11 Jul
2016
Shadow Banking, FinTech, and More Financial Services – TenCount 7.11.16
- The House and Senate have five days left before taking off on a seven-week vacation, so naturally they have delayed a major piece of legislation until the last minute. In addition to fights over gun control and Zika funding, both houses are slated to vote this week on a reauthorization of the Federal Aviation Administration, whose current funding expires Friday. Although at 14 months the new bill meets the accounting definition of long-term, it is not the kind of comprehensive overhaul that members of Congress keep insisting that they want to pass. Funding stays level and a few measures are aimed at shortening times at security checkpoints.
- Expect more fireworks on Tuesday over the decision not to prosecute Hillary Clinton for the unauthorized use of a personal email server. Attorney General Loretta Lynch will testify at an oversight hearing of the House Judiciary Committee, which is certain to also ask her about her meeting with Bill Clinton a few days before the email probe was concluded. Other topics on the agenda include “the disturbing politicization” of the Obama Justice Department and DOJ’s “use of mortgage settlements to funnel money to third-party activist groups.”
- Oversight of the Federal Communications Commission will be the subject before a House Energy and Commerce subcommittee at 10 a.m. Tuesday. All five commissioners are scheduled to testify, and questions are likely to focus on the agency’s proposal for cable television set-top boxes, the recent judicial ruling upholding Net Neutrality and the FCC’s proposed privacy regulations, a subject that also is the focus of a Senate Commerce Committee hearing at the same time. On Thursday, the Commission meets to consider spectrum and wireless competition issues.
- Remember the financial crisis? A large part of that debacle was traced to the shadow banking system – the coterie of hedge funds and insurance companies that operate outside the purview of federal banking regulators. Or did, until Dodd-Frank. Some skeptics, however, say that the post-crisis reforms were inadequate, and that substantial risk remains. The Center for American Progress hosts a discussion Tuesday morning.
- The exciting and interesting part of the banking sector these days is FinTech, the segment of the financial services industry that uses technology to provide online services and products to consumers. On Tuesday, the House Financial Services Committee examines the opportunities and challenges presented by the development of marketplace lending through online platforms.
- Of course, for those truly interested in banking, nothing excites like trying to see through the opaque curtain that shields the machinations of the Federal Reserve. The U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness will try to lift the curtain a bit on Tuesday when it hosts “Federal Reserve Reform: Securing Regulatory Transparency and Accountability.”
- Thought you’d heard the last of Brexit? Not a chance. Treasury Secretary Jack Lew hopscotches through Europe this week discussing the issue with allies. The financial markets, still trying to figure out what it means, brace on Thursday for the Bank of England’s first monetary policy decision since the referendum. Bank Governor Mark Carney has signaled that a rate cut – which would be the first in seven years – could lie ahead because of battered consumer confidence.
- For years, the municipal bond market personified boredom. No more. Following the catastrophic financial meltdowns of Detroit and Puerto Rico, financial risk pretty much defines the muni market these days. On Tuesday the Brookings Institution’s Hutchins Center on Fiscal and Monetary Policy hosts a webcast on “The Muni Market in the Post-Detroit and Post-Puerto Rico Bankruptcy Era.”
- And what about financial risk in China, holder of $1.2 trillion in U.S. government debt? Currently China is undergoing its most serious financial test in decades, as growth slows, earnings decline and lending tightens. On Monday, Brookings hosts a session on “China’s Economic Bubble: Government Guarantees and Growing Risks.” That will serve as an appetizer for a Thursday Senate Banking hearing on “Evaluating the Financial Risks of China.”
- Terrorism gets the full monty in the House this week. Tuesday brings a Foreign Affairs hearing on “Pakistan: Friend or Foe in the Fight Against Terrorism.” On Wednesday, the same committee hears “Countering the Virtual Caliphate: The State Department’s Performance,” while the Homeland Security Committee looks at the preparedness of the Homeland Security Department for counterintelligence and insider threats. On Thursday, that same committee weighs in on “Worldwide Threats to the Homeland: Isis and the New Wave of Terror.”