Statement by the Acting Comptroller of the Currency at the Financial Stability Oversight Council

Acting Comptroller of the Currency Michael J. Hsu made the following statement today at the meeting of the Financial Stability Oversight Council (FSOC) with respect to the LIBOR transition.

Acting Comptroller of the Currency Michael J. Hsu made the following statement today at the meeting of the Financial Stability Oversight Council (FSOC) with respect to the LIBOR transition.

Read more / Original news source: https://www.occ.gov/news-issuances/news-releases/2021/nr-occ-2021-65.html

SIFMA survey looks at GDP, unemployment, and inflation

SIFMA’s biannual survey of U.S. economists highlighted some key economic trends, including a rising gross domestic product (GDP), lower unemployment, and inflation.© Shutterstock “As the economy recalibrates to a new post-pandemic equilibrium, we can expect to see at least temporary higher prices across multiple segments in inflation indexes, but the real question is whether inflationary […]

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SIFMA’s biannual survey of U.S. economists highlighted some key economic trends, including a rising gross domestic product (GDP), lower unemployment, and inflation.

© Shutterstock

“As the economy recalibrates to a new post-pandemic equilibrium, we can expect to see at least temporary higher prices across multiple segments in inflation indexes, but the real question is whether inflationary pressures will prove temporary or underlying,” said Lindsey Piegza, chief economist at Stifel Financial and chair of SIFMA’s Economic Advisory Roundtable. “For the foreseeable future, this unknown will be the focus both for the market and policymakers.”

The chief U.S. economists from 27 global and regional financial institutions who took part in the survey expect real GDP growth to finish 2021 at 7.5 percent, followed by a 3.1 percent increase in 2022. On a quarterly basis, respondents forecast 10 percent real GDP growth in the second quarter, followed by 7.9 percent and 5.6 percent growth in the third and fourth quarters, respectively.

The economists said additional fiscal stimulus, faster opening of U.S. economy, and larger consumer spending could spike the numbers while lingering COVID restrictions and lockdowns, labor supply constraints, and higher inflation were downside risks.

Further, the economists expect unemployment to drop to 5.2 percent at the end of the year, down from its current 5.8 percent level. In 2022 they expect to see it drop to 4 percent.

As for inflation, the respondents expect the CPI (consumer price index) to end 2021 at 3.8 percent, while the core CPI will be at 2.9 percent. Those numbers are up from 1.2 percent and 1.6 percent, respectively, last year. However, the vast majority, 88 percent, believe current inflation pressures are temporary/transitory, while 81 percent are confident the Fed can achieve its 2 percent average inflation target in a sustainable way.

The survey was conducted between May 17 and June 3. All of the findings can be found on the SIFMA website.

SIFMA is the leading trade association for broker-dealers, investment banks, and asset managers operating in the U.S. and global capital markets

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Senate Republicans introduce bill to control nation’s debt

A group of Republican Senators introduced Wednesday legislation seeking to reduce the nation’s debt.© Shutterstock The Federal Debt Emergency Control Act — introduced by U.S. Sens. Ted Cruz (R-TX), Rick Scott (R-FL), Mike Braun (R-IN), and Marsha Blackburn (R-TN) — would require the Office of Management and Budget to declare a “Federal Debt Emergency” in […]

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A group of Republican Senators introduced Wednesday legislation seeking to reduce the nation’s debt.

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The Federal Debt Emergency Control Act — introduced by U.S. Sens. Ted Cruz (R-TX), Rick Scott (R-FL), Mike Braun (R-IN), and Marsha Blackburn (R-TN) — would require the Office of Management and Budget to declare a “Federal Debt Emergency” in any fiscal year where the federal debt held by the public in the prior fiscal year exceeded 100 percent of that year’s Gross Domestic Product (GDP).

“America has a debt crisis. Our nation is barreling toward $30 trillion in debt – an unimaginable $233,000 in debt for every family in America,” Scott said. “It’s a crisis caused by decades of wasteful and reckless spending by Washington politicians. Now, President Biden is continuing this way of governing by pushing for trillions in wasteful spending, raising the U.S. federal debt by 60 percent to $39 trillion and the debt-to-GDP ratio to 117% in 2030, the highest level ever recorded in American history.”

This emergency declaration would trigger steps to reduce the federal debt to levels below 100 percent of GDP. Among them, it would terminate any unobligated funding from the American Rescue Plan Act and any previous stimulus bills and require all legislation that increases the federal deficit, as determined by the Congressional Budget Office, to carry its offsets. Further, it would fast-track any legislation that would reduce the federal deficit by at least 5 percent over ten years.

“Spending beyond our means has consequences,” Scott added. “We’re already seeing rising inflation, which disproportionately hurts the poorest families, like mine growing up. That’s why today, I am leading my colleagues in introducing the Federal Debt Emergency Control Act to rein in Washington’s out-of-control spending.”

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Read more / Original news source: https://financialregnews.com/senate-republicans-introduce-bill-to-control-nations-debt/

FMI details concerns regarding food labeling legislation

The Food Industry Association (FMI) recently announced concerns about potential repercussions of language included in the Country-of-Origin Labeling (COOL) Online Act, stating it would be duplicative and burdensome.© Shutterstock The concern stems from the Senate’s recent advancement of the U.S. Innovation and Competition Act, which includes language from the COOL Online Act, detailing how the […]

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The Food Industry Association (FMI) recently announced concerns about potential repercussions of language included in the Country-of-Origin Labeling (COOL) Online Act, stating it would be duplicative and burdensome.

© Shutterstock

The concern stems from the Senate’s recent advancement of the U.S. Innovation and Competition Act, which includes language from the COOL Online Act, detailing how the bill would require retailers to include country of origin information in product descriptions on their websites, reflecting the origin of the exact product the customer will receive.

The FMI maintains the requirement would foster costly new technology challenges while conflicting with current requirements identifying the country of origin on the package in place under the U.S. Department of Agriculture’s (USDA) authority for more than 10 years.

“Now is not the time to place additional, duplicative burdens on essential industries like food retailers with no additional benefit to customers,” said Andy Harig, FMI vice president of Tax, Trade, Sustainability & Policy Development. “Online purchasing by customers has increased exponentially due to the COVID pandemic, and retailers have expanded their online product offerings at significant costs to meet consumer needs.”

The FMI said the existing USDA COOL program has proven functional, providing consumers with country-of-origin information efficiently and cost-effectively with food retailer high compliance rates.

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Read more / Original news source: https://financialregnews.com/fmi-details-concerns-regarding-food-labeling-legislation/

CUNA supporting further exploration of tax reporting proposal

The Credit Union National Association (CUNA) is joining a group of organizations in supporting further exploration of the legislative tax reporting proposal concerning costs and benefits assessments. © Shutterstock President Joe Biden’s FY22 budget proposal includes language requiring financial institutions to report information on account flows. The CUNA has partnered with organizations to forward correspondence […]

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The Credit Union National Association (CUNA) is joining a group of organizations in supporting further exploration of the legislative tax reporting proposal concerning costs and benefits assessments.

© Shutterstock

President Joe Biden’s FY22 budget proposal includes language requiring financial institutions to report information on account flows.

The CUNA has partnered with organizations to forward correspondence to Congress, seeking further evaluation of the potential for imposing a new level of data collection to the tax reporting structure.

“This proposal will have real costs, not only for government, but also for financial institutions, small businesses, and individual taxpayers,” the organizations wrote. “Strengthening IRS funding and overhauling outdated technology to use existing information reporting to facilitate targeted auditing of questionable tax returns is a much more efficient and effective approach to closing the tax gap.”

Other key observations within the correspondence, per authorities, include new reporting would appear to require material development costs and process additions for financial institutions; estimates used to derive the expected benefits from the proposal may be outdated and misleading; the proposal scope will have significant privacy and data protection ramifications; and the position that providing enhanced resources for IRS audits is a more effective and fair approach.

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Read more / Original news source: https://financialregnews.com/cuna-supporting-further-exploration-of-tax-reporting-proposal/

OCC Hosts Virtual Mutual Savings Association Advisory Committee Meeting June 29

The Office of the Comptroller of the Currency (OCC) today announced it will host a virtual meeting of the Mutual Savings Association Advisory Committee (MSAAC) on Tuesday, June 29, 2021.

The Office of the Comptroller of the Currency (OCC) today announced it will host a virtual meeting of the Mutual Savings Association Advisory Committee (MSAAC) on Tuesday, June 29, 2021.

Read more / Original news source: https://www.occ.gov/news-issuances/news-releases/2021/nr-occ-2021-64.html

Reps. Guest, Soto seek update on DOJ investigation into cattle market

U.S. Reps. Michael Guest (R-MS) and Darren Soto (D-FL) are seeking updates from the U.S. Department of Justice (DOJ) on its investigations into anticompetitive conduct within the beef industry.© Shutterstock Guest and Soto said cattle producers across the country have experienced volatile livestock markets driven by supply chain disruptions and labor challenges. These challenges have […]

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U.S. Reps. Michael Guest (R-MS) and Darren Soto (D-FL) are seeking updates from the U.S. Department of Justice (DOJ) on its investigations into anticompetitive conduct within the beef industry.

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Guest and Soto said cattle producers across the country have experienced volatile livestock markets driven by supply chain disruptions and labor challenges. These challenges have been driven by the COVID-19 pandemic and a consolidated beef market. In May of 2020, the Department of Justice launched investigations into the four largest meatpackers in the United States to examine if anticompetitive practices led to price disparities between live cattle prices and wholesale beef.

The lawmakers sent a letter to U.S. Attorney General Merrick Garland asking for an update on that investigation.

“We understand that a thorough investigation can take many months, but it concerns us that farmers, ranchers, and the packers themselves have all been left with little direction since the CIDs were issued,” the lawmakers wrote to Garland. “As you may know, the price for live cattle in the United States has decreased in the last several years, forcing many small operators to make difficult decisions as they strive to stay in business and keep their farms operational. Yet, at the same time, the price of boxed beef has increased significantly, raising consumer prices and widening the gap between live cattle prices, which is a concern for ranchers and consumers alike. This disparity has only been accelerated by the challenges posed by the COVID-19 pandemic and the labor shortages in processing facilities due to enhanced government benefits, all of which has resulted in continued food supply chain disruption.”

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Read more / Original news source: https://financialregnews.com/reps-guest-soto-seek-update-on-doj-investigation-into-cattle-market/

CFTC subcommittee recommends switch form LIBOR to SOFR for interest rate swaps

A subcommittee within the Commodity Futures Trading Commission (CFTC) voted to recommend switching interdealer trading conventions from LIBOR to the Secured Overnight Financing Rate (SOFR) for interest rate swaps. © Shutterstock The recommendation was made by CFTC’s Market Risk Advisory Committee’s (MRAC) Interest Rate Benchmark Reform Subcommittee. This initiative, referred to as “SOFR First,” is […]

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A subcommittee within the Commodity Futures Trading Commission (CFTC) voted to recommend switching interdealer trading conventions from LIBOR to the Secured Overnight Financing Rate (SOFR) for interest rate swaps.

© Shutterstock

The recommendation was made by CFTC’s Market Risk Advisory Committee’s (MRAC) Interest Rate Benchmark Reform Subcommittee. This initiative, referred to as “SOFR First,” is the third recommendation this subcommittee has referred to the MRAC for consideration in connection with the transition of US Dollar derivatives and related contracts away from LIBOR. SOFR First is a best practice modeled after the U.K.’s SONIA First. It represents a prioritization of interdealer trading in SOFR rather than LIBOR.

“I commend the Interest Rate Benchmark Reform Subcommittee on the development of SOFR First and its forward-thinking approach to increasing overall SOFR derivatives trading in order to facilitate a smooth transition of exposures from LIBOR to SOFR. SOFR First’s milestone date of July 26, 2021, is consistent with, and is designed to complement, U.S. banking regulators’ supervisory guidance that banks should cease entering into new contracts that use USD LIBOR as a reference rate at the end of 2021. Many thanks to the Subcommittee for their hard work on this important contribution to the benchmark reform effort,” Acting MRAC Chair Rostin Behnam said.

Specifically, the subcommittee recommends that starting July 26, interdealer brokers replace trading of LIBOR linear swaps with trading of SOFR linear swaps. This step will cause trading activity amongst swap dealers on these platforms, which account for a substantially large share of trading in the interest rate swap markets, to switch from LIBOR to SOFR.

The subcommittee’s recommendations will not be reviewed by MRAC for consideration.

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Read more / Original news source: https://financialregnews.com/cftc-subcommittee-recommends-switch-form-libor-to-sofr-for-interest-rate-swaps/