U.S. Financial Regulatory Week Ahead

Written By Francis Kelly

Summer Break Comes to Washington

August 5 - 9 , 2024

Last week, we said the Dog Days of Summer were not officially here.  Well, this week, they are here in force.  Washington collectively ran out of town for the summer holidays.  There is very little going on this coming week – no Fed speeches, no big regulatory agency meetings, no Congressional hearings, not many think tank events or trade association events.  So, for now, we should all enjoy the quiet.

But last week was anything but quiet.  The Federal Deposit Insurance Corporation (FDIC) issued a bipartisan agreement among the board on a proposed rulemaking to step up oversight of asset managers and the amount of shares in banks that they own.  Until now, this has been a self-certification process with the asset managers promising to live by the rules.  No more.  Bank examiners will be looking much more closely at who owns what amount of shares in banks – something the asset management industry does not like.  But when you have the FDIC Board – Republicans included – agreeing more has to be done, that is tough to fight back against.   You can read all the materials  and proposed rulemaking by the FDIC  HERE.

But that was not the only action happening at the FDIC last week: The agency’s Inspector General released a scathing report further detailing the abusive atmosphere allowed to persist among employees, including how FDIC leadership failed to properly address allegations of sexual harassment of employees or to implement programs designed to prevent such misconduct.  The Inspector General also revealed a separate report is forthcoming detailing  “FDIC executives’ knowledge of harassment and related misconduct” as well as “factual findings regarding selected allegations that senior officials personally engaged in harassment or related misconduct.”

Somehow, FDIC Chair Martin Gruenberg continues to hold onto his seat, saying he will step down only when a replacement is confirmed by the Senate – which, considering the Senate Banking Committee failed to move on an expected confirmation vote last week, kicking it into September – makes us believe Gruenberg could be still sitting in the chair for months and months to come.  That is a true scandal in and of itself.

Turning to Congress, the House of Representatives left for the summer break two weeks ago while the Senate was in session last week.  Despite hanging around and extra week, they did not get two expected actions done: First, as mentioned above, the Senate Banking Committee did not move on the nomination of Christy Goldsmith Romero as the next FDIC Chair. Senate Banking Committee Chair Sherrod Brown (D-OH) put it off until September.  But we think he will still have trouble moving the nomination forward as – so far – all Republicans oppose her nomination.

Over at the Senate Agriculture Committee,  Chair Debbie Stabenow (D-MI) pulled back from marking up her crypto regulatory bill, also choosing to wait until the Senate comes back in September.   We have a feeling the dynamics and concerns over the draft bill will be pretty much unchanged by then, ending Stabenow’s efforts (she is retiring at the end of this session).

Meanwhile, the House of Representatives – while out of session – still fired off two missives of note. First, the House Republican Environmental, Social, and Governance (ESG) Working Group—led by Oversight and Investigations Subcommittee Chairman Bill Huizenga (MI-04)—released its final staff report Thursday.  The report is the culmination of the Working Group’s comprehensive examination of the factors contributing to the rise of ESG initiatives and the consequences for everyday investors, in addition to recommendations to protect American capital markets from the threats posed by these politically motivated mandates.

The report calls for legislative action on a number of major points, including:

  • Reform the proxy voting system to safeguard the interests of retail investors.

  • Promote transparency, accountability, and accuracy in the proxy advisory system.

  • Enhance accountability in shareholder voting by aligning voting decisions with the economic interests of shareholders.

  • Increase transparency and oversight of large asset managers to ensure their practices reflect the pecuniary interest of retail investors.

  • Improve ESG rating agency accountability and transparency to safeguard retail shareholders.

  • Strengthen oversight and conduct thorough investigations into federal regulatory efforts that would contort our financial system into a vehicle to implement climate policy.

  • Demand transparency, responsibility, and adherence to statutory limits from financial and consumer regulatory agencies.

  • Protect U.S. companies from burdensome European Union (“EU”) regulations, safeguarding American interests in global markets.

You can read the full report HERE.

And second, this past Wednesday, the Chairman of the House Financial Services Committee, Patrick McHenry (R-NC), and all the Committee Republicans sent a letter to Federal Reserve Chairman Jay Powell demanding the Fed withdraw and re-propose the Basel III Endgame rulemaking in its entirety, given the substantial changes to its original form. The letter follows Chairman Powell’s testimony before the Committee in support of re-proposal where he suggested it needed substantial re-writes.  You can read the full letter HERE.   It is another hammer blow against the draft rules, which are already on life-support as Fed Vice Chair for Supervision Michael Barr scrambles to salvage the proposal.

Below is a listing of all the other (very few) significant regulatory-related events this coming week:

U.S. Congressional Hearings

U.S. Senate

  • The Senate is out for the month of August and returns on September 9. No events are scheduled at this time.

House of Representatives

  • The House is out for the month of August and returns on September 9.   No events are scheduled at this time.

US Regulatory Meetings & Events

Federal Reserve Board and Federal Reserve Banks

U.S. Treasury Department

  • There are no significant events scheduled at this time.

Department of Commerce

  • There are no significant events scheduled at this time.

Securities and Exchange Commission

  • Thursday, August 8, 2:00 p.m. – The SEC holds a Closed Meeting.

Commodities Futures Trading Commission

  • There are no significant events scheduled at this time.

FINRA

  • There are no significant events scheduled at this time.

Federal Deposit Insurance Corporation

  • There are no significant events scheduled at this time.

Office of the Comptroller of the Currency

  • There are no significant events scheduled at this time.

The Consumer Financial Protection Bureau

  • There are no significant events scheduled at this time.

National Credit Union Administration

  • There are no significant events scheduled at this time.

Federal Trade Commission & Department of Justice Antitrust Division

  • There are no significant events scheduled at this time.

Farm Credit Administration

International Monetary Fund & World Bank

  • There are no significant events scheduled at this time.

North American Securities Administrators Association

  • There are no significant events scheduled at this time.

Trade Associations & Think Tank Events

Trade Associations

Think Tanks and Other Events

Please let us know if you have any questions or would like to be added to our email distribution list.

Francis Kelly
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