News on the economy from the Federal Reserve and elsewhere was the most prominent feature of last week's developments: the Bureau of Labor Statistics published the CPI for June, and the Federal Reserve released its semiannual monetary policy report (together with Chair Yellen's testimony before the banking committees) and the Beige Book.  The CFPB also provided a semiannual report to the Senate Banking Committee.  On the shadow banking front, the Treasury Department published a request for information for a study of online lending. The full set of events over the past week is as follows. The Economy

  • Consumer Price Index for June released (July 17).
    • CPI rose 0.3% in June on a seasonally adjusted basis after 0.4% increase in May.
    • CPI less food and energy rose 0.2%.
    • Over past 12 months CPI rose 0.1% before seasonal adjustment.
    • Release available at http://www.bls.gov/news.release/cpi.nr0.htm.  
  • Federal Reserve releases Semiannual Report to Congress on the State of the Economy (July 15-16).
    • Major points:
      • "The overall condition of the labor market continued to strengthen over the first half of 2015, albeit at a more moderate pace than in 2014."
      • "Consumer price inflation remains below the FOMC’s longer-run goal of 2 percent."
      • "Real gross domestic product is reported to have been little changed in the first quarter of this year."
      • "The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace and labor market conditions will continue to move toward levels the Committee judges to be consistent with its dual mandate of maximum employment and price stability."
      • "The Committee anticipates that, with stable inflation expectations and strengthening economic activity, inflation will rise gradually over the medium term toward the Committee’s 2 percent objective."
      • "Domestic financial conditions have generally remained supportive of economic growth."
      • "Financial vulnerabilities in the United States overall have remained moderate since the previous Monetary Policy Report."
      • "The FOMC has continued to judge that a high degree of policy accommodation remains appropriate to support continued progress toward maximum employment and price stability."
      • "The Federal Reserve has continued to plan for the eventual normalization of the stance and conduct of monetary policy, including by testing the operational readiness of the policy tools to be used."
    • Report available at http://www.federalreserve.gov/monetarypolicy/mpr_default.htm.
    • Chair Yellen's Congressional testimony available at http://www.federalreserve.gov/newsevents/testimony/yellen20150715a.htm.
    • See also Congressional Activity – Recent below.
  • Beige Book for July 2015 released by Federal Reserve (July 15).
    • "All twelve Federal Reserve Districts indicated that economic activity expanded from mid-May through June."
      • "Consumer spending increased across all Districts since the previous reporting period, albeit at varying degrees."
      • "Overall, Districts reporting on nonfinancial business services, such as information technology, healthcare, and professional and business services, indicated moderate growth since the previous report."
      • "Reports on transportation activity were mixed."
      • "Manufacturing activity was uneven across Districts from mid-May through June."
      • "Several Districts reported that residential real estate activity had increased during the reporting period, including Richmond, St. Louis, Minneapolis, and Kansas City."
      • "Several Districts, including Chicago, St. Louis, and Kansas City, indicated that commercial real estate activity was mostly positive and that it continued to increase at a modest to moderate pace."
      • "Overall demand for loans during the reporting period increased in New York, Richmond, Atlanta, and Dallas, and was stable in Kansas City. Consumer loan demand was steady in Chicago and Kansas City. Commercial loan demand increased in New York, strengthened in Richmond, and remained robust in San Francisco. Reports of commercial and industrial (C&I) loan growth were mixed, and ranged from strong in Philadelphia, to increased in New York and St. Louis, flat in Chicago, and slower in Dallas."
      • "Employment levels picked up in various industries across Districts since the last reporting period.  Wage pressures were modest across most areas of the country, outside of some specialized skill and high-demand occupations in sectors such as information technology, transportation, and construction."
      • "Inflation pressures remained largely unchanged since the last report."
    • Beige Book available at http://www.federalreserve.gov/monetarypolicy/beigebook/default.htm.

Auto Loans

  • Justice Department and CFPB enter into settlements with American Honda Finance regarding discriminatory auto loan pricing and compensation practices (July 14).

BSA/AML

CFPB

Consumer Loans

Disparate Impact

  • Federal Reserve approves section 3 application of Cathay General Bancorp to acquire Asia Bancshares, Inc. (July 16)
  • Note settlement with American Honda Finance; see Auto Lending above.

Diversity

Financial Literacy

Minority- and Women-Owned Businesses

Regulation

Shadow Banking

  • Treasury Department issues request for information  for public comment for study of business models and products offered by online lenders, prospects for increased access to credit by historically underserved borrowers, and regulatory changes to support safe growth (July 16).

Too Big to Fail

  • Federal Reserve Board approves two items at July 20 meeting:
  • Federal Reserve proposes modifications to capital planning and stress testing regulations (July 7).
    • Changes include delay of incorporation of supplementary leverage ratio into stress testing until 2017, continued use of standardized risk-weighted assets in stress testing, and removal of requirement to project tier 1 common ratio in post-stress capital ratios.
    • Proposal available at http://www.federalreserve.gov/newsevents/press/bcreg/20150717a.htm.
    • Comment deadline: September 24.

Congressional Activity – Upcoming.

  • July 22
    • House Financial Services Committee hearing, "Examining Federal Reserve Reform Proposals."
    • House Financial Services Committee hearing, "The Iran Nuclear Deal and its Impact on Terrorism Financing."
    • Senate Banking Committee hearing, "Oversight of the Financial Stability Oversight Council Designation Process."
  • July 23
    • House Financial Services Committee hearing, 'Ending 'Too Big to Fail': What is the Proper role of Capital and Liquidity?"
    • Senate Banking Committee hearing, "Measuring the Systemic Importance of U.S. Bank Holding Companies."
  • July 24
    • House Financial Services Committee hearing, "National Credit Union Administration Operations and Budget."

Congressional Activity – Recent Hearings

Upcoming Events

  • July 22
    • OCC program for minority- and women-owned businesses, "Managing for Long-Term Success," Washington, DC.
  • July 28
    • OCC Director Workshop, Risk Governance, Harrisburg, PA.
  • July 29
    • OCC Director Workshop, Credit Risk, Harrisburg, PA.
  • July 30
    • FDIC Bank Teleconference Series, youth savings programs.
  • Aug. 4
    • EGRPRA field hearing, Federal Reserve Bank of Kansas City.
  • Aug. 12
    • Interagency technical assistance event for minority- and women-owned businesses, Arlington VA.
  • Aug. 18
    • OCC Director Workshop, Compliance Risk, Wichita, KS.
  • Aug. 19
    • OCC Director Workshop, Credit Risk, Wichita, KS.
  • Oct. 15-16
    • FDIC, 5th Annual Consumer Research Symposium, Arlington, VA.
  • Nov. 19-20
    • National Community Investment Fund, 2015 Development Banking Conference, Chicago, IL.

Regulatory Comment Deadlines

  • July 24 – Federal Reserve: inclusion of certain general obligation state and municipal bonds in high-quality liquid assets for the purpose of the liquidity coverage ratio.  
  • August 10 – Federal Reserve/FDIC/OCC/NCUA/CFPB/SEC: information collection relating to interagency diversity standards.  
  • July 27 – FDIC: ANPR on deposit account recordkeeping by large banks.  
  • Aug. 11 – SEC:  new and amended reporting requirements for investment advisers.  
  • Aug. 11 – SEC: new and amended reporting requirements for mutual funds.  
  • Aug. 31 – Treasury: RFI for study of online lending.  
  • Aug. 31 – FTC: privacy policies of auto dealers that finance purchases to be posted on line.  
  • Sept. 3 – Federal Reserve/FDIC/OCC: EGRPRA review, phase 3.  
  • Sept. 11 – FDIC: insurance assessments for small banks.  
  • Sept. 11 – Basel Committee: consultative document on interest rate risk.  
  • Sept. 14 – SEC: disclosure of policy on clawback of erroneously awarded incentive compensation.  
  • Sept. 24 – Federal Reserve: changes to capital planning and stress testing rules.