In the Media
Now do you feel better? The economy should keep growing for at least the next two years. That's from a source who should know: Federal Reserve Board Chairman Jerome Powell. "There's no reason to think that the probability of a recession in the next year or two is at all elevated," Reuters quoted Powell as saying to a business group this week. And yet, that inverted yield curve...
Low drama at the Fed. It raised interest rates again this week. But here's a rarity in Washington: a key institution that is escaping the drama-filled nature of the city. The Wall Street Journal reported that President's Trump's nominees to the Federal Reserve Board are "mainstream, qualified candidates who have mostly drawn praise from outside economists and Fed watchers. It isn't a guarantee that the Fed won't err -- by raising rates too slowly or too quickly -- but it provides essential stability to the economy's most important financial institution." Of course, there are other matters the Fed will have to weigh in on, such as implementation of the bank regulation law approved by Congress earlier this year as well as its supervision of larger firms.
More Fed news. Drama might be low, but that doesn't mean that it is zero. Politico Pro reported that Powell called on Republican Senators wavering on the nomination of Nellie Liang, a Fed careerist, to the Board of Governors. "GOP members of the Banking Committee...have started to raise red flags about her strong regulatory background," Politico reported. Liang helped shape post-crisis regulations while at the Fed. Meanwhile, another Fed nominee, Kansas banking regulator Miki Bowman, also is awaiting Senate confirmation. CSBS has urged the Senate to approve Bowman.
Still too big to fail? Check out the Politico Money podcast interview with former Federal Reserve Governor Daniel Tarullo. He weighs in on the new bank regulation law -- "it's more working around the edges of the biggest banks and not cutting to the heart of what was accomplished" in post-crisis regulation -- the risks of weakening the Volker Rule, and the big question: whether some banks are still too big to fail. Tarullo: "We're certainly a lot safer than we were 10 or 12 years ago...but...there is still some legitimate question...as to whether if one of them got into significant trouble...whether...the government should take extraordinary measures."
A case study on fintech banks. American Banker has an interesting look at Varo Money, a fintech seeking approval to operate as a national bank. While the OCC has given conditional approval to Varo, the company pulled its application from FDIC consideration, citing a number of unresolved issues. "Varo's experience...is an example of regulatory agencies being out of sync with one another," the American Banker reported.
CFPB moves ahead on data. The CFPB issued a report on data collection and will seek public comment shortly. "Acting Director Mick Mulvaney drew criticism for freezing CFPB's data collection for six months when he took over in late November (2017), citing cybersecurity concerns," Politico Pro reported.
Meanwhile, in Congress. Senator Elizabeth Warren (D-Mass.) introduced legislation that would revamp the Community Reinvestment Act and provide incentives to encourage more affordable housing units in the United States. According to National Mortgage News, Warren's bill "would apply CRA requirements to a broader array of institutions -- including credit unions -- and make penalties tougher for violations...Warren's bill also proposes billions of dollars in new investments into affordable housing trust funds." In a separate article, NMN reported the Fed Chair Powell is hopeful that the Fed, FDIC and OCC can come together on CRA reform.