Treasury Presses Fed Efforts to Contain Systemic Liquidity Risk
In remarks today, Treasury Under-Secretary Nellie Liang addressed systemic liquidity risks such as the 2020 dash-for-cash and recent bank failures. Treasury is cautiously optimistic about increasing regional-bank stability, but systemic liquidity risk is now structural.
FDIC Proposes Special, Costly Uninsured-Deposit Assessment
The FDIC today voted 3-2 to propose the special assessments presaged in Chairman Gruenberg’s Congressional testimony after SVB and SBNY’s failures (see Client Report REFORM218). Notably, the assessment does not also cover the $13 billion of cost estimated for the FRC rescue in conjunction with JPMorgan’s purchase; its rescue was not technically systemic and its cost will thus be covered as the FDIC reviews DIF ratios in coming meetings at which more broadly-shared, traditional premiums are likely also to increase.
GOP Endorses GAO Recommendations; Dems Point To Bank Management
At today’s HFSC Oversight Subcommittee hearing on the GAO’s report (see Client Report REFORM223), Subcommittee Chair Huizenga (R-MI) built the case that the Fed has historically been unable to properly supervise troubled banks and noted that the committee will investigate this along with the Systemic-Risk Exception used in recent failures.
Waller Disavows Fed Climate-Risk Action
Confirming the Fed’s omission of climate risk in its new financial-stability report (see Client Report SYSTEMIC96), Gov. Waller today said not only is climate risk not now a threat to financial stability, but it also does not pose a safety-and-soundness hazard to large banks.
FRB-NY Data Contradict Story …