(Feb. 4, 2022) Less than two weeks from now, the nominations of those testifying this week – along with two other Fed nominees – will be considered in vote by Senate Banking Committee, the panel announced this week.
The committee said it would hold a vote Feb. 15 on the nominations of Raskin, Cook and Jefferson, as well as on the nominations of Jerome H. (“Jay”) Powell and Lael Brainard, for chair and vice chair of the Fed Board, respectively. If confirmed, Powell and Brainard would serve in those positions until February 2026. Their terms on the board run to 2028 and 2026, respectively. The other three, if confirmed, would serve terms that end in 2032 for Raskin, 2024 for Cook, and 2036 for Jefferson. Raskin’s term as supervision vice chair, if confirmed, would end in 2026.
There will be six votes when the panel meets at mid-month – which includes two, separate votes for Raskin as a board member and vice chair.
(Feb. 4, 2022) Three nominees for seats on the Federal Reserve Board sat before the Senate Banking Committee Thursday to face questions on their nominations to the agency leadership.
Sarah Bloom Raskin, vice chairman for supervision and member designate, Lisa DeNell Cook, member designate, and Philip Nathan Jefferson, member designate all testified at the hearing. All three were nominated to the seats just two weeks ago by President Joe Biden (D).
Of the three, Raskin is generating the most chatter, largely in opposition from Republican senators. A former member of the Fed Board, and a deputy Treasury secretary, she has been confirmed by the Senate twice before on voice vote, the most recent in 2014. However, Raskin has been forthright in her support of financial regulation’s role in dealing with climate change; some of the senators see no role for a financial regulator in that area.
If confirmed for the board seat – and the position as vice chair for supervision, a separate vote – Raskin would be just the second person to hold the job. The first was Randal Quarles, who stepped down last month from his seat on the Fed Board – after his four-year term as supervision vice chair ended in October. He had sat on the board since 2017.
Raskin is also a former Maryland state regulator and the spouse of U.S. Rep. Jamie Raskin (D-Md.). During the hearing, she reflected on her time as a state regulator in 2008, calling bankers in her state “my indispensable partners.”
Also during the hearing Thursday, Raskin faced questions about her past positions and writings on climate change (particularly on bank lending to oil and gas companies). She did tell senators, however, that “it is inappropriate for the Fed to make credit decisions and allocations,” and that “banks choose their borrowers, not the Fed.”
Cook, who is African American, also heard criticism from Republican senators for her views on racial inequality and use of Federal Reserve policy to address those issues.
(Jan. 21, 2022) Pros and cons of a U.S. central bank digital currency (CBDC) are examined in a discussion paper released by the Federal Reserve Thursday, the agency said, which also seeks public comment in four months.
The Fed described the paper as a “first step in a discussion of whether and how a CBDC could improve the safe and effective domestic payments system.” The paper takes no policy position, the Fed asserted.
The paper addresses, according to the agency, several issues including the state of the domestic payments system and different types of digital payment methods and assets that have emerged in recent years, including stablecoins and other cryptocurrencies.
The paper also examines the potential benefits and risks of a CBDC, and identifies specific policy considerations, the Fed said. Among the considerations: could a CBDC negatively or positively affect financial stability; would it adversely affect the financial sector differently from stablecoins or other nonbank money; should CBDC be legal tender; should it pay interest; what types of firms should serve as intermediaries for CBDCs, and what should be the role and regulatory structure for the intermediaries.
“Other key policy considerations include how to preserve the privacy of citizens and maintain the ability to combat illicit finance,” the Fed said.
Comments will be due in 120 days (four months), the Fed said.
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(Jan. 21, 2022) The names of three candidates to fill three open seats on the Federal Reserve Board are now in the hands of the U.S. Senate – including the name of a former state regulator.
Late last week, President Joe Biden (D) nominated Sarah Bloom Raskin, Lisa DeNell Cook and Phillip N. Jefferson to fill open seats on the central bank’s board.
Raskin – a former Maryland commissioner of financial regulation – was also nominated to be Fed vice chair for supervision, a position open since last fall when the term of Randal Quarles in that job expired. Quarles resigned from the board last month, even though his term as a board member ran to January, 2032. According to the White House, Raskin currently is the Colin W. Brown Distinguished Professor of the Practice of Law at the Duke University School of Law in Durham, N.C.
If confirmed, Raskin would serve a four-year term as supervision vice chair, and the rest of the Quarles term, ending in 10 years.
Raskin previously served on the Fed Board (from October 2010 to March 2014), and is a former deputy Treasury secretary.
Cook is a professor of economics and international relations at Michigan State University in Lansing. She has also served at the White House Council of Economic Advisers under President Barack Obama (D). Jefferson, a former Fed economist, is vice president for academic affairs and dean of faculty, and the Paul B. Freeland professor of economics, at Davidson College in Davidson, N.C.
If confirmed, Cook would serve a term that ends in 2024; Jefferson would serve a 14-year term ending in 2036. If all three are confirmed, the seven seats on the Fed Board would be filled.
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Nominations Sent to The Senate on Thursday, January 13, 2022
(Jan. 7, 2022) The nomination of Todd M. Harper to be reappointed chairman of the NCUA Board, for a six-year term to run through April 2027, was resubmitted by the White House to the Senate this week – even though Harper in September testified in a confirmation hearing before the Banking Committee.
The resubmission of Harper’s nomination was one of three for federal financial regulators made by the White House this week (and more than 100 submitted overall). The other two were for Federal Reserve Board Chair Jerome H. (“Jay”) Powell and Board Member Lael Brainard. The White House had originally submitted those nominations Dec. 13. Powell has been nominated to be reappointed chair of the board (for a four-year term ending in 2026; Brainard has been nominated to be vice chair of the board, also for term ending in 2026.
The reasons for the resubmittals is largely procedural. Jan. 3 marked the beginning of the second session of the current Congress. Under Senate rules, nominations not confirmed by the end of a legislative session must be returned to the White House and resubmitted. New confirmation hearings for those already conducted (such as Harper’s) are unlikely.
Meanwhile, confirmation hearings for Powell and Brainard for their leadership posts on the Fed Board were announced this week by the Senate Banking Committee. Powell’s hearing will be Tuesday (Jan. 11) and Brainard’s Thursday (Jan. 13).
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Nominations Sent to the Senate
(Jan. 7, 2022) Sarah Bloom Raskin, a former Maryland financial institution regulator who also served as a deputy Treasury secretary and member of the Federal Reserve Board, is under consideration for another stint at the central bank: as Federal Reserve Board vice chair for supervision. Washington news outlets this week were reporting that Raskin is under consideration for the post by President Biden. If confirmed, Raskin would be only the second occupant in post, succeed Randal Quarles (the first), who resigned late last year after his term in that role ended … Reports this week indicated that the Nebraska Department of Banking and Finance rejected the purchase of a Nebraska bank by an Iowa credit union. The agency said that GreenState Credit Union of North Liberty, Iowa, could not purchase the assets of Premier Bank, based on Omaha. According to the agency’s ruling, the bank did not carry its burden of proof to show “that there is express power under federal law for a national bank to sell substantially all of its assets,” at least in this case. Premier Bank is reportedly appealing the decision … The three big credit bureaus “failed to fully respond to consumers with errors,” a report released this week by the CFPB charged. The bureau said its report, which represented a new analysis, showed that in 2021, Equifax, Experian, and TransUnion together reported relief in response to less than 2% of covered complaints, down from nearly 25% of covered complaints in 2019. The report looks at errors in credit reports as recounted by consumers to the credit reporting agencies. According to CFPB, consumers submitted more than 700,000 complaints to the bureau regarding Equifax, Experian and TransUnion from January 2020 through September 2021. Those complaints, the bureau said, represented more than 50% of all complaints received by the agency for that period.
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(Dec. 3, 2021) Fees – both mandatory and maximum allowable — are on the increase for 2022 under actions taken this week by the CFPB and the Federal Reserve.
A 50-cent increase in the maximum allowable fee that a nationwide consumer reporting agency or nationwide specialty consumer reporting agency can charge consumers for their credit reports will raise next year’s fee maximum to $13.50, according to CFPB.
The Fair Credit Reporting Act (FCRA) requires that a nationwide consumer reporting agency provide one file disclosure to a consumer, upon request, every 12 months; it provides for other no-cost disclosures under certain circumstances, the bureau noted. Where a fee is permitted, however, and under the recent adjustment, it may not be greater than $13.50, according to the CFPB’s notice in Monday’s Federal Register.
Also this week: the Federal Reserve announced its priced services fees will increase an average 3.7% in the new year. The Fed said increases in the fee schedule for 2022 are generally like previous years, except 2021 where fees other than the Check Services Participation Fee remained flat.
The priced services are categorized within check services, FedACH, Fedwire® Funds and NSS, and Fedwire Securities, the agency said. The 2022 fee schedule for each of the priced services is available on the Federal Reserve Banks’ financial services website at FRBservices.org®. Specific fee changes are detailed more fully in the Fed’s draft notice for the Federal Register, which also details the Fed-approved $19.4 million “private sector adjustment factor” (PSAF) for 2022.
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Federal Register notice on consumer credit report fees
Federal Reserve Board approves fee schedule for Federal Reserve Bank priced services
(Nov. 24, 2021) Leadership at the Federal Reserve would be solidified at least through 2026 if President Joe Biden’s (D) nominations for chair and vice chair of the board, made Monday, are confirmed by the Senate.
Nominated for a four-year term as chair, and a new four-year term for vice chair, Biden tapped Jerome H. (“Jay”) Powell and Lael Brainard to take the two top spots. Biden referred to “decisive action” taken by the pair in helping to steer the nation through the financial impact of the coronavirus crisis and put the economy on the path to recovery.
The president is apparently not done making appointments: the White House indicated that he intends to nominate candidates for three open slots on the Fed Board beginning in December, including that of vice chair of supervision for the agency.
The supervision vice chair appointment has been empty since last month, when the term of Randal Quarles in that job ran out after four years. Quarles has since announced his intention to the leave the Fed Board by the end of next month.
Meanwhile, the term of the current Fed Vice Chairman Richard Clarida (in both that position and as a member of the board) expires in February. Monday’s statement from the White House indicated nothing about keeping Clarida on the board. That position will be one of the three Biden will have to fill, the other two being Quarles’ and a board slot that is now vacant.
Biden said the focus of both Powell and Brainard will be on keeping inflation low, prices stable and “delivering full employment will make our economy stronger than ever before.” He asserted that both share his “deep belief that urgent action is needed to address the economic risks posed by climate change, and stay ahead of emerging risks in our financial system.”
“Fundamentally, if we want to continue to build on the economic success of this year we need stability and independence at the Federal Reserve – and I have full confidence after their trial by fire over the last 20 months that Chair Powell and Dr. Brainard will provide the strong leadership our country needs,” he said.
Powell was confirmed by the Senate for a four-year term as chair of the seven-member board in 2018 after being nominated by then-President Donald Trump (R). His term in that role ends officially in February; his term as a Fed Board member runs to January 2028.
Brainard has served on the Fed Board since June 2014 after being nominated by then-President Barack Obama (D); her terms runs until January 2026. While at the Fed, she has been involved in several key issues related to financial institution regulation. Those include: being the Fed’s point person on reform of rules implementing anti-redlining laws (the Community Reinvestment Act (CRA)) and leading the Fed’s efforts in developing a 24-hour, seven-days-a-week payments system (known as FedNow), expected to debut in 2023.
If confirmed, Powell and Brainard would serve terms as chair and vice chair that end in 2026.
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(Nov. 24, 2021) A final rule requiring banks to notify their federal regulators of certain cyber incidents with potentially systemic effects was approved jointly late last week; it takes effect April 1, with compliance required by May 1. NCUA has not yet adopted a similar rule for credit unions.
Adopted by the Federal Reserve, FDIC, and OCC, the final rule requires a banking organization to notify its primary federal regulator of any “computer-security incident” that rises to the level of a “notification incident” as soon as possible and no later than 36 hours after the banking organization determines that a cyber incident has occurred, according to a notice for the Federal Register.
The final rule defines a “notification incident” as a computer-security incident that has materially disrupted or degraded, or is reasonably likely to materially disrupt or degrade, a banking organization’s:
- ability to carry out banking operations, activities, or processes, or deliver banking products and services to a material portion of its customer base, in the ordinary course of business;
- business line (or lines), including associated operations, services, functions, and support, that upon failure would result in a material loss of revenue, profit, or franchise value; or
- operations, including associated services, functions and support, as applicable, the failure or discontinuance of which would pose a threat to the financial stability of the United States.
The final rule also requires a bank service provider to notify each affected banking organization customer as soon as possible when the bank service provider determines that it has experienced a computer-security incident that has caused, or is reasonably likely to cause, a material service disruption or degradation for four or more hours, the notice states.
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Agencies approve final rule requiring computer-security incident notification
(Nov. 19, 2021) Flexibility for board meetings originally extended to FCUs during the height of the coronavirus crisis will be extended in the new year, NCUA said this week. In Letter to Federal Credit Unions (LTCU) 21-FCU-06, the agency said a federal credit union (FCU), as allowed for in March of last year, may adopt at any time by a two-thirds vote of its board of directors a bylaw amendment allowing the board to meet virtually. The provision was approved by the agency in response to person-to-person limits on meetings during the coronavirus crisis … The use of stablecoins deserves a look – and issuance should be broader than just that by banks and credit unions – Federal Reserve Board Gov. Christopher Waller said this week. Referring to a report issued Nov. 1 by the President’s Working Group on Financial Markets that advocated only federally insured financial institutions could issue the digital payments, Waller said “there may be others that better promote innovation and competition while still protecting consumers and addressing risks to financial stability.” He said he disagrees that stablecoin issuance can or should only be conducted by federally insured banks credit unions “simply because of the nature of the liability … The controversy over OCC Nominee Saule T. Omarova (who faced a confirmation hearing Thursday) was illustrated by competing headlines issued in advance by the top Democrat and Republican members of the Senate Banking Committee. The headline of the press release issued by Chairman Sherrod Brown (D-Ohio) stated “Saule Omarova is Eminently Qualified to Lead the OCC.” The headline of the release issued by Ranking Member Pat Toomey (R-Pa.) stated: “I’ve Never Seen a Nominee with More Radical Ideas.” The banking industry has also expressed skepticism about the nominee. Omarova told the panel her priorities would be helping small- to medium-sized banks invest locally.
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Federal Credit Union Meeting Flexibility in 2022 Due to the COVID-19 Pandemic
Witness statement: Dr. Saule T. Omarova (Comptroller of the Currency Designate)
(Nov. 12, 2021) There will soon be two open seats on the Federal Reserve Board – and maybe three as early as January – because of the announced resignation of the former vice chair for supervision on the board, in what could be some big changes ahead for the central bank’s leadership.
Randal K. Quarles – the first and so far only vice chair of the Federal Reserve Board for supervision – announced his retirement from the agency board Monday, effective in late December. In a letter to President Joe Biden (D), Quarles said after four years as a member of the central bank’s board, and end of his term last month as vice chair of supervision, it was time for him to leave.
“It has been a great privilege to work with my colleagues on the Board, throughout the Federal Reserve System, and among the global central banking and regulatory committee,” Quarles wrote.
Quarles’ resignation will leave two open seats on the Fed Board; no successor has yet been named to him as top supervisor for the agency and the White House has made no nominations to fill the soon-to-be two open board seats.
There could be a third opening on the board within two months: the term of Fed Vice Chair Richard Clarida expires in January (and, likewise, the White House has been mum on a replacement).
And, there remains the question of who will lead the central bank board for the lion’s share of 2022 and beyond: the term of Jerome H. (“Jay”) Powell as chair of the board expires in February. He may continue to serve on the board after that, since his term as a governor runs until January 2028.
Quarles’ four-year term as vice chair for supervision ended last month. He now serves as chairman of the international Financial Stability Board (FSB), which works to coordinate financial stability regulatory programs across the globe. However, the term for that office ends at year’s end.
A former banker, Wall Street lawyer and Treasury Department official, the 64-year-old Quarles was nominated to the position by President Donald Trump (R) in September, 2017; he joined the board in October. His current term was to run until 2032.
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(Nov. 5, 2021) Climate change poses “significant challenges” to the safety and soundness of financial institutions and the stability of the financial sector more broadly, the Federal Reserve said in a statement this week. The assertion was issued in the wake of a declaration issued earlier in the week by the Network of Central Banks and Supervisors for Greening the Financial System (NGFS), as part of the international conference (the “Conference of Parties 26” or COP26) held in Glasgow, Scotland, about climate change. “A sustained global response by national authorities, the international community, and the private sector can address the financial and economic implications of climate change,” the Fed statement said … A new Office of Minority and Community Development Banking to support the FDIC’s work with minority depository institutions (MDIs), community development financial institutions (CDFIs), and other “mission-driven” banks was announced this week by the agency. The FDIC said the new office “will further promote private sector investments in low- and moderate-income (LMI) communities.”
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