On August 15th, Reuters discussed how banking regulators are enlisting banks in the fight against money laundering. Enlistment.
Living Wills and Early Termination
On August 14th, Reuters recounted its interview with Thomas Hoenig, Vice Chair of the FDIC. Hoenig said that in order to improve their living wills, banks must amend the early termination provisions of their derivatives contracts so that the contracts may be stayed in the event of a bank’s failure. Early Termination. DealBook discussed the efforts being made to expand the provision of a stay to cross-border derivatives contracts, the derivatives contracts of a bank entering Chapter 11 Bankruptcy, the derivatives contracts of non-bank financial firms, and pre-existing derivatives contracts. Extended Stay.
On August 14th Reuters, while discussing automated investment advisory services asked, “Can an algorithm be a fiduciary?” Robo-Advisers.
FHFA Proposes New RMBS Structure
On August 12th, the Federal Housing Finance Agency requested comment on a proposed structure for a mortgage backed security, the “Single Security,” that would be issued and guaranteed by Fannie Mae or Freddie Mac and be eligible for trading in the to-be-announced market. FHFA is requesting public input on all aspects of the proposed Single Security structure and is especially focused on issues regarding the transition from the current system to a Single Security. Comments relating to TBA eligibility, legacy Fannie Mae and Freddie Mac securities, potential industry impact of the Single Security initiative, and the risk of market disruption are also sought. Comments should be submitted on or before October 13, 2014. FHFA Press Release.
On August 11th, Reuters reported representatives from the OCC and Federal Reserve have reassured the Private Equity Growth Capital Council that the regulatory concern over leveraged loans is not aimed at private equity firms. Leveraged Loans.