Banking Agencies Drill Down on NBFI Exposures
Reflecting a raft of FSOC recommendations (see Client Report FSOC29) and those from global regulators, U.S. banking agencies have proposed significant call-reporting changes gathering more data on bank/NBFI inter-connections. Newly-granular data break-outs are proposed for credit exposure to numerous NBFIs (e.g., PEs, insurance companies, mortgage intermediaries) from banks with over $10 billion. The agencies justify this by the sharp spike in NBFI credit exposures from 0.8 percent of reported credit to 6.4 percent of respondent data in June of this year (a number we expect downplays far larger concentrations at the nation’s biggest banks). Granular data on off-balance sheet exposures to NBFIs would also be required along with new IDI reports on long-term debt – a proposal presumably intended to backstop the proposed LTD standards (see FSM Report TLAC9). We will shortly review the release to determine if in-depth analysis is helpful; comments are due by February 26.