Fulcrum Perspectives

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Francis Kelly 9/7/24 Francis Kelly 9/7/24

U.S. Financial Regulatory Week Ahead

Moving to Full Throttle: Washington Ramps Up On Multiple Regulatory Fronts This Week

September 9 - 13, 2024

Congress returns to work this week, having been out of session since the end of July. The rest of Washington’s regulatory world is already buzzing with activity, and combined, there is a lot going on.

In the coming week, we will closely watch the House Financial Services Subcommittee on Financial Institutions hearing entitled “Transparency in Global Governance.” The hearing is aimed at how the Basel Committee, the Bank for International Settlements (BIS), and other international organizations interact with US financial regulators and their influence on regulatory developments. The only problem is that these organizations are refusing to appear, infuriating Subcommittee Chair Representative Andy Barr (R-KY). At this point, we are not sure who will testify, and no one is listed on the Committee’s website.

Also on the Hill this week, the House Agriculture Committee is scheduling a closed-door hearing for members to get briefed and up-to-speed on “event contracts.” For those of you unfamiliar with event contracts, they are the ability for financial traders to put “contract” wagers on, well, everything. As Politico noted, it can be things as weird as what a movie’s Rotten Tomato scores will be.

Also this week, Federal Reserve Vice Chair for Supervision Michael Barr will speak at the Brookings Institution on the status of the Fed's Basel III regulatory initiative. Considering the proposal has come under withering criticism from banks and Congress (not to mention public doubts from Fed Chair Jay Powell and several Fed Governors) and has been intensely rewritten, Barr’s comments will be important.

SEC Chair Gary Gensler will give a speech and participate in a fireside chat at a Peterson Institute for International Economics event. The topics of the discussion seem likely to be wide-ranging.

Last week ended up being a bit busier than anyone expected. We would note that Acting Comptroller of the Currency Michael Hsu gave an important speech at the Joint European Banking Authority and European Central Bank International Conference in Frankfurt, Germany (which was not added to his public calendar until the very last minute). In his remarks, Hsu said regulators should consider creating a process for officially designating which banks within the domestic financial system are important – DSIBs. Hsu pointed out some other countries already do this and suggested the US follow suit.

Also, last week, a Federal Court blocked the CFTC’s rejection of US election betting markets – talk about good timing for all you election junkies out there!

Below is what else is happening in the regulatory world in Washington this week:

U.S. Congressional Hearings

U.S. Senate

· The Senate is out of session for the month of August and returns to work on September 9.

House of Representatives

· TBD – The House Agriculture Committee will hold a closed-door briefing for members on the topic of event contracts (which are financial products allowing traders to wager on virtually anything). No date or time has been released yet.

· Tuesday, September 10, 10:00 a.m. – The House Financial Services Committee’s Subcommittee on Digital Assets, Financial Technology, and Inclusion will hold a hearing entitled “Decoding DeFi: Breaking Down the Future of Decentralized Finance.”

· Tuesday, September 10, 10:30 a.m. – The House Education and Workforce Committee holds a hearing entitled “ERISA’s 50th Anniversary: The Value of Employer-Sponsored Health Benefits”

· Tuesday, September 10, 2:00 p.m. – The House Financial Services Committee’s Subcommittee on Oversight and Investigations holds a hearing entitled “The Fall of ESG: Scrutinizing the Failed Use of Environmental, Social, & Governance Standards and the Influence of Proxy Advisors.”

· Wednesday, September 11, 10:00 a.m. – The House Financial Services Committee’s Subcommittee on Financial Institutions and Monetary Policy Subcommittee holds a hearing entitled “Transparency in Global Governance”

· Wednesday, September 11, 10:00 a.m. – The House Agriculture Committee holds a hearing entitled “Severe Food Distribution Shortages in Tribal and Elderly Communities.”

US Regulatory Meetings & Events

Federal Reserve Board and Federal Reserve Banks

· Tuesday, September 10, 11:00 a.m. – Federal Reserve Board Vice Chair for Supervision Michael Barr will speak at the Brookings Institution in Washington, D.C. at an event entitled “The Basel III Endgame: A Conversation with Michael Barr.”

U.S. Treasury Department

· Monday, September 9, 1:00 p.m. – The Treasury Department holds a meeting of the Treasury Advisory Committee on Racial Equity for opening remarks from TACRE Chair Michael Nutter, an overview of the work conducted by the TACRE subcommittees since the April 18, 2024, TACRE meeting, a possible vote on recommendations to make to the Treasury Department and briefings from government officials from the Treasury Department and the Internal Revenue Service.

Department of Commerce