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AAAaron···5 min read

SEC Climate Repeal Moves the Cost to the Counterparty Desk

TL;DR: The SEC's May 29 proposal to rescind its climate-disclosure rules does not make climate data disappear from public-company finance work. It moves the cost from one standardized federal filing lane into a more fragmented set of requests from California, Europe, lenders, insurers, customers, and investors. The business implication is simple: companies may avoid one SEC template while still paying for the underlying measurement, audit trail, and counterparty proof. #What the SEC Actually Changed The Securities and Exchange Commission proposed rescinding the climate-related disclosure rules it adopted in March 2024, arguing that the rules were too costly, too granular, and outside the agency's proper securities-law lane. That is a real regulatory reversal. It also has a narrower practical meaning than the market headline suggests. The original SEC rule would have put climate-risk information inside registration statements and annual reports. The rescission proposal says the SEC should return to a more materiality-focused disclosure approach, with a 60-day comment period after Federal Register publication. But a public company does not run on SEC forms alone. It runs on bank covenants, customer questionnaires, insurance renewals, state rules, procurement scorecards, investor calls, and board packs. The filing may shrink. The workflow may not. #Why the Cost Moves Instead of Vanishing The mistake is treating climate disclosure as a single Washington rule. For many companies, it is already a messy operating process. The same data gets asked for by different buyers Imagine a mid-sized manufacturer selling into a large retailer, borrowing from a bank syndicate, and renewing property insurance after another expensive weather year. Nobody in that chain needs to say, "please comply with the SEC climate rule." The retailer can ask for supplier emissions data. The bank can ask how physical risks affect collateral and cash flow. The insurer can ask whether facilities have flood, fire, or heat exposure. A European customer can ask for sustai

#business#finance#investing#regulation
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TITim···3 min read

The Real Bank Deregulation Trade Is Permanence

The real bank deregulation trade is not the first rule change. It is whether the change survives the next referee. That is why the latest push from Wall Street banks matters. According to Reuters, large lenders are pressing the Federal Reserve to make its softer supervisory regime harder for a future administration to reverse. The overlooked point is simple: banks are no longer just lobbying for relief. They are lobbying for durability, because durability is what lets a CFO treat a regulatory break like balance-sheet capacity instead of a temporary coupon. Picture the risk committee table, not the trading floor. There is a stack of remediation items, a laptop full of control dashboards, and a senior executive asking a very practical question: if an examiner's criticism is downgraded from a formal "matter requiring attention" to a nonbinding observation, can the bank redeploy people, capital, and management attention somewhere else? That sounds like paperwork. It is not. In banking, paperwork becomes economics. A formal supervisory item can turn into years of project staffing, outside consultants, board updates, internal audit testing, and delayed product work. It can also influence how much appetite a bank has for lending, acquiring, launching a new product, or expanding into a customer segment that might annoy a supervisor. So when the Fed says its updated supervisory principles should focus examiners on material financial risks, and Michelle Bowman says MRAs and MRIAs should be aimed at deficiencies that could create significant harm to a bank's financial condition, the market hears more than a philosophy of supervision. It hears a possible change in operating leverage. The obvious debate is safety versus deregulation. That debate matters, but it is not the only business story. The sharper business story is that banks are trying to convert discretion into process. Discretion is expensive because it is hard to price. A bank can model capital ratios, loan losses, deposit betas, and credit spreads. It cannot easily model whether a future supervisor will decide that a process variation is a serious weakness, a minor observation, or a cultural problem that

#banks#finance#investing#regulation
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