#deposit beta

11 04, 2023


2023-04-11T16:56:01-04:00April 11th, 2023|2- Daily Briefing|

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.).


21 11, 2022


2022-11-21T17:37:05-05:00November 21st, 2022|2- Daily Briefing|

FRB-NY Considers Why Deposit Rates are Now So Sticky

As Karen Petrou’s talk last week noted, Democrats and the CFPB have charged that exploitation explains why bank deposit rates now lag Fed rate hikes.  Today’s post from the Federal Reserve Bank of New York finds a steady decline in bank deposit-rate matches to Fed rate hikes since 1994, but also identifies market factors that largely explain rate sluggishness.  The study estimates the “deposit beta” – i.e., the difference between FOMC hikes and all deposit rates (including non-interest paying funds) found in BHC data.

Senate Dems Demand Digital-Asset Crackdown

Following last week’s hearings with the banking agencies (see Client Report REFORM214), Chairman Brown (D-OH) and Senate Banking Democrats today sent letters urging Vice Chair Barr, Acting Chairman Gruenberg, and Acting Comptroller Hsu to review SoFi’s digital asset activities, accusing the firm of improperly expanding its crypto trading following commitments not to do so when it was granted licenses as a national bank and BHC.  Following the playbook of pressing for rules and enforcement rather than new law, Senators point to a new SoFi service they believe is not only an “expanded” digital-asset activity despite a commitment to wind down these impermissible activities, but also is dangerous to investors and unsafe and unsound.


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