fed is putting together a team of experts to help keep abreast of new developments in the crypto sector. He said regulators will issue more guidance soon and warned institutions they need to be careful about “engaging in crypto-asset related activities and the crypto sector.”
Mitigating the risks associated with crypto will require a global regulatory framework and consolidated supervisor, Acting Comptroller of the Currency Michael Hsu said at a banking conference earlier this week. Otherwise, Hsu explained, crypto firms could use international subsidiaries to sidestep local regs and engage in “shell games” to hide risks.
The Federal Housing Finance Agency is undergoing a holistic review of the Federal Home Loan Bank system, and central to that review is the question of whether the banks' mission ought to center on providing liquidity or promoting affordable housing. Last week Ryan Donovan, president and CEO of the Council of Federal Home Loan Banks, a trade group for the system, said the banks "welcome" the FHFA's review. But he also warned that changes to the system's membership or to its low-cost loans, known as "advances," could reduce the amount the banks set aside for affordable housing. Donovan also emphasized that liquidity provided to community banks, in-and-of-itself, supports its affordable housing mission.
The CFPB recently published a special report on junk fees, highlighting their findings on fees associated with deposits, mortgage servicing, payday lending, and more. “One of the things we want to see in our economy is companies competing by offering the best product at the best price,” Chopra told Democratic government officials in a virtual meeting. “What you end up seeing is a lot of firms looking at ways to obscure that price, to tuck in a fee late in the game.”
Testifying recently before Congress, Fed Chair Jerome Powell assured lawmakers the central bank would review hiring and inflation data for February prior to making a decision on any future rate increases. Investors viewed his comments as a signal that another 50-basis-point increase may be likely. Powell reiterated that rates would likely have to go higher than officials expected even a couple months ago, as inflation has proved more stubborn than originally anticipated.
The top Republican on the Senate Banking Committee, Sen. Tim Scott, and nine other Republican senators penned a letter to Fed Chair Jerome Powell urging the central bank to ensure reviews of banks’ capital requirements are tailored to each institution’s structure, riskiness, and complexity, and other factors. Several of them directly questioned Powell during a recent panel appearance, raising concerns about the Fed’s “holistic” review of capital requirements, which most observers believe will result in higher standards for megabanks. Powell said a holistic review was appropriate, but the Fed had not yet finalized any changes.