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So far William Cross has created 37 blog entries.
11 01, 2023


2023-01-12T11:03:19-05:00January 11th, 2023|5- Client Report|

Financial-Policy Consequences of Silvergate’s Travails

Karen Petrou’s memo earlier this week and her comments to the American Banker about Silvergate have sparked many client questions.  In this report, we provide additional context for aspects of this bank’s condition with policy consequences.   High-profile cases such as this have a long history of suddenly shifting long-pending policies; depending on outcomes, this bank’s challenges and those of any other crypto-heavy banks will almost surely do so.  In general, the case already confirms U.S. regulators of the wisdom of additional capital for crypto-exposed banks along the lines recently finalized by global regulators (see FSM Report CRYPTO37).  However, it also raises significant questions about the role of the Federal Home Loan Banks, brokered deposits, resolution policy, and AOCI recognition – and these are just for starters as the bank struggles to stay afloat.


27 12, 2022


2022-12-27T16:34:28-05:00December 27th, 2022|2- Daily Briefing|

FHFA’s New-Product Rule Effective Date Set

Today’s Federal Register includes FHFA’s final rule on new Enterprise products now with an effective date of February 27.  As we noted in our in-depth analysis, the rule requires the Enterprises to notify FHFA of new activities and then to obtain approval of any activities deemed to be new products, with FHFA having considerable discretion to determine if a new offering is an activity or a product.

FRB Atlanta: Political Compromise Essential To Successful CBDC

A new paper from Federal Reserve Bank of Atlanta staff finds that technical design features will not resolve difficult policy issues arising from CBDC issuance, concluding instead that political compromises will be necessary for successful introduction of CBDC.


23 12, 2022


2022-12-23T12:10:03-05:00December 23rd, 2022|3- This Week|

Weekly Analyses Returning in the New Year

Federal Financial Analytics’ Weekly report will be abbreviated this week due to the holidays.  In-depth analyses of weekly developments as well as Karen Petrou’s weekly memo will return in the new year. All of us at FedFin wish you a joyous holiday season.


21 12, 2022


2022-12-21T14:37:30-05:00December 21st, 2022|4- GSE Activity Report|

New to You

Finally taking what was supposed to be an “interim” final rule in 2009, FHFA yesterday finalized a variation on Mark Calabria’s 2020 new-product proposal.  FHFA still has more discretion over which activities go into this process and what the market then knows about them, but the standards would nonetheless exert a lot more discipline and at least some transparency over what the GSEs can launch into the marketplace in which they still can convey a killer punch.


14 12, 2022


2022-12-14T17:26:30-05:00December 14th, 2022|5- Client Report|

Brown Backs Away from Crypto Legislation, Presses Again for New Rules

Senate Banking Committee Chairman Brown (D-OH) today backed away from prior statements about crypto legislation, focusing instead on the prospect of additional investigations into failing crypto firms and ongoing work with Secretary Yellen on a government-wide regulatory framework.  Today’s hearing still centered on legislative action, with Sen. Warren (D-MA) along with Sen. Marshall (R-KS) releasing new legislation to subject crypto firms to AML rules comparable to those applied to banks along with banning crypto mixers.  Sen. Lummis (R-WY) announced that she will reintroduce her stablecoin bill next year with Sen. Gillibrand (D-NY) (see FSM Report CRYPTO28), revising it in light of recent crypto debacles.  Sen. Haggerty (R-TN) flagged Binance’s newfound monopoly power and ties to China as a major concern, an issue echoed by Sen. Warner (D-VA) and, in conjunction with Chairman Brown’s investigative agenda, may well subject the world’s largest crypto exchange to U.S. legislative scrutiny if its current liquidity challenges do not preoccupy attention next year.


5 12, 2022


2022-12-05T16:12:12-05:00December 5th, 2022|4- GSE Activity Report|

The Big Squeeze

Making an important addition to the ongoing debate about Treasury-market liquidity, a new paper from the Bank for International Settlements provides sobering data on agency MBS liquidity with significant implications not only for secondary-market liquidity, but also primary-market stability.  Treasury has taken some steps to enhance its market, but none of which we are aware has yet been adopted for agency paper, an omission with potentially systemic consequences if liquidity stress in this $10 trillion market turns to shove.


21 11, 2022


2022-11-21T16:48:57-05:00November 21st, 2022|6- Client Memo|

What Will Be Done, Not Just Said, To Fix FTX

The only question left unanswered about FTX is whether it was a purposeful scam as more than a few clients conclude or a case of implacable forces ending the era of easy money that just got the better of another wunderkind whose awesome skills turned out to be largely confined to costumery conveying inspired innovation to all too many vulnerable investors and gullible politicians.  No matter which it is or even – as I think – if it’s a bit of both, FTX is a debacle that will change U.S. financial policy for the better unless FTX drives still more crypto chaos that then spills over to core financial infrastructure and intermediation.


18 11, 2022


2022-11-18T16:46:22-05:00November 18th, 2022|3- This Week|

Things To Come

Last week, banking-agency supervisory heads found themselves before Congressional Committees that – at least in the House – will look very different in the next Congress.  As Karen Petrou’s remarks last week made clear, only some legislation will be enacted into law, but many inquiries and investigations will put the Fed, OCC, and FDIC on very hot seats.  The heat will be hottest on the right when it comes to HFSC and around the circumference of the seat in the Senate, where only the little bit that’s left of the middle is likely to view many banking-agency actions with the deference that was once the norm for all but the highest-profile or most-disastrous calls.


16 11, 2022


2022-11-22T15:02:46-05:00November 16th, 2022|5- Client Report|

HFSC Session Brings Crypto Action to Fore, “Holistic” Capital Under Scrutiny

HFSC today largely focused bank regulators on the same range of questions posed at yesterday’s Senate Banking session (see Client Report REFORM214).  However, Chairwoman Waters (D-CA) emphasized the importance of federal legislation in sharp contrast to Chairman Brown (D-OH), also announcing a hearing in December on FTX.  Ranking Member McHenry (R-NC), who will become HFSC chairman in the next Congress, concurred with the chairwoman’s views on the need for digital-finance statutory reform.  However, he took strong issue with inter-agency policy with regard to new capital rules, merger restrictions, and third-party relationship constraints.  Republican members also targeted Vice Chairman Barr’s holistic capital review, arguing that banks are currently well capitalized and that additional standards would hamper lending.  Mr. Barr indicated that an SLR rewrite is part of the holistic review but not immediately necessary to quell Treasury-market volatility or illiquidity.  As discussed in more detail below, regulators promised banking-sector crypto rules at least as stringent as Basel’s proposal.



14 11, 2022


2022-11-14T12:16:04-05:00November 14th, 2022|5- Client Report|

Global Regulators Prioritize CCP, End-User Resilience

As promised, this FedFin report provides an in-depth analysis of the FSB’s latest policy on nonbank financial intermediation.  As is often the case, much in the report discusses data gaps, presses for international cooperation, and details FSB and national work to date on the issues identified in its initial analysis after the 2020 crisis (see FSM Report NBFI).  Most of FSB’s work since has focused on MMFs (see FSM Report MMF18), with this latest report going on to lay out more specific policy options for OEFs, margining, core bond markets, and other target areas.  The report also calls for attention to systemic NBFI concerns, noting risks at family offices, prime brokers, life insurers, and pension funds, as well as “hidden leverage” without discussing what might best be done about them.


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