#CDs

5 09, 2023

DAILY090523

2023-09-05T17:16:52-04:00September 5th, 2023|2- Daily Briefing|

FSB Considers Resolution Construct Revamp

In addition to calling for full and consistent implementation of the Basel III framework, the FSB head’s letter to the G20 today stresses that this year’s bank failures challenge long-held views about deposit stickiness and the speed of bank runs, leading international standard-setters now to consider unspecified policy changes to the resolution construct.

BIS Study: Fed, FDIC Reassurances Offset Bank Run Risk

Contributing to analysis of viral runs and how to stop them, a new paper from BIS staff concludes that public communication from the Fed on banking system stability and from the FDIC on deposit insurance during crises can mitigate systemwide run risk, while similar statements from political figures such as President Biden are less effective.

IMF: Money Laundering Undermines Financial Stability

The IMF yesterday published a blog post on money laundering’s financial-stability impact, concluding that cross-border illicit payments result in equity-price declines, higher CDS costs, elevated perceived credit risk, and declines in deposits for the individual banks involved.  The blog also states that there is a contagion dynamic as a result of spillover effects between targeted banks and other banks within the region.

Daily090523.pdf

20 04, 2023

DAILY042023

2023-04-20T17:02:29-04:00April 20th, 2023|2- Daily Briefing|

Reed-Grassley Bill Lays Out Another Clawback Construct

Sens. Reed (D-RI) and Grassley (R-IA) introduced yesterday S. 1181, a bill allowing the FDIC to claw back the prior two years of failed bank executive compensation and prohibits them from working at another financial institution for at least two years.

FRB-NY Staff Find Severe Climate Risk At Big Four U.S. Banks But We Wonder

Based on a more in-depth study, a new FRB-NY post measures the market risk to financial institutions related to climate change.

FSB Report Shows Growing Supervisory Interest In Climate-Related Compensation Frameworks

A new FSB report on climate-related financial risk factors in compensation frameworks across the banking, insurance and asset management sectors concludes that financial institutions will need to continuously revise their climate-related criteria to ensure effective alignment of compensation with prudent risk management.

Brown Presses For Stringent FHLB Mission Standards

Following considerable furor over the role of the FHLBs in recent bank failures, Senate Banking Chairman Brown (D-OH) has written to FHFA Director Thompson requesting that the agency’s planned FHLB report also include a detailed assessment of this issue.

Waller Sees Promise In Tokenization, AI

Following prior comments about crypto risk, FRB Gov. Waller today highlighted two innovations he believes may well have natural use cases if their risks can be contained or mitigated.

Fed Study: Bank Enforcement Action Resolution Improves Minority Lending Outcomes

A new Federal Reserve paper concludes that enhancing bank loan and internal governance policies is critical to improving access to credit for minority …

3 04, 2023

DAILY040323

2023-04-03T17:05:54-04:00April 3rd, 2023|2- Daily Briefing|

BIS: Banning Capital Distributions Proved Good for Banks, Borrowers

If macroeconomic or market conditions worsen, it seems likely that anxious regulators will look to preserve bank capital and turn to the ban on capital distributions briefly in place at the height of the Covid crisis.  A new BIS study of the impact these restrictions had on the EU at the time is thus a timely guide to regulatory thinking under new leadership at the White House, Fed, OCC, and FDIC.

CFPB Loads Its UDAAP Bazooka

The CFPB today released what to our initial review appears an explosive new policy statement even though the agency asserts that it sets no new policy.

BIS Study Finds Retail CBDCs May Counter Financial Shocks

Supporting its overall goal of two-tier CBDC, the BIS released a model-based working paper today finding that the introduction of a retail CBDC that is perfectly substitutable with bank deposits in an open, large economy (i.e., the U.S.) could lower real interest rates and be an effective tool for countering financial shocks.

Why MMFs Beat Bank Deposits

new FRB-NY post uses recent evidence to confirm an earlier study that MMFs are more responsive than bank deposits to monetary-policy tightening.  Indeed, the data are striking, with MMF rates since March of 22 matching fed funds moves by 97 percent versus an only eight percent match for three-month CDs.

Daily040323.pdf

3 01, 2022

MMF19

2023-04-25T15:59:54-04:00January 3rd, 2022|1- Financial Services Management|

MMF Reform

In the wake of noncommittal statements from global regulators on ways to address money-market fund systemic risk, the Securities and Exchange Commission has proposed sweeping changes to the 2014 standards adopted after the 2008 crisis.  These were viewed as insufficient at the time by the Fed and Treasury.  Based on reconsideration of the U.S. framework after the 2020 crisis by the President’s Working Group on Financial Markets, the proposal now would retract the liquidity fee and redemption gates in the current rule.  Instead, the Commission would require institutional-prime and institutional tax-exempt funds to adopt swing pricing, sharply hike daily and weekly minimums for liquidity buffers at all MMFs, and institute new reporting and disclosure standards.

MMF19.pdf

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