Nonbank

Resistance to Libra on the Senate Banking Committee was bipartisan, and other takeaways from Tuesday’s hearing.

The U.S. lacks mechanisms authorized in other countries to flag nonbank risks, Eric Rosengren says.

Lawmakers circulated a bill just ahead of hearings on Facebook’s Libra cryptocurrency that would prohibit companies with over $25 billion in annual revenue from launching a digital financial asset.

Facebook’s plan to launch a cryptocurrency has raised concerns that state banking regulators may not be equipped to oversee large, international companies.

Focusing regulatory reforms on risk-based activities is a more effective approach to weeding out potential systemic threats.

The legislation, which passed a key test in the state Senate on Wednesday, is the product of a compromise between consumer advocates and some lenders.

A recent proposal by the Financial Stability Oversight Council to focus less on certain nonbank firms and more on risk activities would create unintended economic harm.

Although higher corporate debt could hurt the economy, Federal Reserve Chair Jerome Powell argued changes made since the last crisis will guard against a meltdown.

The Financial Stability Oversight Council is shifting away from designating specific nonbanks and moving toward identifying activities that threaten the whole system. But some say that approach just weakens the council.

Assemblywoman Monique Limon is in the “early stages” of exploring how to create a state-level Consumer Financial Protection Bureau as part of a broader push for more consumer protection for state residents.