FEDERAL GOVERNMENT RELATIONS
Fed Raises Rates by Another 75 Basis Points
The Federal Open Market Committee announced Wednesday it would raise the target range for the federal funds rate federal funds rate to 3.75-4.00. This is the sixth rate increase and the fourth time the Fed has raised the rate by 75 basis points. FOMC also reiterated that it believes ongoing increases will be necessary to help return inflation closer to its 2% target.
The FOMC statement indicated that the committee would continue to monitor the implications of incoming information for the economic outlook and be prepared to adjust the stance of monetary policy as appropriate. During a press conference, Fed Chairman Jerome Powell said the question of when to moderate the pace of rate increases is now less important than the question of how high to raise rates and how long to keep monetary policy restrictive, "which really will be our principal focus." The FOMC will meet again in December.
"At some point…it will become appropriate to slow the pace of increases as we approach the level of interest rates that will be sufficiently restrictive to bring inflation down to our 2% goal," Powell said. "There is significant uncertainty around that level of interest rates. Even so, we still have some ways to go, and incoming data since our last meeting [in September] suggests that the ultimate level of interest rates will be higher than previously expected. Our decisions will depend on the totality of incoming data and their implications for the outlook for economic activity and inflation."
Lawmakers Urge Fed to Slow Pace of Rate Hikes
Sen. Elizabeth Warren, D-Mass., has joined other lawmakers in urging the Federal Reserve to ease the pace of interest rate hikes amid its ongoing tightening of monetary policy. In a letter to the Fed sent ahead of this week's policy meeting, lawmakers said the central bank's "interest rate hikes risk slowing the economy to a crawl while failing to slow rising prices that continue to harm families."
FHFA Plans Competitions to Seek Fintech Housing Finance Solutions
The Federal Housing Finance Agency plans to hold a series of "tech sprints" to solicit input on financial technology solutions that could benefit the housing market. First, it will seek public comment on maximizing the information gleaned from the events, according to a draft public notice published Tuesday. FHFA envisions tech sprints as competitions in which participants are given "problem statements" associated with fintech in housing finance so they can come up with solutions to guide agency strategy. Two tech sprints are planned each year over the next three years. FHFA is seeking comment on ways to enhance the quality of the information collected from the competitions as well as how best to minimize the burden on individuals and sponsors in providing that information.
O'Donnell Named Acting IRS Commissioner
Last Friday U.S. Treasury Secretary Janet Yellen designated IRS Deputy Commissioner Douglas O'Donnell as acting IRS commissioner. O’Donnell will head the agency after Commissioner Charles Rettig’s term ends Nov. 12. O'Donnell is a career IRS employee, having spent more than 36 years at the agency in a variety of roles, including commissioner of the IRS Large Business and International Division for nearly six years.
Russian Hackers Attacked U.S. Treasury Last Month
A Russian hacker group carried out a series of cyberattacks against the U.S. Treasury last month that were successfully repelled, said Todd Conklin, Deputy Treasury Secretary Wally Adeyemo's cybersecurity counselor. Conklin said the department swiftly alerted financial-services firms to the attackers' I.P. addresses, and the effort's success "confirmed that we're on the right track with how we're trying to actually share tactical information with the sector in real-time with the mind that we are interconnected and face the same threat actors."
CFPB Could Face Supreme Court Challenge Over Funding
Legal experts say the Consumer Financial Protection Bureau could again be defending its structure before the U.S. Supreme Court as early as next year after the U.S. Court of Appeals for the 5th Circuit ruled its funding arrangements are unconstitutional. Much now depends on the outcome of the midterm elections, after which lawmakers could either legislate to bring the agency's funding within the scope of congressional appropriations or use the issue as a political bargaining chip.
OCC to Establish Fintech Office
The Office of the Comptroller of the Currency will create an Office of Financial Technology that aims to "provide strategic leadership, vision, and perspective for the OCC's financial technology activities and related supervision," the agency indicated. The office will be established early next year and "will enable us to be more agile and to promote responsible innovation, consistent with our mission," acting Comptroller Michael Hsu said.