Fed Financial-Stability Report: Nonbanks, Investment Funds, Treasury Market, Climate Risk Set for Reform Agenda
In this report, we go in depth into the forward-looking financial-policy implications of the Fed’s latest financial-stability report. Press focused on Fed findings germane to the pandemic and fiscal policy, but the report as always is an important guide to what the Fed and other U.S. regulators will do as the pandemic continues and in its wake. Indeed, in a statement accompany the report, Gov. Brainard highlighted several near-term actions warranted by the report, focusing in particular on the need to address recent corporate mutual-fund outflows, Treasury-market structural reform, and climate risk. The May report (see Client Report SYSTEMIC88) forecast action on MMFs and mutual funds not only repeated in this report, but also emphasized now as the Fed continues work with the FSB and formalizes the U.S. initiatives it will launch when a new FSOC in the Biden Administration is seated next year.