Federal Reserve Board: H.2 Release for Week Ending March 19, 2016

The Federal Reserve Board (Board) publishes a weekly digest of its activities on its website. The digest is called the H.2 Release and is published every Thursday. The release for the week ending March 19, 2016, is below.

H.2 Release–Actions of the Board, Its Staff, and the Federal Reserve Banks; Applications and Reports Received

Category Action Taken
Bank Branches, Domestic Frost Bank, San Antonio, Texas — to establish branches at 314 South WW White Road, San Antonio, and 2421 East Seventh Street, Austin.

-Approved, March 14, 2016

 

 

Bank Mergers Goldman Sachs Bank USA, New York, New York — to assume certain deposits of, and acquire certain assets from, GE Capital Bank, Holladay, Utah.

-Approved, March 17, 2016

 

 

Forms Forms — final Board review to conduct with revision the Survey of Finance Companies (FR 3033s).

-Approved, March 15, 2016

 

 

Personnel Office of the Chief Operating Officer — appointment of Michael Kraemer as chief data officer.

-Announced, March 18, 2016

 

 

Reserve Bank Services Federal Reserve Bank of Chicago — authorization to provide accounts and services to Options Clearing Corporation and Chicago Mercantile Exchange, Inc., in accordance with the Dodd-Frank Act and Regulation HH.

-Approved, March 15, 2016

 

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Federal Reserve Board: Needs to Improve Communication with Congress; Former Fed Vice Chair Donald Kohn Offers Suggestions in Op-Ed

Bloomberg published an article about a simmering disagreements between the Federal Reserve Board (Board) and Congress (members of the House Financial Services Committee)

Issues in brief–

  • Federal Open Market Committee leak, involving Medley Global Advisors. The Board has not responded to Congressional requests for information, citing a Department of Justice investigation. However, the Board conducted a previous investigation (in 2012), which was closed without finding any wrongdoing.
  • Reform of the Federal Reserve Act. Chair Janet Yellen feels the current structure of the Board is acceptable, according to the Bloomberg article.

In a Bloomberg View opinion piece, former Board Vice Chair Donald Kohn (with his book’s co-author David Wessel) offered suggestions for better Board communication with Congress. One of the suggestions is for the Board to provide Congress with copies of the Monetary Policy Report several days in advance of the hearings (the document is typically sent to Congress less than 24 hours before the first hearing).

The eight suggestions from Kohn and Wessel follow.

  1. The Fed should volunteer — and Congress should agree — to have monetary policy hearings quarterly, rather than twice a year. If the Fed believes that the economy evolves quickly enough to warrant issuing new projections and taking questions from the media every quarter, then the same reasoning should apply to informing the people’s representatives.
  2. In connection with the hearings, the now semi-annual Monetary Policy Report — or a streamlined version of it — should become quarterly. Among other things, the Fed should share the monetary policy rules that it already consults in its deliberations.
  3. The Fed should publicly release the Monetary Policy Report three days before the relevant hearing, so members of Congress and staff have adequate time to digest it.
  4. The Monetary Policy Report should continue to include the Fed’s assessment of financial stability risks. The intersection of these risks and monetary policy should be one focus of the quarterly hearings.
  5. Fed staff should continue to brief and field questions from the congressional staff who prepare members for the hearings. The chair should meet with the leaders of the relevant committees in the week before the hearing.
  6. Congress should establish a process for obtaining and publishing the views of outside experts about key policy issues before each set of hearings.
  7. To make them more informative and allow for more give-and-take, each quarterly hearing in the House should allow only half the committee members to question the chair, and each member should be allotted 10 minutes (instead of the current five).
  8. The Fed should hire outside experts to periodically evaluate the procedures used to generate the economic projections that the Federal Open Market Committee receives from its staff and how the committee presents its own projections to the public. These projections — both the staff inputs and the committee outputs — play a critical role in policy making and should be as sound and well-understood as possible. Other central banks have successfully employed such external peer review, which would help Congress and the public better evaluate the quality of monetary policy.

Federal Reserve Board: H.2 Release for Week Ending March 12, 2016; Dems Request Update to 2013 GAO Study on Diversity in Financial Services Agencies and Industry

The Federal Reserve Board (Board) publishes a weekly digest of its activities on its website. The digest is called the H.2 Release and is published every Thursday. The release for the week ending March 12, 2016, is below.

H.2 Release–Actions of the Board, Its Staff, and the Federal Reserve Banks; Applications and Reports Received

Category Action Taken
Forms Forms — initial Board review to extend without revision the Funding and Liquidity Risk Management Guidance (FR 4198) and Recordkeeping Provisions Associated with Guidance on Leveraged Lending (FR 4203).

-Proposed, March 9, 2016

 

Forms — initial Board review to extend without revision the Reporting, Recordkeeping, and Disclosure Requirements Associated with Regulation NN (Reg NN).

-Proposed, March 10, 2016

 

 

 

 

 

Personnel Division of Banking Supervision and Regulation — appointment of Steve Spurry, Kathleen Johnson, and Joanne Wakim as assistant directors.

-Announced, March 7, 2016

Management Division — appointment of Steven A. Miranda as deputy director.

-Announced, March 9, 2016

 

Enforcement American Bank of Baxter Springs, Baxter Springs, Kansas — written agreement dated January 5, 2010, terminated March 4, 2016.

-Announced, March 8, 2016

 

CB Financial Corporation, Wilson, North Carolina — written agreement dated May 25, 2010, terminated March 3, 2016.

-Announced, March 8, 2016

 

Hazard Bancorp, Hazard, Kentucky, and Peoples Bank and Trust Company of Hazard — written agreement with the Federal Reserve Bank of Cleveland and the Commonwealth of Kentucky Department of Financial Institutions.

-Announced, March 8, 2016

 

 

 

Congressional Democrats Request Update to General Accountability Office’s 2013 Report on Diversity within the Financial Services Industry and Related Federal Agencies

On March 15, 2016, Ranking Member of the House Financial Services Committee, Rep. Maxine Waters (D-Calif.), Ranking Member of the Senate Banking Committee, Sen. Sherrod Brown (D-Ohio), and Ranking Member of the Investigations subcommittee of the House Financial Services Committee, Rep. Al Green (D-Tx.) requested that the General Accountability Office update its 2013 report “Diversity Management: Trends and Practices in the Financial Services Industry and Agencies after the Recent Financial Crisis” (released on May 16, 2013).

The Democrats stated that they were concerned about the slow pace of increasing diversity in the financial sector, as such diversity will help the industry to understand better all of the communities that it serves and to ensure that all consumers are treated fairly.

See also a report from the staff of the House Financial Services Committee (discussed previously in this blog).

 

Federal Reserve Board: H.2 Release for Week Ending March 5, 2016; GAO Investigates Regulatory Capture at the NY Fed Bank

The Federal Reserve Board (Board) publishes a weekly digest of its activities on its website. The digest is called the H.2 Release and is published every Thursday. The release for the week ending March 5, 2016, is below.

H.2 Release–Actions of the Board, Its Staff, and the Federal Reserve Banks; Applications and Reports Received

Category Action Taken
Forms Forms — final Board review to implement the Application for Membership for the Community Advisory Council (FR 1401).

-Approved, February 29, 2016

 

 

 

 

Personnel Division of Reserve Bank Operations and Payment Systems — appointment of Travis Nesmith and Marta Chaffee as assistant directors and David Mills as deputy associate director, and reassignment of Jeff Walker.

-Announced, March 1, 2016

Regulations and Policies Regulation YY (Enhanced Prudential Standards) — publication for comment of proposed rule to establish single-counterparty credit limits for large U.S. bank holding companies and foreign banking organizations.

-Approved, March 4, 2016

Enforcement ColoEast Bankshares, Inc., Lamar, Colorado — written agreement issued June 6, 2012, terminated February 29, 2016.

-Announced, March 3, 2016

 

Community First, Inc., Columbia, Tennessee — written agreement issued April 19, 2012, terminated February 29, 2016.

-Announced, March 3, 2016

 

CSRA Bank Corp., Wrens, Georgia — written agreement issued August 19, 2010, terminated January 20, 2016.

-Announced, March 1, 2016

 

FMB Equibanc, Inc., Statesboro, Georgia — written agreement issued April 23, 2010, terminated February 25, 2016.

-Announced, March 1, 2016

 

Industrial Bank of Korea, Seoul, Korea, and its New York, New York Branch — written agreement with the Federal Reserve Bank of New York and the New York State Department of Financial Services.

-Announced, March 1, 2016

 

Valley Bancorp, Inc., Brighton, Colorado — written agreement issued August 27, 2009, terminated February 26, 2016.

-Announced, March 3, 2016

 

General Accountability Office to Investigate Regulatory Capture at the New York Federal Reserve Bank

(March 4, 2016) According to Dow Jones Newswires, Representatives Maxine Waters (D-Calif.) and Al Green (D-Tx.), both of the House Financial Services Committee, requested that the General Accountability Office, a legislative branch agency, to investigate regulatory capture at the New York Federal Reserve Bank.

Federal Financial Regulatory Agencies: Financial Services Democrats Receive Responses from Agencies; Seek Further Action and Commitment for Measurable Results

In a previous post, I discussed the publication of a report by the U.S. House of Representatives’ Democrats (Representative Maxine Waters (D-Calif.), Representative Al Green (D-Tx.), and members of the Tri-Caucus) on the diversity and inclusion issues within the federal financial agencies.

Agency Date submitted Link Comment
Consumer Financial Protection Bureau December 7, 2015 http://democrats.financialservices.house.gov/uploadedfiles/2015.18.25_diversity_report_and_reforms_agency_responses_final.pdf
Federal Deposit Insurance Corporation December 7, 2015
Federal Housing Finance Agency December 7, 2015
Federal Reserve Board November 25, 2015 and February 8, 2016 Detailed letter (Feb. 8, 2016) submitted 2 days before the Monetary Policy Report hearing (Feb. 10, 2016).
National Credit Union Administration December 7, 2015
Office of the Comptroller of the Currency December 8, 2015
Securities and Exchange Commission December 9, 2015

According to a press release issued on January 8, 2016, the Democrats received responses from the federal financial regulatory agencies. Waters and members of the Tri-Caucus appreciated the responses but seek further action to ensure demonstrated commitment and action on the part of these agencies.

Federal Financial Agency Report Number Internet Link Comment
Consumer Financial Protection Bureau Audit report 2015-MO-C-002 http://oig.federalreserve.gov/reports/cfpb-diversity-inclusion-mar2015.pdf American Banker article about racial disparities of CFPB staff evaluations.
Department of the Treasury, Office of the Comptroller of the Currency OIG-15-017 http://www.treasury.gov/about/organizational-structure/ig/Audit%20Reports%20and%20Testimonies/OIG-15-017.pdf
Federal Deposit Insurance Corporation Eval-15-001 http://www.fdicoig.gov/reports15/15-001EV.pdf
Federal Housing Finance Agency EVL-2015-003 http://fhfaoig.gov/Content/Files/EVL-2015-003.pdf
Federal Reserve Board Audit report 2015-MO-B-006 http://oig.federalreserve.gov/reports/board-diversity-inclusion-mar2015.pdf What is left out of the report is significant: Artis v. Bernanke (now Yellen). Also 12 U.S.C. 244 needs Congressional attention to ensure that Title 5 of the U.S. Code applies to the Board; the Board’s record-keeping on, and reporting of, its internal management is lax.
National Credit Union Administration OIG-14-09 http://www.ncua.gov/about/Leadership/CO/OIG/Documents/OIG201409EqualOpportunityDiversity.pdf Click for blog post on this report
Securities and Exchange Commission 528 http://www.sec.gov/oig/reportspubs/528.pdf Report is thorough, thoughtful, and well done.

In particular, Chair Janet Yellen stated in the Fed’s letter that the Fed had already begun acting on recommendations from its Inspector General.

[Note: Key issues to monitor PMR monitoring, discussions with OMWI director. Responses to these recommendations were opaque.]

Author’s note: Other posts relating to the Federal Reserve Board on this issue follow.

https://alexwdc.wordpress.com/2015/11/27/federal-reserve-board-h-2-release-for-week-ending-november-21-2015-a-brief-comment-on-diversity-practices-of-the-board/

https://alexwdc.wordpress.com/2015/11/13/federal-reserve-board-h-2-release-for-week-ending-november-7-2015-background-on-the-boards-omwi-program/

https://alexwdc.wordpress.com/2015/12/11/federal-reserve-board-walter-t-charlton-counsel-for-cynthia-artis-artis-v-bernanke-on-c-span-in-2002-a-note-onjohn-roberts-and-antonin-scalia/

https://alexwdc.wordpress.com/2015/10/29/federal-reserve-board-h-2-release-for-week-ending-october-24-2015-boards-ig-identifies-major-management-challenges/

https://alexwdc.wordpress.com/2015/07/22/federal-reserve-board-long-running-employment-discrimination-case-artis-v-bernanke-yellen-dismissed-with-prejudice-length-of-case-offends-conscience/

https://alexwdc.wordpress.com/2016/02/11/federal-reserve-board-legal-cases-against-the-board-2/

Labor Market Fluidity: Many Proposals to Try to Explain it; None are Conclusive. Rank and Yank, However, Focuses on Persistent Workforce Displacement and Has Destructive Effects

Malloy, Raven; Smith, Christopher L.; Trezzi, Riccardo; Wozniak, Abigail (2016). “Understanding Declining Fluidity in the U.S. Labor Market.” Working Paper. Brookings Papers on Economic Activity. BPEA Conference Draft. March 10-11.

The paper presented ideas to achieve two goals–(1) determine whether various measures of labor market fluidity are related and (2) determine more completely when declines in fluidity began. The authors discussed a number of possibilities, but suggested more work to be done for most of them as the current work did not present clear answers. The authors stated that they found some relationship between a decline in social capital (trust of strangers) and a larger decline of labor market fluidity. The authors acknowledged more work is needed to explore even this relationship.

In reading the paper, I was struck by the attempt to explain human behavior in economic terms only. The paper would be stronger still if other social science disciplines were invited to explore these issues. All of the questions seems to have been proposed by economists, but the questions themselves involve sociology, political science, psychology, and maybe social work. Proper analysis would require involvement of these disciplines in order to make a proper contribution to policy.

Moreover, expectation of labor market fluidity can lead to bad policy, such as “rank and yank” programs, promoted by Dick Grote. Rank and yank forces a certain amount of turnover every year. In every case, such a broad brush approach has produced destruction. This result shows the danger of thoughtless consideration of policy implementation. This result could be reduced with thoughtful and full evaluation of social policy.

[Note: This paper was also summarized at Bloomberg Business.]

Federal Reserve Board: H.2 Release for Week Ending February 27, 2016

The Federal Reserve Board (Board) publishes a weekly digest of its activities on its website. The digest is called the H.2 Release and is published every Thursday. The release for the week ending February 27, 2016, is below.

H.2 Release–Actions of the Board, Its Staff, and the Federal Reserve Banks; Applications and Reports Received

Category Action Taken
Change in Bank Control First Mazon Bancorp, Inc., Mazon, Illinois — to retain control of First Mazon Bancorp, Inc., and its subsidiary, Mazon State Bank, Mazon.

-Permitted, February 24, 2016

 

Heartland BancCorp, Gahanna, Ohio — to retain control of Heartland BancCorp and its subsidiary, Heartland Bank, Gahanna.

-Permitted, February 23, 2016