#FRB Minneapolis – Federal Financial Analytics

22 05, 2023

DAILY052223

Eliza Allen2023-05-22T16:53:15-04:00May 22nd, 2023|2- Daily Briefing|

HFSC Set To Tackle LLPAs, GSE Policy

As noted, HFSC tomorrow will grill FHFA Director Thompson. Republicans will surely emphasize their opposition to recent LLPAs laid out at a subcommittee hearing last week; Democrats will continue to defend them.

Americans Struggle With Inflation, Savings; Bank Use Stable

Although the Fed’s latest economic well-being study has grim macro results with significant political consequences, it also finds that 94 percent of Americans in 2022 had banking relationships, an unchanged rate from 2021 although gaps remain by age, race, ethnicity, and disability.

Kashkari Disputes Need For Broad Reg Rewrite If Big-Bank Capital Goes Way Up

Renewing his campaign to hike large-bank capital ratios, FRB-Minneapolis President Neel Kashkari today said that higher capital requirements would have prevented recent failures and that additional, over-complex rules are poor substitutes for them.

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3 08, 2022

DAILY080322

Eliza Allen2023-01-04T13:29:59-05:00August 3rd, 2022|2- Daily Briefing|

Senate Ag Crypto Bill Lauds CFTC, Faces Many Obstacles

As we anticipated as the crypto debate continues, the Senate Agriculture Committee has sought to claim jurisdiction with a new, bipartisan bill granting the CFTC broad regulatory, supervisory, and enforcement powers over most digital-asset platforms and the assets traded on them.

ECB Study Favors CBDCs Over Private Crypto for Cross-Border Payments

A study released by the ECB today argues that CBDCs would be a cheaper, safer, and more effective vehicle for cross border payments for global transactions than privately-issued cryptoassets or stablecoins. Based on assessment of global, not just EU markets, the study thus has implications for those in the U.S. opposing a CBDC.

FRB-Minneapolis Renews Attack on Big-Bank Capital Resilience

Renewing its attack on big-bank capital ratios, the Federal Reserve Bank of Minneapolis today released its own stress-test conclusions, reinforcing its president’s longstanding view that the largest U.S. banks are woefully under-capitalized even though test results show considerable variance on a bank-by-bank basis as well as overall resilience.

FRB Philadelphia President Touts Fintech’s Financial Inclusion Potential

FRB Philadelphia President Patrick Harker today stated that fintech can increase financial inclusion, specifically citing buy-now pay-later products because they offer financial services to low- to moderate-income customers who would otherwise be locked out of traditional lending because they are more likely to be non-White, lower earning, and younger.

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27 04, 2022

DAILY042722

Eliza Allen2023-03-01T15:04:29-05:00April 27th, 2022|2- Daily Briefing|

Hsu Urges Collaboration, Governance Efforts for Stablecoin, AI

In a statement today, Acting Comptroller Hsu confirmed his longstanding view that stablecoins require strong governance. Adding AI to this list of innovations that also need policy attention, Mr. Hsu also urged private standard-setting efforts such as those undertaken by the Internet Engineering Task Force and the World Wide Web Consortium.

Study Finds Benefits to Central-Bank Reserve Sanctions

In a new research paper, the Federal Reserve Bank of Minneapolis’ staff concludes that seizing reserves in the course of economic sanctions is warranted in “high-risk” scenarios in which the cost to the sanctioning country resulting from a debt default by the sanctioned nation is lower than the cost of the actions being sanctioned. This conclusion is derived from a simple economics model but it is of course very timely given ongoing debate about the extent to which central-bank reserves should be fully sanctioned as the Ukraine invasion continues and related geopolitical risks loom large.

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12 04, 2022

DAILY041222

Eliza Allen2023-03-02T11:23:53-05:00April 12th, 2022|2- Daily Briefing|

FRB-Dallas Targets Renewable Energy Credit Risk

Venturing farther into politically-contentious territory, the Federal Reserve Bank of Dallas today issued a report finding that lenders with credit exposure to commercial renewable energy projects face unique and evolving risks that may adversely affect credit performance. It bases this conclusion on numerous risk factors such as a lack of vertical integration seen in traditionally regulated markets, underperformance relative to forecasts, counterparty and merchant risk, and transmission challenges.

CFPB Takes Promised Tough Enforcement Action

Acting promptly on his recent threat to sanction “repeat offenders,” the CFPB today went after TransUnion and a former executive for what it asserts are continuing violations of law that warrant civil money penalties, injunctive relief, and consumer compensation. This is the first significant enforcement action filed by Director Chopra and signals that, as we forecasted, the Bureau will act quickly on his new policies.

BIS Presses CBDC’s Financial-Inclusion Upside

Continuing its advocacy for “two-tier” CBDCs (see Client Report CBDC6), the BIS today released a study arguing that financial inclusion benefits are among the most important that should lead central banks to offer a fiat digital currency.

Toomey Continues Calls for Reserve Bank Reform

Renewing his attack against Neal Kashkari, head of the Minneapolis Federal Reserve Bank, Senate Banking Committee Ranking Member Toomey (R-PA) today also ramped up demands for structural Federal Reserve System reform.

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16 11, 2021

Daily111621

Arezou Rafikian2023-05-26T10:56:42-04:00November 16th, 2021|2- Daily Briefing|

Basel Proposes Global Climate-risk Management, Supervision Principles
As anticipated, the Basel Committee today proposed climate-risk management and supervision principles sure to guide both the Fed and OCC, even in just proposed form, as the U.S. agencies finalize near-term U.S. guidance in this high-priority arena.

FRB-NY Staff: U.S. Banks Now Even More Resilient
A new post from the Federal Reserve Bank of New York’s blog assesses bank resilience through the pandemic, concluding that large banks are even more resilient now than before thanks to post-2008 rules and post-2020 market backstops.

HFSC Republicans Condition CBDC on Stablecoin, Private Sector
HFSC Republicans have now laid out their principles for any U.S. CBDC, demanding that any Fed-issued CBDC maintain the U.S. Dollar’s reserve currency status and the U.S. payment system’s preeminence.

Senate GOP Tackles USPS Banking Pilot Program
Senate Banking Ranking Member Toomey (R-PA) today described postal banking as about the worst possible idea. Joined by other Republicans, Mr. Toomey wrote to the Postmaster General, questioning USPS authority to offer its recent pilot and challenging its mission-relevance.

CFPB Plans HMDA-Data Do-Over
Reflecting the President’s executive order on racial equity, the CFPB has now accelerated its fair-lending efforts with a request for views on how best to retool HMDA to better prevent mortgage discrimination.

FRB Presidents: Fund-Access, Financial-Literacy Improvements Needed
At today’s racism and the economy virtual event hosted by the Minneapolis Fed, FRB Atlanta President Bostic highlighted work by his Reserve Bank’s Special Committee on Payments Inclusion to show the Fed’s dedication in this …

8 11, 2021

Karen Petrou: When Economic Theory Meets Political Reality

Arezou Rafikian2023-06-01T14:58:22-04:00November 8th, 2021|The Vault|

In a thought-provoking column on Friday, former Federal Reserve Bank of Minneapolis President Kocherlakota asked if the Fed is playing politics with interest rates. As he points out, this is a troubling prospect, albeit wholly an unproven one. What doesn’t need proof, though, is that interest rates are playing a deadly game with politics. Last Tuesday, economic theory met political reality in yet another collision in which voters made it at least as clear as they did in 1980 that they won’t put up with low rates if they lead to high prices and the economic inequality it exacerbates. The Fed has a profound, albeit de facto, fiscal role. Failure to reckon with it poses risks not just to Democratic officeholders, but also to the Fed itself.

Last July, Jay Powell emphatically rebutted a Member of Congress who asked him about my view that the Fed has dramatically, if inadvertently, increased income and wealth inequality. Then as before and after, the Fed chairman asserted that economic inequality is wholly an artifact of fiscal policy. At his press conference on Wednesday, he did express sympathy for those dealing with high prices, but he still insisted that policy relief is beyond the Fed’s reach as stipulated in its statutory mandate.

Later this month, I’ll present a paper showing that the Fed’s full statutory mandate requires attention to the “general welfare” and other equality drivers. I’ll also lay out how seemingly pure monetary policy has become a real, dominant fiscal power by …