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U.S. Initial Public Stock Offerings and the JOBS Act [September 27, 2012]
"Over the past decade, many sources have reported a precipitous decline in the number of initial public offerings (IPOs) in the United States. These statistics raise several questions: what has caused such a decline? What are the implications for the U.S. economy, and particularly for job creation? At the same time as IPOs appear to have fallen, the amount of private stock offerings has increased, suggesting growth in an alternative source of equity financing. This report analyzes factors contributing to the decline in IPOs, differences between an IPO involving the sale of shares to the public versus a private stock offering limited to sophisticated investors, and potential economic implications of such a rise in private versus public stock offerings. It also provides analysis of the causes and implications of the stagnation in public IPOs. [...] Enacted on April 5, 2012, in the 112th Congress, the Jumpstart Our Businesses Startup Act (JOBS) Act (P.L. 112-106) is broadly aimed at stimulating capital formation for companies, especially for relatively new and smaller ones. Among other things, the JOBS Act lifts certain impediments to a small company external financing technique known as crowdfunding, establishes a category of firm known as an emerging growth company (EGC), and relaxes various disclosure and accounting requirements for such firms."
Library of Congress. Congressional Research Service
Miller, Rena S.; Shorter, Gary W.
2012-09-27
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JP Morgan Trading Losses: Implications for the Volcker Rule and Other Regulation [August 16, 2012]
From the Document: "JP Morgan Chase (JP Morgan), the nation's largest bank holding company by asset size, had established a reputation for quality risk management. On May 10, 2012, Jamie Dimon, the bank's chairman and chief executive officer (CEO), held an unplanned conference call. As reflected in the firm's first quarter 2012 filings with the Securities and Exchange Commission (SEC), Mr. Dimon reported that, during the early part of the second quarter, a London-based office of the bank (insured depository) unit, the Chief Investment Office (CIO), sought 'to hedge the firm's overall credit exposure' and incurred 'slightly more than [a] $2 billion trading [paper] loss on … synthetic credit positions.' The CEO characterized the trading strategy behind the loss as 'flawed, complex, poorly reviewed, poorly executed and poorly monitored [and noted that] the portfolio has proven to be riskier, more volatile and less effective as economic hedge than we thought.' He also said that the portfolio still contained securities with 'a lot of risk and volatility going forward.... It could cost us as much as $1 billion or more…. [I]t is risky, and it will be for a couple of quarters.' The loss was charged to the bank's corporate and private equity division, which houses the CIO. During the conference call, Mr. Dimon also indicated that the loss would be partially offset by a $1 billion gain from the sale of securities by the unit, resulting in an $800 million second quarter loss for the division."
Library of Congress. Congressional Research Service
Shorter, Gary W.; Murphy, Edward Vincent; Miller, Rena S.
2012-08-16
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Treasury Securities and the U.S. Soverign Credit Default Swap Market [August 15, 2011]
"Paying the public debt is a central constitutional responsibility of Congress (Article I, Section 8). U.S. Treasury securities, which represent nearly all federal debt, have long been considered riskfree assets. The size of federal deficits and the projected imbalance between federal revenues and outlays, however, have raised concerns among some, including the rating agency Standard & Poor's (S&P), which downgraded the U.S. sovereign credit rating from AAA to AA+ on August 5, 2011. S&P also cited 'political brinksmanship' in debt ceiling negotiations as a factor, which raised the issue of a hypothetical federal default. Prices for Treasuries suggest that financial markets continue to consider federal debt instruments a safe haven despite the S&P downgrade. Continued concerns about rising federal debt and the ability of policymakers to reach solutions to fiscal challenges could raise borrowing costs and negatively affect capital markets. A credit default swap (CDS) contract is a way to hedge or speculate on credit risk, including sovereign credit risk. A CDS protection buyer, in exchange for an annual fee set by the market and paid quarterly, can trade an asset issued by a 'reference entity' (or a cash equivalent) for its face value if a 'credit event' occurs. A CDS buyer need not own or borrow an asset issued by the reference entity, thus may hold a 'naked CDS.' A committee of the derivatives trade organization, the International Swaps and Derivatives Association (ISDA), determines whether a credit event has occurred, according to their interpretation of applicable guidelines. In general, failure to make a timely payment usually constitutes a credit event, as does a repudiation of debts, and in some cases, debt restructuring."
Library of Congress. Congressional Research Service
Austin, D. Andrew; Miller, Rena S.
2011-08-15
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Speculation, Fundamentals, and Oil Prices [September 2, 2011]
"High oil prices affect nearly every household and business in the United States. During the course of 2008, oil prices doubled to more than $145 per barrel and then fell by 80%. In early 2011, there was a run-up of about 20%, sending gasoline prices to near 2008 highs. Few would rule out the possibility of similar price swings in the months to come. What explains oil price volatility? Some consider price movements such as those of 2008 and early 2011 to be more extreme than warranted by the fundamentals of supply and demand. […] The role of speculators in oil and other commodity markets has attracted congressional interest. Staff reports by the Permanent Subcommittee on Investigations of the Senate Committee on Homeland Security and Government Affairs found that excessive speculation has had 'undue' influence on wheat price movements and in the natural gas market. A 2011 report by the minority staff of the House Committee on Oversight and Government Reform argues that 'addressing excessive speculation offers the single most significant opportunity to reduce the price of gas for American consumers.' Legislation before the 112th Congress (S. 1200 and H.R. 2328) would authorize and direct the CFTC [Commodity Futures Trading Commission] to take certain actions to reduce the volume of speculation in oil and related energy commodities. Another bill, H.R. 2003, would impose a tax on oil futures, swaps, and options that were not used for hedging commercial risk. This report provides background on financial speculation in oil, the workings of oil derivatives markets, and the different types of firms that trade in those markets. It reviews the concepts of manipulation and excessive speculation, and it briefly describes the fundamental factors that affect oil prices. This report will be updated as events warrant."
Library of Congress. Congressional Research Service
Jickling, Mark; Miller, Rena S.; Nerurkar, Neelesh
2011-09-02
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Treasury Securities and the U.S. Sovereign Credit Default Swap Market [July 25, 2011]
From the Summary: "Paying the public debt is a central constitutional responsibility of Congress (Article I, Section 8). U.S. Treasury securities, which represent nearly all federal debt, have long been considered risk-free assets. The size of federal deficits and the projected imbalance between federal revenues and outlays, however, has raised concerns among some. Uncertainties surrounding the debt limit have raised issues related to a hypothetical federal default. Prices for Treasury securities suggest that financial markets consider a federal default unlikely, although credit rating agencies warned of possible downgrades, which could raise borrowing costs and negatively affect capital markets. A typical credit default swap (CDS) contract specifies that a CDS holder, in exchange for an annual fee set by the market and paid quarterly, can trade an asset issued by a 'reference entity' for its par value if a 'credit event' occurs. […] This report explains how the sovereign CDS market works and how such CDS price trends may illuminate fiscal stresses facing sovereign governments. Although CDS prices may be imperfect measures of the federal government's fiscal condition, some investors may try to glean information from those price trends. CDS prices have been playing an important role in the European government debt markets and could potentially affect U.S debt markets in the future. European policymakers have debated certain restrictions on types of sovereign CDS trading, and such calls for reform may be of interest to U.S. lawmakers. This report will be updated as events warrant."
Library of Congress. Congressional Research Service
Austin, D. Andrew; Miller, Rena S.
2011-07-25
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MF Global Bankruptcy and Missing Customer Funds [December 12, 2011]
"On October 31, 2011, MF Global, a large brokerage firm registered with the Securities and Exchange Commission (SEC) as a broker-dealer and with the Commodity Futures Trading Commission (CFTC) as a futures commission merchant (FCM), filed for bankruptcy. Details are lacking, but it appears that the firm failed as a result of losses from investments related to European sovereign debt. Normally, brokerage customers are protected from brokerage failure. On the securities side, investors may receive up to $500,000 from the Securities Investor Protection Corporation (SIPC) if the failed brokerage's assets are insufficient to meet customer claims. In futures markets, there is no insurance scheme comparable to SIPC, but customers are supposed to be protected by strict segregation rules: customer funds entrusted to FCMs are required to be kept in separate accounts and the FCM is not allowed to use them for its own purposes. […] On December 9, 2011, the court approved a third distribution of about $2.1 billion in customer funds. When completed, customers should have received about 72% of their funds. In the future, there may be additional partial payouts. Because the customer funds in cash accounts were not guaranteed, however, the final distribution of cash to investors may not occur until the conclusion of the bankruptcy proceeding, and it is not certain that MF Global's futures customers will receive 100% of their money back. This report provides information about MF Global, the rules for handling of customer funds, the enforcement of those rules, and the bankruptcy proceeding. It will be updated as events develop."
Library of Congress. Congressional Research Service
Miller, Rena S.; Jickling, Mark
2011-12-12
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MF Global Bankruptcy and Missing Customer Funds [November 18, 2011]
"On October 31, 2011, MF Global, a large brokerage firm registered with the Securities and Exchange Commission (SEC) as a broker-dealer and with the Commodity Futures Trading Commission (CFTC) as a futures commission merchant (FCM), filed for bankruptcy. Details are lacking, but it appears that the firm failed as a result of losses from investments related to European sovereign debt. Normally, brokerage customers are protected from brokerage failure. On the securities side, investors may receive up to $500,000 from the Securities Investor Protection Corporation (SIPC) if the failed brokerage's assets are insufficient to meet customer claims. In futures markets, there is no insurance scheme comparable to SIPC, but customers are supposed to be protected by strict segregation rules: customer funds entrusted to FCMs are required to be kept in separate accounts and the FCM is not allowed to use them for its own purposes. […] On November 17, 2011, the bankruptcy court approved distribution of $520 million, or about 60% of frozen customer funds. These payouts were expected to occur by November 21. In the future, there may be additional partial payouts. Because the customer funds in cash accounts were not guaranteed, however, the final distribution of cash to investors may not occur until the conclusion of the bankruptcy proceeding, and it is not certain that MF Global's futures customers will receive 100% of their money back. This report provides information about MF Global, the rules for handling of customer funds, the enforcement of those rules, and the bankruptcy proceeding. It will be updated as events develop."
Library of Congress. Congressional Research Service
Miller, Rena S.; Jickling, Mark
2011-11-18
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Comparing G-20 Reform of the Over-the-Counter Derivatives Markets [February 19, 2013]
"Derivatives, or financial instruments whose value is based on an underlying asset, played a key role in the financial crisis of 2008-2009. Congress directly addressed the governance of the derivatives markets through the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank; P.L. [Public Law] 111-203; July 21, 2010). This act, in Title VII, sought to bring the largely unregulated over-the-counter (OTC) derivatives markets under greater regulatory control and scrutiny. Pillars of this approach included mandating that certain OTC derivatives be subject to central clearing, such as through a clearinghouse, which involves posting margin to cover potential losses; greater transparency through trading on exchanges or exchange-like facilities; and reporting trades to a repository, among other reforms. In the debates over Dodd-Frank and in subsequent years, many in Congress have raised the following important questions: If the United States takes stronger regulatory action than other countries, will business in these OTC derivatives markets shift overseas? Since OTC derivatives markets are global in nature, could derivatives trading across borders, or business for U.S. financial firms that engage in these trades, be disrupted if other countries do not adopt similar regulatory frameworks? The first step in addressing these congressional concerns is to examine the degree to which other major countries have adopted similar legislation and regulation as the United States, particularly in light of commitments from the Group of Twenty nations (G-20) to adopt certain derivatives reforms. […] This report examines the G-20 recommendations for reforming OTC derivatives markets and presents the result of self-assessment surveys measuring the performance of G-20 members and some FSB [Financial Stability Board] members to date in meeting their commitments. The Appendix to the report presents more detailed information on the status of individual jurisdictions in implementing the G-20- endorsed reforms. The Glossary defines key international bodies and related financial terms and concepts."
Library of Congress. Congressional Research Service
Jackson, James K., 1949-; Miller, Rena S.
2013-02-19
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Money Laundering in the U.S. Real Estate Sector [November 9, 2021]
From the Document: "Money laundering and other financial crimes in the real estate sector take many forms and continue to challenge real estate professionals, financial institutions, policymakers, law enforcement authorities, and regulatory stakeholders. Domestic and international scrutiny of the real estate market's vulnerability to money laundering has grown in recent years. An issue Congress may consider is how to balance the money laundering risks posed by the real estate sector against differing views on how to implement appropriate oversight. According to various sources, real estate money laundering (REML) schemes can involve a wide range of conventional domestic criminals, as well as transnational criminals, including drug cartels and human traffickers, international terrorists, and foreign kleptocrats (corrupt high-level officials). The purchase of real estate, often combined with methods to conceal a purchaser's identity and source of funds, can allow criminals to integrate ill-gotten proceeds into the legal economy or park illicit wealth abroad. Real estate transactions may intersect with banks and other financial institutions that are subject to anti-money laundering (AML) and countering the financing of terrorism (CFT) requirements. Some critics posit that current AML/CFT practices may not effectively deter REML. The U.S. Department of the Treasury's 2018 'National Money Laundering Risk Assessment' identified five key risks and vulnerabilities within the U.S. real estate sector: [1] transactions involving luxury residential real estate; [2] real estate transactions involving opaque entities; [3] all-cash transactions that do not involve mortgage lenders; [4] real estate transactions based on falsified loan application information; and [5] complicit professionals in the real estate industry."
Library of Congress. Congressional Research Service
Rosen, Liana W.; Miller, Rena S.
2021-11-09
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Climate Change and U.S. Financial Regulators: Overview and Recent Actions [Updated August 26, 2021]
From the Document: "Under the Biden Administration, financial regulators have announced a range of new measures to address financial risks associated with climate change. The Department of the Treasury, the Securities and Exchange Commission (SEC), and the Federal Reserve have each announced new steps: [1] The Treasury's announcement covers a range of issues including public spending, macroeconomic effects, and international cooperation. [2] The SEC's addresses investor disclosure requirements relating to climate risks and the classification of funds marketed to investors as environmentally friendly. [3] The Fed's relates to lending risks for individual financial institutions and to systemic financial risks related to climate change. This Insight provides an overview of these actions and how they interrelate."
Library of Congress. Congressional Research Service
Miller, Rena S.
2021-08-26
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HEROS Act, Division K--COVID-19 Housing, Economic Relief, and Oversight Act [June 29, 2020]
From the Document: "Many economic effects of the Coronavirus Disease 2019 (COVID-19) pandemic intensified in April and May 2020, including historically high levels of unemployment and related housing affordability issues, consumption and spending reductions, and state and local government financial strains. In an attempt to mitigate a range of issues stemming from COVID-19, the House of Representatives on May 15, 2020, passed the HEROES [Health and Economic Recovery Omnibus Emergency Solutions] Act (H.R. 6800), by a vote of 208 to 199. This wide-ranging bill, consisting of Divisions A through T, would provide a new round of economic stimulus checks to individuals and tax credits to certain COVID-19-affected businesses and employees; extend certain federal unemployment benefits; grant some student loan forgiveness; provide rental and mortgage assistance; provide certain health care equipment; and offer economic assistance to state and local governments, among other provisions. [...] This report provides an overview of the HEROES Act's Division K--the COVID-19 Housing, Economic Relief, and Oversight Act--which includes provisions for housing assistance, student loan forgiveness, the provision of medical equipment, credit reporting and debt collection, greater funding for Community Development Financial Institutions, and increased oversight of COVID19-related government loans to businesses, among other measures."
Library of Congress. Congressional Research Service
Miller, Rena S.; Lowry, Sean; Cecire, Michael H. . . .
2020-06-29
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Treasuries and Repo in the Time of COVID-19 [July 20, 2020]
From the Document: "The U.S. Treasury issues debt securities--known as Treasuries--that play three critical roles in the economy: funding the government, supplying safe assets, and anchoring liquidity flows in financial markets. This Insight examines how the coronavirus pandemic has affected all three roles."
Library of Congress. Congressional Research Service
Austin, D. Andrew; Miller, Rena S.
2020-07-20
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Financial Reform: Overview of the Volcker Rule [July 9, 2018]
"Legislators and regulators have long grappled with whether restricting the types of activities banks can engage in, or reforming banks' structures, might reduce the risk of large bank failures and the risk of systemic financial instability, such as that seen in the 2008 financial crisis. The Volcker Rule is an example of a means of addressing this issue. The statutory basis of the Volcker Rule is Section 619 of the Dodd-Frank Act, enacted in 2010 following the crisis. It was conceived of by Paul Volcker, a former Federal Reserve (Fed) chair, and implemented as 'the Volcker Rule' in a 2013 joint final rule by five financial regulators: the Fed, Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency (OCC), Securities and Exchange Commission (SEC), and Commodity Futures Trading Commission (CFTC). The Volcker Rule generally prohibits a depository bank (or company that owns one) from engaging in proprietary trading or investing in (or sponsoring) a hedge fund or private equity fund. The rule has been subject to debate and was recently amended through legislative action. Regulators have also proposed further changes to the rule."
Library of Congress. Congressional Research Service
Miller, Rena S.
2018-07-09
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Climate Change Risk Disclosures and the Securities and Exchange Commission [Updated February 17, 2022]
From the Summary: "Potential risks to the U.S. financial system from climate change have attracted growing attention in government, academia, and media, raising questions about the roles of financial regulators in addressing such risks. Scientific assessments have concluded that human activities--and particularly carbon dioxide and methane emitted by fossil fuels, agriculture, and land use change--are extremely [>95% likelihood] likely the primary driver of the rise of global average temperature since 1950. Climate change--defined by the Federal Reserve as 'the trend toward higher average global temperatures and accompanying environmental shifts such as rising sea levels and more severe weather events'--may impact multiple financial regulators' responsibilities, including those of ensuring financial stability. Risks from climate change may belong to the category of physical risks, such as heavier and more frequent storms or wildfires that impose direct losses. Or they may consist of transition risk, meaning the risk that changing government policies or market perceptions might lead to sudden asset price drops, such as for carbon-emitting industries. A 2020 report by the Commodity Futures Trading Commission (CFTC) found that climate change could pose systemic risks to the U.S. financial system. The Securities and Exchange Commission's (SEC's) mission is to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation. As part of this mission, the SEC issued 'Guidance Regarding Disclosure Related to Climate Change' in 2010 to assist publicly listed companies in evaluating when climate change risks require disclosure. However, the 2020 CFTC report concluded that the 2010 SEC guidance has not resulted in high-quality disclosure of climate change risks across U.S. publicly listed firms, and that it should be updated in light of global advancements over the preceding 10 years."
Library of Congress. Congressional Research Service
Miller, Rena S.; Vanatko, Nicole; Shorter, Gary W.
2022-02-17
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Money Laundering in the U.S. Real Estate Sector [Updated January 4, 2022]
From the Document: "Money laundering and other financial crimes in the real estate sector take many forms and continue to challenge real estate, financial institution, law enforcement, policymaker, and regulatory stakeholders. Global scrutiny of the real estate market's vulnerability to money laundering has grown in recent years. An issue Congress may consider is how to balance the money-laundering risks posed by the real estate sector against differing views on how to implement appropriate oversight. According to various sources, real estate money-laundering (REML) schemes can involve a wide range of domestic and transnational criminals, including drug cartels and human traffickers, international terrorists, and foreign kleptocrats (corrupt high-level officials). The purchase of real estate, often combined with methods to conceal a purchaser's identity and source of funds, can allow criminals to integrate ill-gotten proceeds into the legal economy or park illicit wealth abroad. Although real estate transactions often intersect with financial institutions that are subject to anti-money laundering (AML) and combating the financing of terrorism (CFT) requirements, AML/CFT gaps remain. The U.S. Department of the Treasury's 2020 'National Strategy to Counter Illicit Finance' states that 'Treasury is committed to working with Congress to minimize the risks of the laundering of illicit proceeds through real estate purchases'--and identifies REML as among its top 12 AML priorities and supporting actions."
Library of Congress. Congressional Research Service
Rosen, Liana W.; Miller, Rena S.
2022-01-04
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U.S. Efforts to Combat Money Laundering, Terrorist Financing, and Other Illicit Financial Threats: An Overview [Updated January 4, 2022]
From the Document: "The United States maintains a multifaceted policy regime for tackling anti-money laundering (AML), combating the financing of terrorism (CFT), and countering illicit financial threats. Key issues for the 117th Congress may include oversight of the U.S. government's legal, regulatory, enforcement, and diplomatic AML/CFT effort--with special focus on the Biden Administration's implementation of significant changes to the AML/CFT regime enacted as part of the William M. (Mac) Thornberry National Defense Authorization Act FY2021 (NDAA; P.L. [Public Law] 116-283). [...] Several provisions of the FY2022 NDAA (P.L. 117-81) address AML concerns, including with respect to Russian money laundering (Section 6106), the delegation of BSA [Bank Secrecy Act] examination authority (Section 6107), and updates to the National Strategy for Combating Terrorist and Other Illicit Financing (Section 6506)."
Library of Congress. Congressional Research Service
Miller, Rena S.; Rosen, Liana W.
2022-01-04
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Overview of Correspondent Banking and 'De-Risking' Issues [Updated April 8, 2022]
From the Document: "In broad terms, correspondent banking refers to formal agreements or relationships between banks to provide payment services for each other. It is often used to effectuate cross-border payments, and as such, plays an important role in the international financial system. The value of global cross-border payments is estimated to increase from almost $150 trillion in 2017 to over $250 trillion by 2027, according to the Bank of England. Correspondent banking represents a significant portion of this (e.g., the European Central Bank reported roughly $746 billion worth of daily transactions channeled through correspondent banking arrangements within Eurozone countries alone in 2019), as it underpins trade finance, migrant remittances, and humanitarian flows. [...] Although these transactions provide significant benefits, they also present several challenges. Two interrelated primary policy issues involved with correspondent banking are (1) what types of anti-money-laundering (AML) and countering the financing of terrorism (CFT) controls should be in place to prevent illicit payments? and (2) how to prevent excessive industry reaction to such controls, called 'de-risking.'"
Library of Congress. Congressional Research Service
Miller, Rena S.
2022-04-08
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Fintech: Overview of Innovative Financial Technology and Selected Policy Issues [April 28, 2020]
From the Summary: "Advances in technology allow for innovation in the ways businesses and individuals perform financial activities. The development of financial technology--commonly referred to as 'fintech'-- is the subject of great interest for the public and policymakers. Fintech innovations could potentially improve the efficiency of the financial system and financial outcomes for businesses and consumers. However, the new technology could pose certain risks, potentially leading to unanticipated financial losses or other harmful outcomes. Policymakers designed many of the financial laws and regulations intended to foster innovation and mitigate risks before the most recent technological changes. This raises questions concerning whether the existing legal and regulatory frameworks, when applied to fintech, effectively protect against harm without unduly hindering beneficial technologies' development."
Library of Congress. Congressional Research Service
Perkins, David W.; Cooper, Cheryl R.; Getter, Darryl E. . . .
2020-04-28
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Climate Change Risk Disclosures and the Securities and Exchange Commission [April 20, 2021]
From the Summary: "Potential risks to the U.S. financial system from climate change have attracted growing attention in government, academia, and media, raising questions about the roles of financial regulators in addressing such risks. [...] The Securities and Exchange Commission's(SEC's)mission is to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation. As part of this mission, the SEC issued 'Guidance Regarding Disclosure Related to Climate Change' in 2010 to assist publicly listed companies in evaluating when climate change risks require disclosure."
Library of Congress. Congressional Research Service
Miller, Rena S.; Vanatko, Nicole; Shorter, Gary W.
2021-04-20
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U.S. Efforts to Combat Money Laundering, Terrorist Financing, and Other Illicit Financial Threats: An Overview [Updated June 9, 2021]
From the Document: "The United States maintains a multifaceted policy regime for tackling anti-money laundering (AML), combating the financing of terrorism (CFT), and countering other forms of illicit financial threats. Key issues for the 117thCongress may include oversight of the U.S. government's robust legal, regulatory, enforcement, and diplomatic AML/CFT effort--with special focus on the Biden Administration's implementation of significant changes to the AML/CFT regime that were enacted as part of the FY2021 National Defense Authorization Act (NDAA; P.L. 116-283)."
Library of Congress. Congressional Research Service
Miller, Rena S.; Rosen, Liana W.
2021-06-09
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Climate Change and U.S. Financial Regulators: Overview and Recent Actions [May 11, 2021]
From the Document: "Under the Biden Administration, financial regulators have announced a range of new measures to address financial risks associated with climate change. The Department of the Treasury, the Securities and Exchange Commission (SEC), and the Federal Reserve have each announced new steps: [1] The Treasury's announcement covers a range of issues including public spending, macroeconomic effects, and international cooperation. [2] The SEC's addresses investor disclosure requirements relating to climate risks and the classification of funds marketed to investors as environmentally friendly. [3] The Fed's relates to lending risks for individual financial institutions and to systemic financial risks related to climate change. This Insight provides an overview of these actions and how they interrelate."
Library of Congress. Congressional Research Service
Miller, Rena S.
2021-05-11
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Financial Services and General Government (FSGG) FY2019 Appropriations: Independent Agencies and General Provisions [October 26, 2018]
"The Financial Services and General Government (FSGG) appropriations bill includes funding for more than two dozen independent agencies primarily in Title V. These agencies perform a wide range of functions, including the management of federal real property, the regulation of financial institutions and markets, and mail delivery. This report focuses on funding for those independent agencies in Title V of the FSGG appropriations bill. It also addresses general provisions that apply government-wide, which appear in Title VII, and provisions on Cuba sanctions, which would typically appear in Title I. In addition, the FSGG bill funds agencies not covered in this report--the Department of the Treasury (Title I), the Executive Office of the President (EOP; Title II), the judiciary (Title III), and the District of Columbia (Title IV). The bill typically funds mandatory retirement accounts in Title VI, which also contains general provisions applying to the FSGG agencies."
Library of Congress. Congressional Research Service
Webel, Baird; Christensen, Michelle D.; Dilger, Robert Jay, 1954- . . .
2018-10-26
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Could the Global Legal Entity Identifier Be Useful for Financial Transparency Legislation in the 116th Congress? [October 22, 2019]
From the Overview: "The 116th Congress is examining legislation related to financial transparency. This has come in the form of bills--H.R. 2513, S. 2563, S. 1978, or S. 1889--that would mandate greater disclosures of the natural persons or 'beneficial owners' who benefit from or control a corporation or similar legal entity. Other bills, such as H.R. 4476, seek to promote financial transparency and data standardization among securities, commodities, and banking laws to make information reported to financial regulatory agencies more easily electronically searchable. The global Legal Entity Identifier system, increasingly used in the financial sector since its 2009 inception, but seemingly little known among broader audiences, may be of interest to Congress in light of such legislative activity."
Library of Congress. Congressional Research Service
Miller, Rena S.
2019-10-22
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Introduction to Financial Services: Anti-Money Laundering Regulation [Updated January 8, 2019]
From the Background: "Anti-money laundering (AML) regulation refers to efforts to prevent criminal exploitation of financial systems to conceal the location, ownership, source, nature, or control of illicit proceeds. According to the United Nations, some $300 billion in illicit transnational crime proceeds (excluding tax evasion) likely flowed through the U.S. financial system in 2010, equivalent to roughly 2% of U.S. gross domestic product (GDP). In 2015, the U.S. Department of the Treasury confirmed that the U.N.'s estimates are comparable to U.S. estimates. Rough International Monetary Fund (IMF) estimates also indicate that the global volume of money laundering could amount to as much as 2.7% of the world's GDP, or $1.6 trillion annually."
Library of Congress. Congressional Research Service
Rosen, Liana W.; Miller, Rena S.
2019-01-08
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COVID-19: Commercial Paper Market Strains and Federal Government Support [April 13, 2020]
From the Document: "As COVID-19 [coronavirus disease 2019] spread rapidly in the United States, fears of its economic effects led to strains in the commercial paper (CP) market, one of the main funding sources for many firms and for providers of credit to individuals. Commercial paper is short-term debt issued primarily by corporations and generally is unsecured. The CP market is an important source of short-term credit for a range of financial and nonfinancial businesses, who may rely on it as an alternative to bank loans--for example, in making payroll or for other short-term funding needs. The CP market also helps provide credit to individuals through short-term asset-backed commercial paper (ABCP), which finances certain consumer loans such as auto loans or other consumer debt. Municipalities also issue CP for short-term funding needs. Some money market funds (MMFs) are key purchasers of CP, which plays a significant role in this short-term funding market. As of March 31, 2020, about 24% of total CP outstanding was ABCP; 47% of total CP was from financial issuers; and 28% was from nonfinancial issuers."
Library of Congress. Congressional Research Service
Miller, Rena S.
2020-04-13
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COVID-19: U.S. Economic Effects [May 13, 2020]
From the Document: "This Insight discusses the current and projected effects of the Coronavirus Disease 2019 (COVID-19) pandemic on the U.S. economy. [...] The economic impacts of COVID-19 since March 2020 have been large and dramatic, with impact disparities between various sectors and regions. In the United States, fear of infection, social distancing, and various states' stay-at-home orders prompted business closures and severe declines in U.S. demand for travel, accommodations, restaurants, and entertainment, among other industries. This has led to massive layoffs, furloughs, and surges in unemployment claims, with predictions for further declines in U.S. gross domestic product (GDP)."
Library of Congress. Congressional Research Service
Miller, Rena S.; Labonte, Marc
2020-05-11
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Banking Policy Issues in the 116th Congress [Updated February 21, 2019]
From the Introduction: "Banks play a central role in the financial system by connecting borrowers to savers and allocating available funds across the economy. As a result, banking is vital to the U.S. economy's health and growth. Nevertheless, banking is an inherently risky activity involving extending credit and undertaking liabilities. Therefore, banking can generate tremendous societal and economic benefits, but banking panics and failures can create devastating losses. Over time, a regulatory system designed to foster the benefits of banking while limiting risks has developed, and both banks and regulation have coevolved as market conditions have changed and different risks have emerged. For these reasons, Congress often considers policies related to the banking industry."
Library of Congress. Congressional Research Service
Perkins, David W.; Cooper, Cheryl R.; Getter, Darryl E. . . .
2019-02-21
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How Do Bank Regulators Treat Climate Change Risks? [November 25, 2020]
From the Document: "Potential risks to the financial system from climate change have attracted growing attention in government, academia, and media, raising questions about the roles of central banks and bank regulators in addressing such risks. The U.S. central bank, the Federal Reserve (Fed), has responsibilities involving financial stability, monetary policy, and banking supervision. Climate change--defined in a November 9, 2020, Fed report as 'the trend toward higher average global temperatures and accompanying environmental shifts such as rising sea levels and more severe weather events'--may impact each of these. This could occur either through physical risks, such as greater storms and wildfires, or through 'transition risk,' meaning the risk that changed government policies or market perceptions might lead to sudden asset price drops, such as for carbon-emitting industries. The Fed report on financial stability warned that sudden hazards can bring about direct losses that could negatively impact banks' investments. It asserted that even slowly developing hazards such as rising sea levels could lead to sudden price drops for bank investments if abrupt changes in public perceptions about such risks emerges. This Insight focuses on the central bank's role in banking supervision and climate change risks and on what the Fed and other banking regulators have done to address such risks."
Library of Congress. Congressional Research Service
Miller, Rena S.
2020-11-25
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Target Data Breach: Frequently Asked Questions [April 22, 2014]
"In November and December of 2013, cyber-criminals breached the data security of Target, one of the largest U.S. retail chains, stealing the personal and financial information of millions of customers. On December 19, 2013, Target confirmed that some 40 million credit and debit card account numbers had been stolen. On January 10, 2014, Target announced that personal information, including the names, addresses, phone numbers, and email addresses of up to 70 million customers, was also stolen during the data breach. A report by the Senate Committee on Commerce in March 2014 concluded that Target missed opportunities to prevent the data breach. [...] In the wake of Target's revelations, Congress has held seven hearings by six different committees related to these topics between February 3 and April 2, 2014. In addition to examining the events surrounding the Target breach, hearings have focused on preventing such data breaches, improving data security standards, better protecting consumers' personal data, and providing notice to consumers when their data have been compromised. [...]This report answers some frequently asked questions about the Target breach, including what is known to have happened in the breach, and what costs may result. [...] The report addresses policy issues discussed in congressional hearings and describes some of the legislation that the 113th Congress has introduced to deal with these issues."
Library of Congress. Congressional Research Service
Miller, Rena S.; Weiss, N. Eric
2014-04-22
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Anti-Money Laundering: An Overview for Congress [March 1, 2017]
"Anti-money laundering (AML) refers to efforts to prevent criminal exploitation of financial systems to conceal the location, ownership, source, nature, or control of illicit proceeds. Despite the existence of longstanding domestic regulatory and enforcement mechanisms, as well as international commitments and guidance on best practices, policymakers remain challenged to identify and address policy gaps and new laundering methods that criminals exploit. According to United Nations estimates recognized by the U.S. Department of the Treasury, criminals in the United States generate some $300 billion in illicit proceeds that might involve money laundering. Rough International Monetary Fund estimates also indicate that the global volume of money laundering could amount to as much as 2.7% of the world's gross domestic product, or $1.6 trillion annually. Money laundering is broadly recognized to have potentially significant economic and political consequences at both national and international levels. Despite robust AML efforts in the United States, the ability to counter money laundering effectively remains challenged by a variety of factors. These include: the scale of global money laundering; the diversity of illicit methods to move and store ill-gotten proceeds through the international financial system; the introduction of new and emerging threats (e.g., cyber-related financial crimes); the ongoing use of old methods (e.g., bulk cash smuggling); gaps in legal, regulatory, and enforcement regimes, including uneven availability of international training and technical assistance for AML purposes; and
the costs associated with financial institution compliance with global AML guidance and national laws."
Library of Congress. Congressional Research Service
Miller, Rena S.; Rosen, Liana W.
2017-03-01
