#Federal Reserve – Federal Financial Analytics

8 03, 2023

FedFin: Red Light For Retail CBDC

Arezou Rafikian2023-03-08T17:02:10-05:00March 8th, 2023|The Vault|

At today’s HFSC hearing, Chairman Powell modulated his hawkish stance just a bit, continuing as he long has done to refuse to take a stand on fiscal policy while advocating for rapid debt-limit action. Pressed by Republicans for CBDC updates, the chairman today was the most specific of any Fed official to date, stating that a retail CBDC would require express Congressional authorization even though this may not be the case for a wholesale-focused instrument. As yesterday (see Client Report FEDERALRESERVE72), Republicans pushed hard against the Vice Chairman’s holistic-capital review, leading Mr. Powell to say that he hopes for Board consensus on both end-game rules and broader rewrites but cannot assure this will be the case despite the Board’s consensus culture….

The full report is available to retainer clients. To find out how you can sign up for the service, click here and here.…

8 03, 2023

FEDERALRESERVE73

Max Camateros-Mann2023-03-10T10:07:22-05:00March 8th, 2023|5- Client Report|

Red Light For Retail CBDC

At today’s HFSC hearing, Chairman Powell modulated his hawkish stance just a bit, continuing as he long has done to refuse to take a stand on fiscal policy while advocating for rapid debt-limit action. Pressed by Republicans for CBDC updates, the chairman today was the most specific of any Fed official to date, stating that a retail CBDC would require express Congressional authorization even though this may not be the case for a wholesale-focused instrument. As yesterday (see Client Report FEDERALRESERVE72), Republicans pushed hard against the Vice Chairman’s holistic-capital review, leading Mr. Powell to say that he hopes for Board consensus on both end-game rules and broader rewrites but cannot assure this will be the case despite the Board’s consensus culture.

FEDERALRESERVE73.pdf…

13 02, 2023

Daily021323

Arezou Rafikian2023-02-14T15:50:52-05:00February 13th, 2023|2- Daily Briefing|

Bowman: Large-Bank Supervisory Guidance to Come, Capital Reform to Exempt Smaller Banks

FRB Gov. Bowman today acknowledged that, while Fed supervision and regulation must be independent of political objectives, they must also be accountable and therefore transparent, predictable, and tailored.

Daily021323.pdf…

7 11, 2022

GSE-110722

William Cross2022-11-07T11:11:35-05:00November 7th, 2022|4- GSE Activity Report|

Don’t Scare the Children

In its latest financial-stability report, the Fed is at pains to provide dozens of pages of helpful data with the few systemic-risk conclusions the Board ventures couched in careful prose designed to assure critics that the Fed knows well what’s going on without expressing any views that might suggest serious trouble looms or hint that any of what it surveys will alter the Fed’s course in terms of monetary policy, regulatory actions, or systemic considerations. Still, its assessment of residential housing is far more pessimistic than its last report, acknowledging for the first time that, as we warned a while back, seemingly robust amounts of borrower home equity can evaporate quickly in a high-priced market flush with high-LTV mortgages. This is an important early warning sign both for markets and of upcoming actions in areas such as mortgage risk-based capital.

GSE110722.pdf…

25 07, 2022

LIBOR8

Eliza Allen2023-01-04T15:53:08-05:00July 25th, 2022|1- Financial Services Management|

Legacy-Contract LIBOR-Replacement Benchmarks

Moving belatedly but now expeditiously to implement legislation governing legacy-contract benchmarks when there is no contractual fallback rate, the Fed has proposed a new framework for derivatives, consumer loans, certain GSE contracts, and any other legacy contracts without clear LIBOR-replacement provisions and a “determining person” to effectuate them. As required by the LIBOR Act, the new approach is SOFR-based and incorporates statutory “tenor spreads” designed to reflect the differences between a rate calculated with some amount of credit risk (LIBOR) to one premised on risk-free sovereign obligations (SOFR). The manner in which this was done was one of the most challenging aspects of finalizing the new law and reflects an uneasy compromise between the Fed and many in the industry, especially regional banks with large consumer-loan books. Perhaps due to the late date at which the proposal was issued, many other issues are not addressed, creating areas of potential uncertainty related to affected contracts and the broader body not only of Fed rules, but also the broader regulatory framework governing nonbanks.

LIBOR8.pdf…