FRB-NY Finds Still Sticker Deposit Rates, Tougher Fed Policy Transmission

A new post from Federal Reserve Bank of New York staff concludes that, even as deposit funding declines, banks remain liquid due to less rate-sensitive sources such as time deposits and FHLB advances.  As we noted when assessing a prior FRB-NY deposit post, these analyses go beyond conventional deposit-flight and unfair-competition arguments to show the complexity of funding-market behavior during periods of rising interest rates.  The latest post brings the prior study through the end of 2022, showing continuing lags between the fed funds rate and interest-bearing deposit rates through the fourth quarter.

Chopra Wants Expanded FDIC Coverage, Payment-System Guardrails, Comp Reform

In remarks today, CFPB Director Chopra called for tailoring DIF assessments to protect community banks and to expand coverage to payroll and certain other accounts.  He also said that current law may give regulators the tools needed to deal with viral runs via systemic designations for certain payment systems and/or providers.  He did not explain how this would be accomplished in practice (e.g., mandatory speed bumps, etc.).