STATE GOVERNMENT RELATIONS
Carrasco Wins Caucus Vote to Fill Vacant Senate Seat
Prominent Indianapolis Republican Cyndi Carrasco defeated former Rep. John Jacob in a Wednesday caucus to serve Indiana's Senate District 36 seat, which was left vacant following the death of Sen. Jack Sandlin in September. Republican precinct committee members chose Carrasco 53-5 over Jacob.
IEDC Awards $500K in Grants to Kickstart Entrepreneurial Activity
On Wednesday the Indiana Economic Development Corporation announced $500,000 in grant awards to accelerate entrepreneurial activity and resources statewide through a pilot of its new Community Collaboration Fund. This investment will help power 16 community-led projects focused on entrepreneurial education, connection and acceleration across Indiana, with a particular focus on underrepresented founders and underserved markets.
Purdue, IU Team to Study Effectiveness of READI Grants Program
Researchers from Purdue University and Indiana University plan to review over the next several years the effectiveness of $500 million in regional development grants awarded in 2021. The research on the READI program (Regional Economic Acceleration and Development Initiative) will track the performance of the funded projects along with population growth, per capita income and other economic impacts.
FEDERAL GOVERNMENT RELATIONS
CFPB Releases Proposed Data Sharing Rule
The Consumer Financial Protection Bureau Thursday released its long-awaited rulemaking on consumer-authorized financial data sharing. Among the many provisions in the nearly 300-page proposed rule – which would implement Section 1033 of the Dodd-Frank Act – is a ban on companies from charging customers for electronic access to their personal financial data. Consumers also would have the legal right to access information associated with their credit card, checking and digital wallet accounts.
According to the CFPB, the proposed rule would prevent companies from using personal financial data that consumers share to advance their own commercial interests, such as by engaging in targeted or behavioral advertising. Consumers would have the right to revoke that access, and, as part of that request, companies must delete the data they have on file by default. Companies would not be allowed to engage in "screen scraping," a dangerous form of data collection that requires the use of log-in credentials and does not allow the consumer to limit the information seen by third parties. The proposal also contains several requirements to ensure industry standards are "fair, open and inclusive," the bureau said.
Barr: Fed to Use Exploratory Scenarios, Market Shocks in Stress Tests
Fed Vice Chairman for Supervision Michael Barr announced Thursday that the Federal Reserve is developing "both exploratory macroeconomic scenarios and exploratory market shocks" for next year's stress tests. This builds on last year's inclusion of the exploratory market shock component for the first time, which was characterized by a less severe recession with greater inflationary pressures.
Barr noted that the exploratory scenario "would not be used to set a firm's stress capital buffer requirement. Instead, the exploratory scenarios will be used to inform the board's supervisory assessments of firms' risk management and our understanding of different risks in the banking system." He said the additional scenarios would also provide bank supervisors with additional insight into firms' internal risk management practices and allow for more creativity in scenario design.
"The use of stress scenarios and shocks that do not set a firm's stress capital buffer requirement can provide room to explore a wider range of vulnerabilities to inform risk-based supervision," Barr explained. "For example, if the purpose of the exploratory scenario is to inform the board or the public about new or underappreciated risks, the board could explore the impact of a scenario using a different set of variables than the ones it has currently defined in its policy statement."
He added that the supervisory stress tests are not a replacement for a firm's own risk management or internal stress testing processes. "Large banking organizations should maintain a solid line of sight into their own risks and focus their efforts to capture those risks and determine capital need," he said. "Our stress test is designed to provide a consistent measure of risk across firms, and is not a replacement for comprehensive modeling, risk management, and capital planning by the largest banks that enable them to measure and manage their own unique risks." Barr did not specify how many additional scenarios would be included in the next stress test exercise.
Powell Pleased with Progress in Reducing Inflation
Federal Reserve Chairman Jerome Powell Thursday pointed to several economic indicators suggesting progress in the Fed's goal of lowering inflation to its 2% target. However, he added that "meaningful" monetary policy tightening isn't out of the question.
During a speech in New York City, Powell noted that personal consumption expenditure inflation was estimated at 3.5% in September, down from a peak of 7.1% last year. Core inflation was estimated at 3.7%, down from 5.6% at its peak. That declining inflation did not come at the cost of higher unemployment, which Powell noted was "a highly welcome development, but a historically unusual one.” Still, Powell cautioned that reaching the Fed's 2% goal will likely require a period of below-trend growth and softening in labor market conditions.
"My colleagues and I are committed to achieving a stance of policy that is sufficiently restrictive to bring inflation sustainably down to 2% over time, and to keeping policy restrictive until we are confident that inflation is on a path to that objective…Additional evidence of persistently above-trend growth, or that tightness in the labor market is no longer easing, could put further progress on inflation at risk and could warrant further tightening of monetary policy," Powell said.
Fed's Waller Suggests Wait-and-See Approach to Future Rate Hikes
Federal Reserve Governor Christopher Waller said Wednesday that the Federal Open Market Committee has room to "wait, watch and see" what the economy does before deciding whether to raise the federal funds rate again. During a speech in the U.K., Waller pointed to several economic factors that showed progress in the Fed's battle against inflation. Still, he cited causes for concern, such as a recent jump in housing services prices and the fact that inflation has proven stubbornly persistent.
"I will be looking carefully at the data to see whether the real side of the economy begins to cool off or whether prices, the nominal side of the economy, heat up. As of today, it is too soon to tell," Waller said. "Consequently, I believe we can wait, watch and see how the economy evolves before making definitive moves on the path of the policy rate."
Still, Waller cautioned that should the economy continue showing strength, and if inflation remains persistent, more policy tightening is likely needed. "So, I will be watching to see if core inflation comes in higher than expected, perhaps sustained by continued strength in spending and investment or, if demand and the real economy slow, moderating core inflation," he said. The FOMC next meets Oct. 31-Nov. 1.
Senate Approves Resolution to Overturn CFPB Data Collection Rule
The Senate Wednesday voted 53-44 to approve a resolution of disapproval seeking to overturn the Consumer Financial Protection Bureau’s final rule implementing Section 1071 of the Dodd-Frank Act, which requires the collection and reporting of credit application data for small businesses, including women-owned and minority-owned small businesses. The legislation passed with Republicans and a few Democrats and independents voting in favor of it.
S.J. Res. 32 by Sen. John Kennedy, R-La., would need to be approved by both houses of Congress and signed by the president to overturn the rule. An identical resolution has been introduced in the House and has passed out of committee. President Biden is expected to veto the legislation.