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Articles by Jesse Westbrook
Penn's Conti-Brown Talks Basel, Tensions Between Wall Street and Washington and Why it's a Bad Idea for Banks to Sue Their Regulators
(Note to readers: Capitol Account will be off on Monday for the Martin Luther King Jr. holiday. We will be back on Tuesday, Jan. 16.) Friday Q and A: In Washington, it's easy to get caught up in the daily twists and turns of policy fights. Who’s up? Who’s down? Who’s planning to sue? (At Capitol Account, we plead guilty.) Sometimes, however, it is benefi…
Wall Street's Other Market Structure Battle: SEC Rebate Rule Pits Brokers Against Brokers, Exchanges Against Exchanges
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Wall Street's Other Market Structure Battle: SEC Rebate Rule Pits Brokers Against Brokers, Exchanges Against Exchanges
Policy battles can get ugly, especially when there’s lots of money at stake. Case in point: the fight that is brewing over the SEC’s most recent market structure proposal – an effort to prohibit rebates that stock exchanges give their biggest customers. Designed to attract trading volume, the payments (at least by some estimates) can bring in hundreds o…
Hearing Bank Criticisms, Barr Fires Back on Basel
Michael Barr, in his first public remarks of the year, came out swinging against banks’ criticisms of his effort to boost capital levels. The Fed vice chair for supervision particularly pushed back on claims that a tough rule will put U.S. lenders at a competitive disadvantage to their foreign rivals. “It’s fair to say that the U.S. banking system has h…
Gensler's Emerging Strategy for Moving Forward on Stock Trading Rules
Gary Gensler bit off a lot when he proposed four market structure rules at the same time in December 2022. Now, despite the stiff opposition of much of the finance industry, the chair is finally making progress. Most expect an agency vote to finalize some of the plan very soon. Action on two of the more contentious proposals, however, could be months aw…
Financial Regulation's Themes of 2024 (No Surprise, Lawsuits are at the Top)
Welcome to 2024. As the SEC, the banking agencies and the CFPB move to adopt some of the most prominent (and controversial) rules on their agendas, it promises to be a year of finalization. And while the description may be apt, it’s also a bit of a misnomer. There’s not likely to be a lot of finality – at least until the federal courts have their say. L…
A Banking Regulation Retrospective: 2023's Biggest Themes and Most Intriguing Moments
Looking back at the year in banking oversight, few would disagree on the pivotal moment: March 10. The collapse of Silicon Valley Bank, fueled by the fastest depositor run in history, shook the financial system – and the Washington regulatory apparatus. The fallout included two more regional bank failures, but fears of another 2008 meltdown proved to be…
SEC's Forceful Defense of Private Funds Rule Offers Clues on How It Might Fight Future Lawsuits
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SEC's Forceful Defense of Private Funds Rule Offers Clues on How It Might Fight Future Lawsuits
The SEC – offering its first public response to a high-profile industry legal challenge – is coming out strong in defense of the private funds rule. The new oversight regime, the regulator argues in a recent court brief, is restrained, well within its remit and necessary to protect investors. They include “public employees, religious organizations and n…
Harvard's Hal Scott Talks Gensler, Bank Capital and Feeling 'Besieged' by New Regulations
Friday Q and A: It has been an extremely busy year in financial regulation. At the SEC, Chair Gary Gensler is moving ahead with rules at a record pace. But the banking agencies, spurred on by the collapses of several regional firms, aren’t too far behind. Their most prominent effort, boosting capital requirements for large lenders, has spurred a massive…
Gensler Passes a Rule on His Treasury To-Do List. But There Are Tougher Fights Ahead
Tick another item off Gary Gensler’s agenda. The rule approved today, designed to expand central clearing of Treasuries, is pretty deep in the weeds of market plumbing. But it is near and dear to the SEC chief’s heart – and central to his oft-repeated mission of promoting transparency, resiliency and competition in the markets.
Wall Street Embracing a 'Logical' Approach to Challenge Gensler's Rules
Wall Street lawyers are spending lots of time looking for the best ways to win court challenges against Gary Gensler’s onslaught of rules. One area that the industry is repeatedly homing in on: the SEC chair’s penchant for making major revisions to proposals before a final vote. The issue has already cropped up in at least one prominent case filed again…
Fintech Advocate Talks Rules, CFPB and Why Big Banks Struggle With Technology
Friday Q and A: Fintech is, perhaps, an overused buzzword. But there’s also no question that upstart technology firms are making big inroads in financial services – upending norms, but also raising important questions about regulation. While consumer protection issues may be the most prominent, it’s not just CFPB Director Rohit Chopra who has fintech in…
Bank CEOs Can Take Heart: Annual Senate Showcase is no Longer a Flogging
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Bank CEOs Can Take Heart: Annual Senate Showcase is no Longer a Flogging
The big bank CEOs have long complained about being hauled up to Congress each year for what is essentially a show trial. Or as lawmakers like to call it, “annual oversight of Wall Street.” Today, however, the eight executives who testified in front of the Senate Banking Committee deftly turned the situation to their favor, using the opportunity to take …
For Wall Street, McHenry's Retirement Means Losing a Key Ally in Raucous House
It was the surprise that wasn’t. Even when Financial Services Chairman Patrick McHenry recently said he was running for re-election, few believed it was a final decision. So his announcement today that he would leave Congress after this term was met with a lot of head nodding and I-told-you-so in financial policy circles. But there was also a good amoun…
Gruenberg's 'Listening Tour' Idea Falls Flat With FDIC Staff
As he scrambled to contain the fallout from the FDIC’s toxic workplace scandal last month, Martin Gruenberg filmed a somber internal video message where he took full responsibility for what had gone wrong and committed to getting the regulator back on track. As a first step, the chairman stressed that he would soon be visiting all the FDIC’s regional of…
Sheila Bair Talks Bank Capital, Badly Behaving Lobbyists and FDIC's Workplace Misconduct
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Sheila Bair Talks Bank Capital, Badly Behaving Lobbyists and FDIC's Workplace Misconduct
Friday Q and A: It’s been a rough few weeks for the FDIC as allegations about its toxic, boys-club workplace culture rocketed across Washington. Several investigations are now under way, assuring that the scandal will continue to reverberate – especially on Capitol Hill. Though Democrats are mostly reserving judgment for now, a handful of Republican law…
At Washington Crypto Summit, Industry Keeps the Faith that Regulatory Clarity Will Happen
Most realists see crypto policy as stuck in an endless rut, but there is always plenty of hope in the industry that Congress will miraculously come together and pass comprehensive legislation laying out the regulatory rules of the road. That was certainly the vibe at the Blockchain Association’s annual policy summit in Washington, where attendees were b…
SEC's In-House Judges Have a Tough Day in Court
After more than two hours of arguments today, it was clear that the Supreme Court’s conservative majority has some issues with the SEC’s in-house court system. But even if the justices rule against the agency in the closely watched case involving a hedge fund manager accused of securities fraud, the regulator’s enforcement efforts don’t seem likely to b…
SEC Investor Panel Joins Industry in Criticizing Predictive Data Rule
The SEC’s attempt to regulate how financial advisers use predictive data analytics has sparked fierce resistance in the industry. Now, the agency’s own investor advisory committee is joining the chorus of complaints, arguing that the plan could drive up costs for retail traders and even cause firms to curtail access to basic technology like retirement p…
Finance Professor Talks Non-Competes and What ESG Ratings Get Wrong
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Finance Professor Talks Non-Competes and What ESG Ratings Get Wrong
(Note to readers: Capitol Account won’t be publishing during Thanksgiving week — unless big news breaks. We’ll resume our regular schedule on Nov. 27.) Friday Q and A: A professor of finance and accounting at the University of Texas at Dallas, Umit Gurun specializes in the kind of meticulous, math-heavy research that isn’t always easy to unpack for a gen…
Gruenberg Under Siege: He's Threatened, But Insiders Expect Him to Fight Back
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Gruenberg Under Siege: He's Threatened, But Insiders Expect Him to Fight Back
When the first allegations about the FDIC’s toxic workplace environment hit this week, FDIC Chairman Martin Gruenberg commissioned an independent review in an attempt to contain the uproar. Three days later, with his own actions now under scrutiny, the FDIC chief is suddenly finding it a lot more difficult to quell the scandal.
House Hearing Offers More Basel Scrutiny -- And Tough Questions About Gruenberg's FDIC
It was day two for the bank regulators on Capitol Hill, but it wasn’t exactly a boring Basel bashing session. That did happen. But the drama at the FDIC continued to be a focus – and Chairman Martin Gruenberg found himself in an uncomfortable spotlight. The backdrop, of course, was this week’s Wall Street Journal expose that documented rampant sexual ha…
Senate Banking Wrap: Basel Dominates But FDIC Harassment Scandal Puts Gruenberg in Hot Seat
Bipartisan opposition to the Basel endgame proposal was on full display in the Senate Banking Committee today – yet another sign that regulators may have to dial back the capital plan to get it across the finish line. At their first Senate appearance since the plan’s release, Fed Vice Chair for Supervision Michael Barr, FDIC Chairman Martin Gruenberg and…
CFTC Called Out By Union Over Pham's Alleged Mistreatment of Enforcement Staff
The CFTC’s union has filed a grievance over Republican Commissioner Caroline Pham’s treatment of an enforcement lawyer at a closed-door meeting. The complaint contends that the derivatives regulator has allowed Pham to repeatedly intimidate and abuse employees, a situation that “has created and fostered a hostile work environment.”
Financial Services Panel Stresses That Angst With Gensler's Agenda is Bipartisan
By now, you’d have to be stranded on a desert island (without Wi-Fi) not to see the story line coming out of the Republican-led House Financial Services Committee: Gary Gensler is running roughshod over everyone and everything as he haphazardly proposes dozens of consequential rules, without even a thought about the aftereffects.
Finra Warns Constitutional Challenge Could 'Eviscerate' Market Oversight
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Finra Warns Constitutional Challenge Could 'Eviscerate' Market Oversight
Finra is raising the stakes in the federal court battle over the legality of its in-house judicial system, warning that the case could pose an “existential threat” to the U.S. system of financial regulation and investor protection.
Scalia and Rep. Barr Blast Bank Capital Plan
Eugene Scalia, the go-to lawyer for challenging federal rules, had a message today for the bank regulators: He’s been digging through their capital plan and finds it wanting. “It's an incomplete document in ways that are legally very consequential,” Scalia said.
Banks in a Bind: Industry Has Issues With CRA Revamp, But Fighting Back May be Tricky
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Banks in a Bind: Industry Has Issues With CRA Revamp, But Fighting Back May be Tricky
Regulators have wrapped up their years-long effort to overhaul rules aimed at boosting bank lending in underserved communities. For progressives and the White House, the update of Community Reinvestment Act regulations is a signature achievement, especially with an election year approaching.
CFPB Shocker: Industry Doesn't Hate Chopra's 'Open Banking' Rule -- Yet
It’s a rare occasion when the CFPB proposes a new rule and the banking industry doesn’t lose its (collective) mind. Today was one of those days.
Brokerages, Exchanges Prepare for Battle Over SEC's Latest Market Structure Rule
The SEC is wading into yet another market structure fight. Its latest rule proposal, approved today over the objections of the two Republican commissioners, is much more limited than last year’s massive overhaul of stock trading oversight.
Citadel and Regional Brokerage Group Team Up to Sue SEC Over CAT Funding
Lawsuits against SEC Chair Gary Gensler’s far-reaching rules are starting to pile up. The latest, filed today by Citadel Securities and the American Securities Association, challenges a plan the agency approved last month for funding a huge database of stock trades known as the Consolidated Audit Trail.
No SEC Appeal in Grayscale Case Means a Bitcoin ETF is Closer Than Ever
As much as SEC Chair Gary Gensler may dislike crypto, the agency’s decision to not appeal its loss in the Grayscale Investments case sends a pretty strong signal that the commission is getting closer to approving a Bitcoin ETF – and it could happen as soon as early next year.
Gensler Notches Win on Activist Rule, While Concessions Tamp Down Funds' Opposition
Gary Gensler got a win today (as we reported earlier in a special breaking news edition), spearheading the first revamp of an important investor disclosure requirement in five decades.
SEC Approves Activist Hedge Fund Disclosure Rule -- With Some Concessions
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SEC Approves Activist Hedge Fund Disclosure Rule -- With Some Concessions
The SEC is quickening the pace for investors to disclose when they’ve taken a big stake in a company. The regulator approved a rule today that requires public reporting of a 5 percent holding within five business days – up from the current 10-day deadline. The agency billed the effort as the first modernization of the requirements in more than 40 years.
Progressive Lawyer Explains How to Defend Agencies With Constitution's Text and History
[Note to readers: Capitol Account won’t be published on Monday due to the federal holiday.
Enforcement Overdrive? It's Not Just Gensler's Rules Surge That Has Firms on Edge
Gary Gensler’s ambitious rules agenda has prompted no shortage of complaints from Wall Street firms and congressional Republicans. Less talked about, but just as frustrating to many companies, is how enforcement fines have soared under his leadership.
Wall Street Wants McHenry to be Speaker. Is There a Chance?
Financial Services Committee Chairman Patrick McHenry is suddenly presiding over a much larger circus. His job as House speaker pro tempore is designed to be temporary, but it has put the somewhat wonky bow-tie wearing lawmaker squarely in the national spotlight.
Consumer Credit Trade Group Leader Talks CFPB Case and Chopra's Regulation by Blog
Friday Q and A: In case you haven’t heard, there’s a big Supreme Court argument next week. The constitutional challenge to the CFPB’s funding has provoked an outpouring of commentary and speculation on all sides.
Warren Gets a Jump on Defending the CFPB
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Warren Gets a Jump on Defending the CFPB
With oral arguments on the constitutionality of the CFPB’s funding days away, the left is mobilizing for what many fear will be a big hit to the consumer regulator, delivered by the Supreme Court’s 6-3 conservative majority. Today, Elizabeth Warren headed over to the Center for American Progress to fire up the troops.
SEC Launches Broad Sweep Into Wall Street's Use of AI, Raising Questions About Broker Conflicts Rule
SEC examiners are conducting a sweep of investment advisers and brokerage firms, seeking details about their use of machine learning, algorithms and artificial intelligence.
A Way Forward on SEC Climate Rule? An Ex-Commissioner Makes His Pitch
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