Cabinet News & Views

In This Issue ...

Welcome to a new (and noticeably colder) month and the latest edition of Cabinet News and Views. Our team has had another very busy week examining regulatory activity on hot topics in artificial intelligence, climate change, cryptocurrency and personal data, as well as the ongoing dialogue on Basel 3.1.

In this issue, we start with the leftovers we promised last week (just in time for the colder temperatures). I provide an update on the U.S. interagency climate-related risk management principles for large financial institutions, which now include clarification on their applicability to foreign banks and the different roles of an institution’s board of directors versus its management. My colleague in Washington, D.C., Mercedes Kelley Tunstall, and I provide another look at the Federal Reserve’s debit interchange proposal. Mercedes offers two more reports this week, including a second installment of her analysis on the CFPB’s proposed rule on personal data financial rights; and on Monday’s announcement that the Biden administration has issued an Executive Order regarding artificial intelligence. Also from Monday’s news is a report by my colleagues, Mike Gambro and Maurine Bartlett, on the SEC’s new order exempting brokers and dealers from certain review and recordkeeping requirements related to fixed income securities.

Reporting from London, my colleague, Alix Prentice, discusses two topics. She provides an analysis of the latest UK PRA discussion paper covering securitization capital requirements in the context of Basel 3.1. Alix also shares an update from the UK Treasury on its plans to facilitate and regulate the use of fiat-backed stablecoins in the country’s payment chains. Finally, my colleagues on our firm’s global litigation team, Jason Halper and Timbre Shriver, offer an in-depth look into the U.S. Treasurer Department’s guiding principles for private sector financial institutions that have made net-zero commitments.

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Daniel Meade
Partner and Editor, Cabinet News and Views

Federal Banking Agencies Finalize Interagency Climate-Related Risk Management Principles

By Daniel Meade

Partner | Financial Regulation

Last week, the Federal Reserve Board, Federal Deposit Insurance Corporation, and Office of Comptroller of the Currency released a final interagency “Principles for Climate-Related Financial Risk Management for Large Financial Institutions.”

By Daniel Meade

Partner | Financial Regulation

By Mercedes Kelley Tunstall

Partner | Financial Regulation

As we mentioned last week, the Federal Reserve Board announced proposed changes to Regulation II (Debit Card Interchange Fees and Routing), which is the implementing regulation of the Durbin Amendment to the Dodd-Frank Act that required the FRB to establish a cap on debit interchange fees that is reasonable and proportional to the cost incurred by the debut card issuer.

By Mercedes Kelley Tunstall

Partner | Financial Regulation

As we reported last week, the Consumer Financial Protection Bureau released a proposed rule addressing “personal data financial rights.” Comments are due on December 29, 2023. This week’s installment discusses the entities that would be required to comply with the provisions of the rule, should it be adopted as proposed.

By Mercedes Kelley Tunstall

Partner | Financial Regulation

On October 30, 2023, the White House announced that President Biden had issued an Executive Order regarding artificial intelligence. The Executive Order was accompanied by a Fact Sheet summarizing the eight policy goals on AI that the White House wanted to emphasize.

On October 30, the Securities and Exchange Commission issued an order exempting brokers and dealers from the information review and recordkeeping requirements under Rule 15c2-11 in connection with providing quotations on 144A fixed income securities.

Further details are discussed in our recent Client and Friends Memo here authored by Mike Gambro and Maurine Bartlett.

The UK’s PRA Discusses Securitisation Capital Requirements and Basel 3.1

By Alix Prentice

Partner | Financial Regulation

The UK’s banking regulator, the Prudential Regulation Authority has published a Discussion Paper covering securitisation bank capital in the context of: (1) the Basel 3.1 output floor and capital requirements for securitisation exposures; (2) a review of the hierarchy of methods for determining capital requirements for securitisation exposures; and (3) the scope of the framework for simple, transparent and standardised securitisations, as covered in the PRA’s consultation on the Implementation of the Basel 3.1 standards.

By Alix Prentice

Partner | Financial Regulation

The UK’s Treasury has released an update on plans for the regulation of fiat-backed stablecoins, following on from its January 2021 consultation on the UK regulatory approach to cryptoassets and stablecoins, the government’s intention at this stage is to “facilitate and regulate the use of fiat-backed stablecoins in UK payment chains.”

By Jason M. Halper

Partner | Global Litigation

By Timbre Shriver

Associate | Global Litigation

On September 19, 2023, the U.S. Treasury Department introduced nine guiding principles for private sector financial institutions that have made net-zero commitments. The principles are intended to highlight and encourage the adoption of best practices and promote consistency and credibility in the approaches taken to set and achieve net-zero commitments. The “Principles for Net-Zero Financing & Investment” are also intended to help attract private sector capital to address the economic and environmental impacts of climate change.