U.S. Financial Regulatory Week Ahead
May 13 - 20, 2024
Last week was electrifying in the otherwise usually staid world of regulation. And the coming week might be just as action-packed. The fireworks were set off when, as we noted in our note last week, an independent investigatory report on the FDIC workplace and FDIC Chair Marty Gruenberg was released, and it was, in a word, damning. Conducted by the law firm Cleary Gottlieb Steen & Hamilton, the report charged, "For too many employees and for far too long, the FDIC has failed to provide a workplace safe from sexual harassment, discrimination, and other interpersonal misconduct."
The report went on to detail numerous incidents of Gruenberg verbally abusing employees and failing to respond to years of employee complaints over workplace culture. Gruenberg has issued a generic apology to staff but refused to step down despite a growing chorus of members of Congress demanding his resignation. As House Financial Services Committee Chair Patrick McHenry (R-NC) said, the report "details his inexcusable behavior and makes clear new leadership is needed at the FDIC."
In an attempt to defend Gruenberg, House Financial Services Committee Ranking Member Representative Maxine Waters (D-CA) issued not one but two strident press releases in response to the report defending Gruenberg. In the first release, Waters tried to divert the fault away from Gruenberg and onto two previous Republican chairs (despite Gruenberg having been Chair for the last three years. Gruenberg first joined the FDIC board in 2005 as Vice Chair, serving until he became Chair in 2011 and serving until 2018. Then he returned to serving as Vice Chair when Jelena McWilliams was named Chair. He then became Chair again in January 2023 after instigating a series of maneuvers to push McWilliams out so he could become Chair again).
Then, later in the day, Waters issued an updated statement, again attempting to divert the issue away from Gruenberg and the institution as a whole – all the while ignoring the detailed evidence of Gruenberg's bullying and abusive behavior over the years.
The scandal will be brought into the public square on Wednesday and Thursday in Congressional hearings, starting at the House Financial Services Committee. The Committee had already scheduled an oversight hearing on banking regulation in general with Gruenberg, Federal Reserve Vice Chair Michael Barr, and Acting Comptroller of the Currency Michael Hsu testifying. But at this point, we expect the lion's share of the hearing will be spent either bashing or defending Gruenberg. The fireworks show will be replicated the next day when the trio of regulators testify before the Senate Banking Committee.
Last week, a federal appellate court also blocked the Consumer Financial Protection Bureau's regulation on capping credit card fees. We expect the CFPB to appeal the case, which is likely to end up before the Supreme Court.
This past Friday, the Commodity Futures Trading Commission (CFTC) approved a move to ban derivatives contracts tied to political elections, sporting events, and awards shows like the Oscars, in a blow to political analysts like me.
Also, last week, the Financial Stability Oversight Council agreed unanimously to examine mortgage servicing companies (NMC) more closely. Secretary Janet Yellen separately called on Congress to establish a system for troubled NMCs.
We will watch closely this coming week as the House Financial Services Committee is expected to markup legislation seeking to limit SEC regulations on consolidated audit trails and crypto regulations.
And circling back to the regulatory calendar this coming week, the big event will be the SEC Division of Investment Management's annual Conference on Emerging Trends in Asset Management. The conference will bring together a variety of asset management industry participants and academics. SEC Chair Gary Gensler will kick off the meeting with a keynote speech.
Below is a listing of all the other significant regulatory-related events this coming week:
U.S. Congressional Hearings
U.S. Senate
· Thursday, May 16, 10:00 a.m. – The Senate Banking Committee holds a hearing entitled “Oversight of the U.S. Financial Regulators: Accountability and Financial Stability”. Testifying will be Michael Barr, Vice Chair for Supervision, Federal Reserve; The Honorable Martin Gruenberg, Chair, Federal Deposit Insurance Corporation; and Mr. Michael Hsu, Acting Comptroller, Office of the Comptroller of the Currency.
House of Representatives
· Wednesday, May 15, 10:00 a.m. – The House Financial Services Committee holds a hearing entitled “Oversight of Prudential Regulators.” Testifying will be Michael Barr, Vice Chair for Supervision, Federal Reserve; The Honorable Martin Gruenberg, Chair, Federal Deposit Insurance Corporation; and Mr. Michael Hsu, Acting Comptroller, Office of the Comptroller of the Currency.
US Regulatory Meetings & Events
Federal Reserve Board and Federal Reserve Banks
· Monday, May 13, 9:00 a.m. – Federal Reserve Board Vice Chair Philip N. Jefferson gives a speech entitled “Communicating About Monetary Policy” at the Cleveland Fed Conference on Central Bank Communications, Cleveland, Ohio.
· Monday, May 13, 9:10 a.m. – Federal Reserve Board Governor Lisa D. Cook gives a speech entitled “Growth and Change at Community Development Financial Institutions” at the Expanding Access to Capital for CDFIs, hosted by the Federal Reserve Bank of New York in New York.
· Monday, May 13, 10:00 a.m. (Amsterdam) – Federal Reserve Board Chair Jerome H. Powell participates in a moderated discussion with De Nederlandsche Bank (DNB) President Klaas Knot at the Annual General Meeting, Foreign Bankers’ Association, Amsterdam.
· Wednesday, May 15, 3:20 p.m. – Federal Reserve Board Governor Michelle W. Bowman gives a speech entitled “Innovation and the Evolving Financial Landscape” at the DC Blockchain Summit 2024 in Washington, D.C.
· Thursday, May 16, 10:00 a.m. – Federal Reserve Board Vice Chair for Supervision Michael S. Barr will testify at a “Oversight of Financial Regulators” hearing before the U.S. Senate Committee on Banking, Housing, and Urban Affairs.
· Friday, May 17, 10:15 a.m. – Federal Reserve Board Governor Christopher J. Waller gives a speech entitled “Payments Innovation, Technical Standards and the Federal Reserve’s Roles” at the International Organization for Standardization Technical Committee 68 Financial Services 44th Plenary Meeting in Minneapolis, Minnesota.
· Saturday, May 18, 5:45 p.m. – Federal Reserve Board Governor Adriana D. Kugler gives the Commencement Speech at the University of Virginia 2024 Commencement Ceremony – Frank Batten School of Leadership and Public Policy, Charlottesville, Virginia.
· Sunday, May 19, 3:30 p.m. – Federal Reserve Board Chair Jerome H. Powell gives the Commencement Remarks at the Georgetown Law Commencement Ceremony in Washington, D.C.
U.S. Treasury Department
· There are no significant events scheduled at this time.
Securities and Exchange Commission
· Thursday, May 16, 9:00 a.m. – The SEC Division of Investment Management will host its annual Conference on Emerging Trends in Asset Management. The conference will bring together a variety of asset management industry participants and academics. SEC Chair Gary Gensler will kick off the meeting with a keynote speech.
· Thursday, May 16, 2:00 a.m. – The SEC will hold a Closed Meeting.
Commodities Futures Trading Commission
· Monday, May 13, 11:15 a.m. – CFTC Commissioner Christy Goldsmith Romero will participate on an AI panel at the Asian Pacific American Institute for Congressional Studies (APAICS) at the 2024 Legislative Leadership Summit in Washington, D.C. The panel is titled How AI is Changing the World.
· Thursday, May 16, 1:15 p.m. – CFTC Commissioner Christy Goldsmith Romero will speak at the National Futures Association’s (NFA) Board of Directors Spring meeting in Washington, D.C.
FINRA
· Tuesday, May 14, 10:00 a.m. – FINRA holds its 2024 FINRA Annual Conference in Washington, D.C.
Federal Deposit Insurance Corporation
· Wednesday & Thursday, May 15 & 16 – FDIC Chair Martin Gruenberg will testify before the House Financial Services Committee and then the Senate Banking Committee.
Office of the Comptroller of the Currency
· Wednesday & Thursday, May 15 & 16 – Acting Comptroller of the Currency Michael Hsu will testify before the House Financial Services Committee and then the Senate Banking Committee.
The Consumer Financial Protection Bureau
· Wednesday, May 15, 10:30 a.m. – The Consumer Financial Protection Bureau holds a virtual meeting of the Consumer Advisory Board to discuss broad policy matters related to the Bureau's Unified Regulatory Agenda and general scope of authority.
National Credit Union Administration
· There are no significant events scheduled at this time.
Federal Trade Commission & Department of Justice Antitrust Division
· Tuesday, May 14, 11:00 a.m. – The FTC will hold a Compliance Webinar on the Final Noncompete Rule.
· Thursday, May 16, 10:00 a.m. – The FTC has a scheduling conference before the Administrative Law Judge re: the Tapestry, Inc and Capri Holding Limited deal.
Farm Credit Administration
· There are no significant events scheduled at this time.
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
· Tuesday, May 14, 11:30 a.m. (London) – the Institute for International Finance hosts the IIF-Fitch Ratings Global Debt Roundtable in London.
· Wednesday, May 15, 9:30 a.m. – The Institute for International Finance holds the 2024 IIF/Deloitte Insurance Colloquium in Arlington, Virginia.
· Tuesday, May 14, 4:30 p.m. (Austin, Texas) – The Investment Company Institute and the Association of Securities and Exchange Commission Alumni (ASECA) holds an event entitled “ICI & ASECA: Celebrating 100 Years of the Mutual Fund”
· Wednesday, May 15, 11:00 a.m. – SIFMA holds the third of a four-part webinar series on China. This event is entitled “ U.S. Policy On China: What Might Congress and the White House Do in 2024 and Beyond.”
· Wednesday, May 15, 1:00 p.m. – The National Association for Business Economics holds a virtual discussion on "Climate Change, Risk, and Insurance: How the Landscape for Risk Is Evolving and Implications for Commercial Real Estate Investors/Owners."
Think Tanks and Other Events
· Tuesday, May 14, 9:00 a.m. – The Peterson Institute for International Economics holds an event entitled “Can auditors better serve investors’ needs?”
· Thursday, May 16, 2:00 p.m. – The Brookings Institution holds an event entitled “How can markets better value nature and price the benefits of conservation?”
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