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Well, That's Novel
August 10, 2023

Even though it’s mid-August, it was a busy week for the Fed.

As my colleague Mercedes Tunstall writes, the Fed took aim at “novel activities conducted by supervised banking organizations,” essentially cautioning banking organizations that the Fed would be closely watching all the hot-button areas, including crypto-asset related activities, banking services to fintechs and distributed ledger technology.

There was more. Mercedes notes that the Fed this week also focused on stablecoins, requiring that state member banks receive “supervisory nonobjection” from the Fed prior to “issuing, holding, or transacting in dollar tokens to facilitate payments.” As Mercedes points out, the Fed’s actions suggest that the Lummis-Gillibrand crypto bill is gaining traction – an interesting but perhaps somewhat unexpected development. 

Moody’s was also busy this week with credit ratings downgrades of some regional banks and putting some larger banks on watch. We have an article on the downgrades and the possible transactional implications the downgrades can bring. My colleagues Peter Malyshev, Stu Goldstein and Lary Stromfeld took the laboring oar on our brief article on the downgrades, but as you will see in the article, it truly was a team effort amongst our Capital Markets, Finance, and Financial Services practices to highlight what Moody’s actions can mean going forward.   

Be sure to also take a look at important updates from my UK colleagues Alix Prentice and Sukhvir Basran. 

Daniel Meade 
Partner and Editor, Cabinet News and Views

Profile photo of contributor Peter Y. Malyshev
Partner | Financial Regulation
Profile photo of contributor Stuart  Goldstein
Partner | Capital Markets
Profile photo of contributor Lary Stromfeld
Partner | Financial Regulation

Earlier this week, Moody’s Investor Services downgraded the credit ratings of 10 regional banks and put 17 other banks under review or gave their rating a negative outlook. Moody’s action follows Fitch’s downgrade of U.S. sovereign credit one notch on August 1, 2023 and is likely to raise both transactional and regulatory implications for the affected banks as well as for their counterparties and customers.   

Read More »

Profile photo of contributor Mercedes Kelley Tunstall
Partner | Financial Regulation

Earlier this week, the Federal Reserve issued a Supervision and Regulation Letter regarding the “Creation of Novel Activities Supervision Program” (SR 23-7). The letter informs all banking organizations subject to supervision by the Fed, including those with assets of $10B or less, that it has established an enhanced program to “monitor and examine novel activities conducted by supervised banking organizations” that will “work within existing supervisory portfolios and alongside existing supervisory teams.” 

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Profile photo of contributor Mercedes Kelley Tunstall
Partner | Financial Regulation

The Federal Reserve issued a Supervision and Regulation letter earlier this week to all state member banks regarding their involvement in activities involving stablecoins, taking an even more reticent position than the Office of the Comptroller of the Currency took regarding national banks and stablecoins in January 2021.

Read More »

Profile photo of contributor Alix Prentice
Partner | Financial Regulation

In Consultation Paper 13/23, the UK’s Prudential Regulation Authority sets out its “Margin requirements for non-centrally cleared derivatives: Amendments to BTS 2016/2251.”

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Profile photo of contributor Alix Prentice
Partner | Financial Regulation
Profile photo of contributor Assia Damianova
Special Counsel | Capital Markets

This Clients & Friends Memo discusses the FCA proposals for revisions to firm-facing securitisation rules, including clarifications of due diligence and risk retention obligations. Also discussed is a preview of an upcoming consultation on the definitions of public and private securitisations.

You may access the Memo here.

Profile photo of contributor Sukhvir Basran
Partner | Financial Services

In April 2022, the Basel Committee on Banking Supervision began a review of “the core principles for effective banking supervision.” Last month, the Basel Committee published a Consultative Document on the Core Principles following its review.

Read More »

Maurine R. Bartlett
Senior Counsel
T. +1 212 504 6218
maurine.bartlett@cwt.com

Sukhvir Basran
Partner
T. +44 0 20 7170 8620
sukhvir.basran@cwt.com

Brian Foster
Partner
T. +1 212 504 6736
brian.foster@cwt.com

James Frazier
Partner
T. +1 212 504 6963
james.frazier@cwt.com

Mark Howe
Partner
T. +1 202 862 2236
mark.howe@cwt.com

Gregg Jubin
Partner
T. +1 202 862 2485
gregg.jubin@cwt.com

Philip S. Khinda
Partner
T. +1 202 862 2262
philip.khinda@cwt.com

Ivan Loncar
Partner
T. +1 212 504 6339
ivan.loncar@cwt.com

Peter Y. Malyshev
Partner
T. +1 202 862 2474
peter.malyshev@cwt.com

Jed Miller
Partner
T. +1 212 504 6821
jed.miller@cwt.com

Michael Newell
Partner
T. +44 0 20 7170 8540
michael.newell@cwt.com

Alix Prentice
Partner
T. +44 0 20 7170 8710
alix.prentice@cwt.com

Rachel Rodman
Partner
T. +1 202 862 2210
rachel.rodman@cwt.com

Richard M. Schetman
Senior Counsel
T. +1 212 504 6906
richard.schetman@cwt.com

Lary Stromfeld
Partner
T. +1 212 504 6291
lary.stromfeld@cwt.com

Jonathan M. Wainwright
Senior Counsel
T. +1 212 504 6122
jonathan.wainwright@cwt.com

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