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  • Thread starter Thread starter nycfan
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nycfan said:

Federal Reserve Board announces that reputational risk will no longer be a component of examination programs in its supervision of banks​


www.federalreserve.gov

Federal Reserve Board announces that reputational risk will no longer be a component of examination programs in its supervision of banks

The Federal Reserve Board on Monday announced that reputational risk will no longer be a component of examination programs in its supervision of banks. The Bo
www.federalreserve.gov

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The Fed - SR 95-51 (SUP): Rating the Adequacy of Risk Management Processes and Internal Controls at State Member Banks and Bank Holding Companies

The Federal Reserve Board of Governors in Washington DC.
www.federalreserve.gov
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This move is consistent with Treasury/OCC policy announced in March to discontinue assessing reputational risk as one of the 8 prongs of a bank audit. The Trump Administration was adamant that the reputational risk assessment put too much pressure on crypto and other developing industries and contributed to debanking of such industries to avoid pressure on the reputational risk component of the audit.

For their part, lenders have complained that the reputational risk component is too subjective and can ding an institution for matters out of their control that do not impact the financial risks to the lender or depository.
 
The lack of regulatory concern about reputational risk has given fintechs a leg up on traditional banks and has made it hard for some industries (crypto, gun dealers, payday lenders, marijuana growers, gambling establishments, racist organizations, etc.) to obtain customary banking services, but my view is that the reputational risk component could be modified instead of eliminated as a key to the survival of a bank or other financial institution.

I suspect the biggest impact will be for the benefit of crypto companies in the immediate term as I think banks are not otherwise eager to platform some of the other socially questionable organizations they avoid under the reputational risk regulation. This change could also complicate efforts to of banks that want to terminate a customer that creates reputational risk by association for the bank (which I am sure is part of the intent from the “debanking” conspiracists who complain that law-abiding members of right wing militias and other right wing or libertarian groups can’t get or keep banking services because of the tyranny of reputational risk concerns).
 
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nycfan said:
The Trump Administration was adamant that the reputational risk assessment put too much pressure on crypto and other developing industries and contributed to debanking of such industries to avoid pressure on the reputational risk component of the audit.
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Exactly. The purpose isn't to regulate banking. It's again bending the rules to accommodate an industry that doesn't live in the real world.

It is utterly crazy how crypto has gotten so much loving attention in DC despite its track record. Almost every major player in the business has faced felony charges and several have been convicted. Theft and fraud is everywhere. So what does Congress do? Hey, let's trust the people who brought us Binance and FTX to create "stablecoins."
 
lawtig02 said:
I'm going out on a limb here because you know about a million times more about this than I do, but I'm also starting to hope for a big cut in July. Yes, I know it will trigger more inflation. But we need to do something to start getting the housing market unstuck, and a substantial cut would help a lot. I also think we could use a jolt of energy with all the chaos happening around us right now.
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There are signs there may be support at the Fed for just that

IMG_7609.jpeg

 

Powell Reaffirms Wait-and-See Posture on Rate Cuts, Citing Solid Economy​

Congressional hearings follow an emerging rift within the Fed on rate cuts and sharp criticism from Trump​


🎁 —> https://www.wsj.com/economy/central...d?st=5YF2CX&reflink=desktopwebshare_permalink

“Federal Reserve Chair Jerome Powell is set to tell lawmakers on Tuesday that the central bank remains focused on making sure any one-time increases in prices from higher tariffs won’t turn into an “ongoing inflation problem.”

Powell said little in prepared remarks to tee up a rate cut next month. Instead, he said solid economic activity in recent months meant officials could carefully study inflation and employment data to determine whether and when the central bank resumes lowering interest rates following a pause that has so far lasted for six months.

“For the time being, we are well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance,” Powell said in remarks prepared for delivery later Tuesday before the House Financial Services Committee. Powell is set to testify on Capitol Hill over two days.…”
 
nycfan said:
The lack of regulatory concern about reputational risk has given fintechs a leg up on traditional banks and has made it hard for some industries (crypto, gun dealers, payday lenders, marijuana growers, gambling establishments, racist organizations, etc.) to obtain customary banking services, but my view is that the reputational risk component could be modified instead of eliminated as a key to the survival of a bank or other financial institution.

I suspect the biggest impact will be for the benefit of crypto companies in the immediate term as I think banks are not otherwise eager to platform some of the other socially questionable organizations they avoid under the reputational risk regulation. This change could also complicate efforts to of banks that want to terminate a customer that creates reputational risk by association for the bank (which I am sure is part of the intent from the “debanking” conspiracists who complain that law-abiding members of right wing militias and other right wing or libertarian groups can’t get or keep banking services because of the tyranny of reputational risk concerns).
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Big Banks, Worried About Being Trump’s Next Target, Race to Appease Republicans​

Texas and Oklahoma have banned some banks from state contracts, saying they discriminate against the gun and fossil-fuel industries​


🎁 —> https://www.wsj.com/finance/banking...a?st=5mscMx&reflink=desktopwebshare_permalink

“…
Banks are also worried about a bigger threat: that President Trump could turn the power of the federal government against banks, as he has with universities and big law firms.

The Trump administration is considering an executive order on “debanking,” according to people familiar with the matter.

Leaders in a growing number of conservative states have accused banks of boycotting industries for political reasons, rather than based on traditional factors such as the ability to repay debts. States including Texas and Oklahoma have blacklisted some banks from state contracts as a result. Banks say they weigh risks when deciding who to do business with and limit ties with companies for financial, legal and reputational reasons.

… Earlier this month, Citigroup met with Texas Gov. Greg Abbott to discuss the bank’s decision to end its policy of not doing business with companies that sell firearms to people under the age of 21, a person familiar with the matter said.

… Citigroup and JPMorgan updated their policies this year to clarify that they don’t discriminate on political grounds, which the banks said were already part of their existing practices. They were also among the big banks that recently left the Net-Zero Banking Alliance, an industry climate group targeted by Texas’ attorney general.

…
Goldman Sachs GS 0.95%increase; green up pointing triangle, Morgan StanleyMS 0.97%increase; green up pointing triangle, JPMorgan and Wells Fargo have removed some limitations on working with the coal sector or have been discussing whether to do so, according to people familiar with the matter. Bank of America dropped its ban on coal companies in late 2023.

A spokeswoman for JPMorgan said, “We believe understanding policymakers’ perspectives while sharing our own makes us a better bank.” Bank of America said it serves clients in the oil-and-gas industry, as well as those working in clean and renewable energy.…”
 
nycfan said:
There are signs there may be support at the Fed for just that
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Both of the governors who have been calling for rate cuts are Trump appointees who are auditioning for Powell's job. Think of it is as the equivalent of an unhinged 5th Circuit rant designed to curry favor with the president.

It is lunacy to think about cutting rates substantially in this environment. Powell is 100% correct.
 


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“… Even people who find themselves underwater on their mortgages generally don’t have a major cause for alarm, provided they can consistently make payments and keep their jobs, said Chen Zhao, an economist at Redfin.

Zhao expects a slight national home price drop of 1% by the end of the year, which might lead to more people being underwater. But she said that a surge in foreclosures was unlikely. The more stringent lending practices ensure that homeowners are typically able to handle financial fluctuations...”
 
superrific said:
Both of the governors who have been calling for rate cuts are Trump appointees who are auditioning for Powell's job. Think of it is as the equivalent of an unhinged 5th Circuit rant designed to curry favor with the president.

It is lunacy to think about cutting rates substantially in this environment. Powell is 100% correct.
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Lunacy seems a bit strong. Europe has done a lot of rate cutting and the inflation and growth concerns are not that different over there.
 
nycfan said:


Gross Domestic Product, 1st Quarter 2025 (Third Estimate), GDP by Industry, and Corporate Profits (Revised) | U.S. Bureau of Economic Analysis (BEA)

Real gross domestic product (GDP) decreased at an annual rate of 0.5 percent in the first quarter of 2025 (January, February, and March), according to the third estimate released by the U.S. Bureau of Economic Analysis. In the fourth quarter of 2024, real GDP increased 2.4 percent.
www.bea.gov www.bea.gov

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How much time before Trump calls his own administration a bunch of liars again?
 

Claiming a historic gain in blue-collar wage growth, Trump shows how to use statistics to mislead​

Commentary: Claiming a historic gain in blue-collar wage growth, Trump shows how to use statistics to mislead [Is this link behind a firewall for you guys? Not clear if LA times has a gift link option]

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[setting aside the obscure calculation they used], “… A fundamental question about the White House claim is why it chose to measure itself against the first five months of previous administrations. Why not the first five months of all presidential terms? Or any other five-month period?

… The time frame cited by the White House is curiously selective. The historical comparison to the first five months of one-term presidents and the first terms of two-term presidents doesn’t apply to Trump: “This is Trump’s second term, so he’s not really a member of this club,” observe Dunne and Henwood.

They note, further, that the five-month annualized gain in worker wages is “a silly metric.” The statistic is notoriously volatile, and averaging such a short period only exacerbates its ephemerality.

… It’s proper to recognize that even assembling the statistics that the Trump administration decided to torture for its news release may become more difficult in the future. That’s because Trump is taking a hatchet to the government’s economic data infrastructure.

Several datasets have been deleted from federal websites. Budget cuts and mass firings will hobble data collection, and expert advisory committees serving the Census Bureau, BLS and Bureau of Economic Analysis have been disbanded.

The result of these and other assaults, wrote Jed Kolko, a former undersecretary for economic affairs at the Commerce Department overseeing data operations at the Census Bureau and BEA, will include the destruction of trust in U.S. economic data.

“Governments hide or manipulate the numbers only when they’re bad, as Argentina did with inflation, Greece with public finances, and China with its youth unemployment rate,” Kolko wrote.…”
 
I read this NYPost piece when it came out and have been trying to figure out where they calculated the stats since the article doesn’t tell you that.



From the LA Times link above:

“… The basis for Trump’s claim is a government statistic tracking inflation-adjusted hourly earnings for production and nonsupervisory employees in the private sector, pegged to prices in 1982-1984.

The workers tend to be rank-and-file employees, though economic analysts Philippa Dunne and Doug Henwood of TLRAnalytics note that it’s a stretch to call them “blue-collar.” The term customarily applies to laborers, not “bartenders, teachers, or retail workers” whose earnings are also tracked by the statistic.

Trump cited wage growth from Jan. 1 through May 31 this year. As it happens, however, Trump wasn’t president for that entire period; he took office on Jan. 20, so at least some of his claim covered the last three weeks of the Biden administration.…”
 

Washington
CNN
—
A deluge of economic data released Thursday should have provided a clearer picture of how the US economy is faring in the face of President Donald Trump’s massive policy shifts. But the latest numbers were a mixed bag, leaving economists still scratching their heads.

Gross domestic product, the broadest measure of economic output, registered an annualized rate of -0.5% from January through March, the Commerce Department said Thursday in its third and final estimate. That’s worse than the 0.2% decline reported in the second estimate. GDP is adjusted for seasonal swings and inflation.
 
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