(May 18) Treasury Secretary Jack Lew convened a meeting of the Financial Stability Oversight Council in executive and open sessions at the Treasury Department. He said FSOC's review of asset management firms is ongoing. Other points:
Cybersecurity in financial markets is a main focus of several government agencies
Regulators continue to monitor investor risk-taking amid period of low interest rates
Shelby legislation would roll back parts of Dodd-Frank and leave FSOC in "knots"
(May 20) The Financial Stability Oversight Council's 2015 Annual Report offers insight into where supervisors will focus in the coming year, and points to policy risk for mortgage REITs, nonbanks engaged in leveraged lending, peer-to-peer lenders, clearinghouses, and banks. The report
Reiterates worry MREITs are so heavily reliant on short-term funding any disruptions could lead to fire sales
Flags risk crackdown on how banks underwrite leveraged loans could result in business shifting to nonbanks; may lead to poorly-underwritten leveraged loans that could go bad in downturn
Liquidity risk to P2P lenders, with product rapid growth
(May 20) The Securities and Exchange Commission proposed new rules that would require mutual funds and other asset managers to report much more detailed data about their holdings, e.g., their exposure to derivatives, repurchase agreements, and securities lending. The regulators' plan is one of a series of reforms announced late last year by SEC Chair Mary Jo White. The proposal comes as asset managers are facing scrutiny as part of a broader attempt to clamp down on potentially risky financial activities not fully addressed by Dodd-Frank.
(May 20) The FHFA, in a move meant to mitigate risk in the growing industry, announced new financial eligibility requirements for mortgage servicers. Nonbanks selling mortgages to Fannie or Freddie must meet new liquidity standards. Companies selling mortgages to Fannie or Freddie, or collecting payments on loans backed by the two U.S.-owned enterprises, must meet the new standards. Financial requirements become effective at the end of 2015.
