To begin to address the context of the comment period presented at this time, I will first provide context through an introduction that includes information previously put before the Federal Reserve and that responds directly to Federal Reserve policy that have transpired within the last two years:

 

 

Comment ID 134432, “1673(AF56)Risk-Based Capital Requirements for Companies Significantly Engaged In Insurance Activitie[s],” Sept. 25, 2019 (Federal Reserve)

 

 

At a minimum, entities have to be held to account for applying the law in regard to changing the financing status of their entities. At a maximum (with a low threshold) is assuring that all of those whose "pooled" resources and capital go into supporting other structures - including structures seeking insurance to protect their capital investments [-] are provided with records of their actual contributions that reflect the real and not abstracted or derivative value of their participation. These accountings also have to have appreciative terms rather than just leveraging of one liability against another liability.

…

 

Timely delivery of sufficient responses to insurance claims and complaints of fraud is necessary to guard against default on the attendant surety. Why do we not reward as value added successful investigation and prosecution of fraud and malfeasance? The last several years have made it apparent that fines and

fees levied in the financial sector are used as leverage in future deals and just written off as business

costs. The taxes get waived off onto whom?

…

 

We need to prevent the promulgation of methodologies that obscure important data so that what starts as awareness of fraud on a specific scale is not permitted to be leveraged by those with more high-risk investment into a high-risk scenario that has "catastrophic" consequences. We should be beyond "catastrophe" and those who profit from it. We should have far less payout on insurance policies connected to high-risk sectors because we engaged in appropriate preventive processes. We need to implement a system for accruing value based on adherence to high standards that includes providing returns which demonstrate a greater appreciative inculcation of all assets that were invested. That means being honest about what are actually "capital" investments.

…

 

The report attendant with this public comment period features the following quote on p. 11, stating it "does not require Board to exclude state-regulated or certain foreign-regulated insurers from its risk-based capital requirements." There is an Executive Order due to be implemented on Monday, Sept. 30, 2019 that will decommission one-third of currently active federal executive commissions. This action potentially includes commissions that have for several years and Presidential terms concentrated departmental authority and oversight directly under the President of the United States. This is in contravention to applying effective safeguards via appropriate application of the federal checks and balances system. The explanation for this decommissioning is that these commissions need to demonstrate their value. How? Who decides what that means? What happens to pending information or reports in regard to these commissions once that EO takes effect? Does it become "risk-based" capital that someone else contributed and for which they are not going to be credited?* What then happens with the "streams" when this information gets mischaracterized and misapplied? This sort of paradigm accrues as we well know and are, it seems, in great need of dealing directly with at this time.

…

 

Had the situation with the Affordable Care Act been addressed via specific investigations or lawsuits that addressed the fraud and malfeasance attendant with its rollout rather than torts or financial charges concerning pharmaceutical companies alone we would be in a much more secure position right now when discussing, analyzing and attempting to apply new insurance paradigms. By addressing and holding accountable breaches of patient privacy, theft, and other malfeasance connected to the delivery of services under various state marketplace schemes we would have real leverage to work with moving forward. As I understood it different state marketplaces had different schemes; in whose interests those schemes worked is the question at hand now. Without addressing that directly, these pharmaceutical suits appear to be nothing more than a way to acquire leverageable "capital" to meet risk requirements for entities that have concentrated individual assets as private as our biodata into their largesses. This has occurred without even giving us disclosure as to the processes by which that data has been financialized or applied in the current and unfolding financial paradigm, much less access to a means by which to invest it for ourselves. And what is the current corollary? Cyberinsurance.

…

 

[Regarding “Cyberinsurance.”] "Insurance-centric" is potentially one way of saying that reports on policy breaches that are evidentiary of criminal activity can be mischaracterized as a form of underwriting in connection with "risk assessments" to use in discussions on financiability. Reports on fraud need rather to be evaluated for their potential culpability with criminal activity, which starts with specificity around what is legal and what is actually "confidential." It is a great disservice to cut off disclosure on criminal activity reports and investigations and then to say that individual data can be obtained, anonymized, and then used by others. The long-term implications of this need to be evaluated for the manners in which they radically redefine safety standards for citizens and others.

…

 

Another issue concerns "pooling" in terms of establishing standards regarding risk and valuations of associated assets. Qualitative analyses of specific "means tested" modalities in the past few years has been neglected, if not outright obstructed, in calibrating paradigms. Downgrading specific assets that are potentially high-performing and high-yield in one contextualization that may not be as popular or may not accept the same definitions of acceptable risk behaviors can have a long-term effect on miscalibrating the entire schema. It should be acknowledged that people's religious, spiritual and ethical perspectives can have a substantial impact on what they consider to be "acceptable" versus "unacceptable" risks and Constitutional rights concerning protections for religious and spiritual beliefs need to be applied. There must also be considered the relationship between money laundering and "insurance activities" as a form of cover up. How do mischaracterizations as "liability" for purposes of ascribing as insurance activity, as opposed to other types of activities, accrue?

…

 

"Shifting risk from one subsidiary to another" can potentially be used in manners such as how many people for how long were supposed to "stabilize" using the offloading of mischaracterized capital while others took on this risk and did what with it?

…

 

"double leverage, whereby an upstream company's debt proceeds are infused into a downstream subsidiary as equity, resulting in equity at the subsidiary level that is offset by the liability at the parent and, hence, capital-neutral at the enterprise-level." Is this how it is that despite the fact that in accordance with mandates regarding more explication in reporting source of income via the Basel Convention we have LESS specific reporting and rather appearance of derivative reportings that transfer capital and recharacterize it without actually acknowledging the processes by which these transfers have been accomplished? Whatever happened with the original TARP and TALF monies, including ones that were "double-leveraged" to offload a bankruptcy for a major employer of U.S. workers to the U.S. government so that the federal government could become majority shareholders? This is NOT about "capital-neutral" when we look at what Congress is actually doing and what they are NOT doing at this time.

 

 

 

 

 

 

(At the time the above was written, on Sept. 25, 2019, there had yet to be the ten-year anniversary of the AIG stock buyback process approval that came due in July of 2020. Following that stock buyback announcement anniversary, there was a MAJOR shift of American assets – as well as mischaracterized “debt” – to the Asian markets, as reflected in numerous manners subsequent to that timeframe. We have since had two more “COVID-19 relief packages” approved and distributed to “individuals” or “married couples” and yet have NO taxable income acknowledged in accordance with these alleged “relief awards.” At the same time, in accordance with timelines associated with these COVID-19 relief packages there have been two major movements connected to dividends payments, including for “Senior Preferred Stock” by Citigroup (in November and December of 2020) and now Bank of America (in May and June of 2021). If someone agreed to charter a new “Bank of the United States” and/or some sort of “joint banking arrangement” in connection with a foreign country that was predicated upon “joint stock” issued with consolidated assets from within the United States or accessible via financial markets or institutions based in the United States, then what we are discussing is very different than ANYTHING that has been officially and publicly acknowledged, at least since December of 2017 and then only if you knew how to read what was written in the margins.

 

On the other hand, even the “public comment” at the Federal Reserve and its potential financial value has been put into a significant spotlight at this time, as the “default” has permitted for a justification and an “opening” of a timeframe within which to pursue criminal charges specific to the matters mentioned in the public comment of Sept. 25, 2019. For years, I was intentionally denied access to due process, but now, there is a different exposure of risk, including risk associated with commission of serious crime, and that which was previously leveraged and mischaracterized has ALREADY took the hit without any redress. The political “opportunity” and the economic “opportunity” actually match. This is, however, precisely this sort of speculative financial hedging that caused the crimes around which the original effort to seek due process was sought. According to the Federal Reserve’s standards, there is no violation of regulatory policy in capitalizing as much as possible on the current moment. It is an ENTIRELY political decision to choose to pursue it at this time in this manner rather than in the manner in which it was originally attempted for pursuit. But at that time, I had invested, where? And since then, I have invested in where? Relative to the “investments” both of judicial capital and economic capital in the court systems, there has also been a leveraging in a direction different than the one that would have achieved justice and the appropriate political capital restitution for and in consideration of the charges originally sought; that, now, however, is not feasible in the same manner – it requires an investment of MORE risk exposure in order to pursue the same charges and I contend that was absolutely intentional. Who made that decision?

 

I do not accept that increased subordinated indebtedness is appropriate or even legal at this time in consideration of what is actually occurring in connection with COVID-19. Perhaps that is why both courses of action are actually required at this time.) 

 

 

The following is excerpted from the original notice of policy change at the Federal Reserve and incoudes new comments on that policy change added for the current public comment under consideration:

 

 

Docket No. [R-1673]/RIN [7100 AF 56], “Regulatory Capital Rules: Risk-Based Capital Requirements for Depository Institution Holding Companies Significantly Engaged in Insurance Activities,” Sept. 6, 2019 (Board of Governors of the Federal Reserve System)

 

 

The BBA aggregates a downstream building block’s capital requirements into those of its upstream building block parent by scaling to the upstream parent’s capital framework and adding to the upstream parent’s capital requirement. This rollup includes adjusting for the parent’s ownership of the building block prior to adding in the scaled capital requirement for the building block. In performing this rollup, building blocks are aggregated to achieve a consolidated, enterprise-wide reflection of capital requirements. Ultimately, all building blocks under the top-tier depository institution holding company would be scaled and rolled up into the capital position of the top-tier depository institution holding company.

 

P. 69

 

 

 

(By “scaling to the upstream parent’s capital framework” one needs to now take into consideration the implications of the pending proposed regulations, specifically the accessibility of increased “subordinated indebtedness” that can be made available for investment in allegedly “low- and -moderate income community financial institutions.” Providing “loans, grants and forbearance” does what to and for the account at that institution for and during the time frame in which the capital investments are being maintained by the “Senior Preferred Stock” and “Subordinated Indebtedness” holders? Will it more likely CREATE more subordinated indebtedness that can be made accessible through the functions of affiliated holding companies and via their other “insurance-related activities” to offset or absorb risks associated with leveraging in other areas? That is exactly what this sounds like.)

 

 

 

The notion of a material financial entity is proposed to address a variety of companies not subject to a capital requirement and that could pose risk to the safety and soundness of the insurance depository institution holding company or its subsidiary IDI. For instance, an insurance depository institution holding company may have a material derivatives trading subsidiary not presently subject to any capital framework. Additionally, a company under an insurance depository institution holding company may serve as a funding vehicle for other companies in the institution, borrowing and downstreaming funds to affiliates.

 

P. 51

 

 

 

(This sounds like a form of recharacterization that the others are not permitted to access. Was not such a term required under the original Troubled Asset Relief Program when it came to address individuals who had been defrauded but INSTEAD got leveraged to aid the largest banking institutions from being held criminally liable for their actions? Would those “downstreaming funds” NOW be, what, “subordinated indebtedness” that was not only acquired but characterized under false pretenses? And if there is a concern about “performance” does it then fall on the “subordinated indebtedness” as opposed to the “Senior Preferred Stock” when they engage in and through their “insurance activities?”

 

What of the concern around aggregation and disaggregation when it comes to the bundling of securities? If there is not an appropriate characterization at the onset and such a praxis is allowed to proliferate, then this is only going to compound the pressures put on assets further downstream. The priority here SHOULD NOT BE availing a select and increasingly selective group of “investors” who are able to command their capital tier with increased leveragability while more and more assets are proportionately aggregated to be made available for access as “consolidation” in such a manner. An appropriate place for “consolidation” would have been to address matters as they existed PRIOR to COVID-19 and follow through on the vigilance promised by Sec. Mnuchin and others in holding accountable any who intended to exploit COVID-19 to cover up for their crimes or commit to new crimes.)

 

 

 

Under the proposed Section 171 calculation the Board’s existing minimum risk-based capital requirements would generally apply to a top-tier insurance SLHC on a consolidated basis when this company is not an insurance underwriting company. In the case of an insurance SLHC that is an insurance underwriting company, the requirements would instead apply to any insurance SLHC’s subsidiary SLHC that is not itself an insurance underwriting company and is not a subsidiary of any SLHC other than the insurance SLHC, provided that the subsidiary SLHC is the farthest upstream non-insurer SLHC (i.e., the subsidiary SLHC’s assets and liabilities are not consolidated with those of a holding company that controls the subsidiary for purposes of determining the parent holding company’s capital requirements and capital ratios under the Board’s banking capital rule) (an insurance SLHC mid-tier holding company). Except for the option to exclude insurance operations, which is described in further detail below, the minimum risk-based capital requirements that would apply for purposes of the Section 171 calculation are the same requirements that are applied under the generally applicable capital rules, and therefore ensure compliance with Section 171 of the Dodd-Frank Act.26

 

P. 29

 

 

 

(This is concerning in relationship to the above-referenced information regarding the “an insurance SLHC mid-tier holding company.” Pressure on the subsidiaries that are NOT provided with the exemptions that those associated with the “an insurance SLHC mid-tier holding company” and their affiliates are can be engaged to provide for illegal expropriation of assets that are not actually legally applicable for use in insurance underwriting, at least not at the stage at which they may be consolidated without the exceptions commensurate with the ones provided to those engaged in insurance-related activities. This may say much about the manners in which, for instance, law enforcement activities as part of municipal service provision are focused on certain kinds of crime in certain sectors that are not directly engaged in and through the same capital tiers that OTHER crimes which are less often prosecuted are associated.)

 

 

 

The proposed Section 171 calculation would be implemented by amending the definition of “covered savings and loan holding company” for the purposes of the Board’s banking capital rule.27 Under the proposal, an insurance SLHC would become a covered savings and loan holding company subject to the requirements of the Board’s banking capital rule unless it is a grandfathered unitary savings and loan holding company that derives 50 percent or more of its total consolidated assets or 50 percent of its total revenues on an enterprise-wide basis (as calculated under GAAP) from activities that are not financial in nature.

 

P. 30

 

 

 

(Does this mean that the “grandfathered unitary savings and loan holding company” of concern in this regard is one that has collateral available for use as loans or in processes of securitization? That which is permitted to be accepted as collateral needs to be explicated.)

 

 

 

As a result of this amendment to the definition of “covered savings and loan holding company,” insurance SLHCs generally would become subject to the minimum risk-based capital requirements in the Board’s banking capital rule. However, under the proposed rule, top-tier holding companies that are engaged in insurance underwriting and regulated by a state insurance regulator, or certain foreign insurance regulators, would not be required to comply with the generally applicable risk-based capital requirements.28 Instead, those requirements would apply to any insurance SLHC mid-tier holding companies, as defined in the proposed rule.

 

Pps. 30-31

 

 

 

(There is a concern here that a SLHC that is involved with insurance underwriting activities will “create” an appropriately “risk-weighted” subsidiary, potentially by creating the circumstances under which they could mischaracterize the assets associated with the actual production of the entities associated with the subsidiary so as to have them made available for use in insurance underwriting. Is this one of the “market mechanisms” wherein justification can be made to permit for “crime” to be mischaracterized as “risk” and hence actual “crime” does not get addressed as “crime?” This has long-term implications and accrues if the CRIME is itself not appropriately addressed. The metrics of the central banking establishment can only leverage a miscalculation of the societal and political economy costs of evading prosecution for crime for so long before the capacity for offsetting liability becomes too great to sustain.

 

There is also a concern that the specific “top-tier holding companies that are engaged in insurance underwriting and regulated by a state insurance regulator” would be able to be availed of using the public sector in association with its relationship with the “state insurance regulator” as collateral to offset its losses if they were to occur. The same could be said in regards to “foreign insurance regulators.” On one hand, a decentralization of oversight could have advantages, but if there are other corrupt practices for which top-tier holding companies can be provided with insurance to guard against in regards to their assumption of significant liability then it can cause extraordinary pressure on the mid-tier holding companies. If one considers this in regards to crime and the role of law enforcement in mitigating risks then one must also compare with investment in security and the types of security.)

 

 

 

As noted, under the proposed Section 171 calculation, an insurance SLHC subject to the generally applicable risk-based capital requirements (i.e., that is not a top-tier insurance underwriting company) could elect not to consolidate the assets and liabilities of all of its subsidiary state-regulated insurers and certain foreign-regulated insurers. By making this election, an insurance SLHC could determine that assets and liabilities that support its insurance operations should not contribute to the calculation of risk-weighted assets or average total assets under the generally applicable capital requirements.

…

 

With regard to the regulatory capital treatment of an insurance SLHC’s (or insurance mid-tier holding company’s) equity investment in subsidiary insurers that do not consolidate assets and liabilities with the holding company pursuant to the election, the proposal presents two alternative approaches for comment.29 Under the first alternative, the holding company could elect to deduct the aggregate amount of its outstanding equity investment in its subsidiary state- and certain foreign-regulated insurers, including retained earnings, from its common equity tier 1 capital elements. Under the second alternative, the holding company could include the amount of its investment in its risk-weighted assets and assign to the investment a 400 percent risk weight, consistent with the risk weight applicable under the simple risk-weighted approach in section 217.52 of the Board’s banking capital rule to an equity exposure that is not publicly traded.30 The Board recognizes that fully deducting from common equity tier 1 capital an insurance SLHC’s equity investment in insurance subsidiaries in some cases could yield inaccurate or overly conservative results for the section 171 calculation, for example, where the holding company has issued debt to fund equity contributions to the insurance subsidiaries. Conversely, any risk weight approach for equity investments in insurance subsidiaries must be calibrated to reflect risk, facilitate comparability of capital requirements for insurance and non-insurance depository institution holding companies, and avoid creating incentives for regulatory arbitrage. The Board continues to consider these issues, and invites comment on optional approaches to exclude insurance operations from calculation of consolidated regulatory capital.

 

Pps. 31-32

 

 

 

(The 400 percent sounds comparable to what was proposed in 2008 regarding “payday loans” and is consistent with reports provided in early 2019 that the FDIC was in a period of review on payday loan considerations. The implications of these two “options” are to create for incredibly high-risk possibilities that, if they DO default, can involve a substantial transfer of assets that will be easier to abuse in the processes of crime. Additionally, it again places the “mid-tier” subsidiaries that are not exempted in the position to aggregate, potentially including in manners that compromise the capacity to maintain their standards or quality in production, and then allow for the liabilities themselves to be used in future insurance activities. Again, the problem appears to be an over-emphasis on using insurance activities to offset the risks and losses associated with the sort of accumulation that under this policy permits for the sort of exemption of which the “top-tier” is availed.

 

Then comes the concern around “equity” and “consolidation” of equity. Mischaracterized equity that is not appropriately recharacterized once it has been determined that there was fraud or other illegal activity involved – including if justification can be made and maintained due to permissibility for illegal insurance underwriting activities – can serve to divest certain kinds of equity for an extended period of time, or permit for a form of engineering that recapitulates equity bases in manners that have even graver criminal implications. That also calls into consideration the processes of attempting to leverage deficiencies regarding one equity base by intentionally downgrading other equity bases and permitting for inappropriate and even illegal consolidation of assets. This increases the likelihood of crime being able to occur without redress and inevitably attempts to substantiate market considerations in liening on the law to accommodate the market demand for the yields of crime, including yields that have been intentionally mischaracterized such that they cannot be obtained in a non-criminal manner.

 

Inevitably, what is required here is greater access to top-tier assets for leveraging when the risk reaches a certain point than has been thusfar demonstrated. That risk necessarily needs to recalculate for characterizing crime AS crime, including crime committed at and in regards to top-tier assets. One way to do this is to reconsider the qualifications for exemption when it comes to making risk-based capital available at or by the top tier and re-weighting the risk demand. This ALSO requires a recharacterization of considerations around determining value of the equity base.)

 

 

 

In light of the requirements of the Dodd-Frank Act, in addition to the BBA, the Board is proposing to apply a separate minimum risk-based capital requirement calculation (the Section 171 calculation) to insurance depository institution holding companies that uses the flexibility afforded under the 2014 amendments to section 171 of the Dodd-Frank Act to exclude certain state and foreign regulated insurance operations and to exempt top-tier insurance underwriting companies.

 

As previously discussed, section 171 of the Dodd-Frank Act requires the Board to establish minimum risk-based and leverage capital requirements for depository institution holding companies. These requirements may not be less than the “generally applicable” capital requirements for IDIs, nor quantitatively lower than the capital requirements that applied to IDIs on July21, 2010.24 Section 171 of the Dodd-Frank Act generally requires that the minimum risk-based capital requirements established by the Board for depository institution holding companies apply on a consolidated basis. Notwithstanding the general requirement of section 171 of the Dodd-Frank Act that the minimum risk-based capital requirements established by the Board for depository institution holding companies apply on a consolidated basis, section 171(c) provides that the Board is not required to include for any purpose of section 171 (including in any determination of consolidation) any entity regulated by a state insurance regulator or a regulated foreign subsidiary or certain regulated foreign affiliates of such entity engaged in the business of insurance.

 

P. 28

 

 

 

(Certain state insurance regulators have processes that are distinct from the Constitutional legal process and provide administrative consideration. This contradicts the intent to decrease reliance on arbitrage. It also can potentially permit for the misrepresentation as “insurance activity” other forms of equity investment and, in the case of fraud, recovery that would be otherwise made available through a Constitutional legal process. Such then brings up for consideration what would be the context for “deconsolidation” with regards to consideration of risk-weighting and risk assumption.)

 

 

 

Currently, only a depository institution holding company that is a bank holding company or a “covered savings and loan holding company”25is subject to the Board’s banking capital rule, which serves as the generally applicable capital requirement for IDIs and sets a floor for any capital requirements established by the Board for depository institution holding companies. Insurance depository institution holding companies are excluded from the definition of covered savings and loan holding company and from the application of the Board’s banking capital rule on a consolidated basis. As a result, a top-tier SLHC that is significantly engaged in insurance activities and its subsidiary SLHCs currently are not subject to a consolidated minimum risk-based capital requirement that complies with section 171 of the Dodd-Frank Act.

 

P. 28-29

 

 

 

{Consider comments in two public comments regarding foreign holding companies, specific to the information about individual credit being absorbed into consolidated processes, and then contrast with information now, including pending public comments regarding definition of derivatives with recent/upcoming public comment regarding documentation of timeframes for which to make them accessible}

…

 

Section 171 of the Dodd-Frank Act generally requires that the minimum risk-based capital requirements established by the Board for depository institution holding companies apply on a consolidated basis.

 

P. 28

 

 

 

 

The above provides the context for considering the implications regarding an “emergency capital investment program” that is being provided under the auspices of assisting “low- and moderate-income community financial institutions”:

 

 

“Regulatory Capital Rule: Emergency Capital Investment Program,” Federal Register, March 22, 2021 (Federal Reserve)

 

 

On March 4, 2021, Treasury issued an interim final rule that established restrictions on executive

compensation, capital distributions, and luxury expenditures for ECIP.10

 

P. 15078

 

 

(There was the Federal Reserve report on Executive Compensation that discussed what Executive Compensation can do for the overall accounting of an organization. (“Executive Compensation and Earnings Management Under Moral Hazard” by Bo Sun, December 2009, Federal Reserve) The consideration of what would be considered “luxury expenditures” is important when assessing what is considered credit-worthy and how such expenditures factor into other elements of a budget, including the understanding of assessing budgetary needs upon which to base extension of lines of credit. Especially insofar as AIG was able last May to provide the sort of executive compensation determinations (“AIG Shareholders Approve Executive Compensation Plan,” Insurance Journal, May 15, 2020) and OTHER companies have been able for more than a year to provide specific executive compensation determinations without any regulatory intervention and during the alleged COVID-19 crisis brings up serious questions about the intent of prioritizing “subordinated debt” on these terms and in this manner. (see Comment ID 134192, “1658(AF45) Regs Q, YY, LL & YY; Prudential Standards FBOs; Revisions Domestic BHCs and SLHCs,” June 19, 2019, Federal Reserve).

An announcement was made shortly after the federal government began providing the first round of assistance through Treasury to banking establishments that then-Secretary of Treasury Steve Mnuchin was going to pursue criminal charges against anyone engaged in defrauding COVID-19 relief.

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[TRUN(K)ated]

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9:26 am CST

June 9, 2023

President Charity Colleen Crouse