GAO Expected to Release Report on Big Banks

On Thursday, July 31, the Government Accountability Office (GAO) is expected to release a long awaited report on funding advantages of the largest banks.  The report, prepared at the request of Senators Sherrod Brown (D-OH) and David Vitter (R-LA), will be the focus of a Thursday Senate Banking Subcommittee on Financial Institutions and Consumer Protection hearing to further discuss the report.

This Week’s Hearings:

  • Tuesday, July 29: The House Financial Services Committee will hold a markup of the following bills:  H.R. 5018, the “Federal Reserve Accountability and Transparency Act of 2014;” H.R. 4329, the “Native American Housing Assistance and Self-Determination Reauthorization Act of 2014;” H.R. 3240, the “Regulation D Study Act;” H.R. 3913, a bill to amend the Bank Holding Company Act of 1956 to require agencies to make considerations relating to the promotion of efficiency, competition, and capital formation before issuing or modifying certain regulations; H.R. 4042, the “Community Bank Mortgage Service Asset Capital Requirements Study Act of 2014;” and H.R. 5148, the “Access to Affordable Mortgages Act of 2014.”
  • Wednesday, July 30: The House Financial Services Subcommittee on Oversight and Investigations will hold a hearing titled “Allegations of Discrimination and Retaliation and the CFPB Management Culture.”
  • Wednesday, July 30: The Senate Banking Subcommittee on Housing, Transportation, and Community Development will hold a hearing titled “The Flood Insurance Claims Process in Communities After Sandy: Lessons Learned and Potential Improvements.”
  • Thursday, July 31: The Senate Banking Subcommittee on Financial Institutions and Consumer Protection will hold a hearing titled “Examining the GAO Report on Expectations of Government Support for Bank Holding Companies.”
  • Thursday, July 31: The Senate Banking Committee will hold a hearing title “Financial Products for Students: Issues and Challenges.”

Regulatory Activity

CFTC Commissioner O’Malia to Step Down

On July 23, Commodity Futures Trading Commission (CFTC) Commissioner Scott O’Malia announced his resignation effective August 8.  Commissioner O’Malia will become the chief executive officer of the International Swaps and Derivatives Association (ISDA) on August 18.

SEC Issues Rules on Money Market Funds

On July 23, the Securities and Exchange Commission (SEC) voted 3-2 to adopt new rules for money market mutual funds that require “prime” funds that invest in corporate debt to move from fixed $1 share prices to floating net asset values (NAV).  In an effort to prevent runs on funds, the rules impose restrictions on retail and institutional investors seeking to withdraw their investments during periods of financial stress. These newly adopted rules are set to take effect in 2016. At the same time, in response to these regulations, the Internal Revenue Service (IRS) has proposed regulations to allow floating NAV money market fund investors to use simplified tax accounting methods.

FSOC to Discuss Rules on Money Market Funds, SIFI Designations, and Asset anagers

On Thursday, July 31, the Financial Stability Oversight Council’s (FSOC) will meet and discuss designations of systemically important financial institutions (SIFI), reportedly to vote on whether to designate MetLife as a SIFI.  Additionally, in light of the SEC’s approval of new rules for money market funds, FSOC has indicated that it will also discuss “money market mutual reform.” FSOC will also discuss systemic risks in the asset management industry, among other topics.

Federal Open Market Committee to Meet

On Tuesday, July 29, the Federal Reserve will hold a meeting of its Federal Open Market Committee (FOMC).