#QE – Federal Financial Analytics

21 07, 2023

DAILY072123

Eliza Allen2023-07-21T17:06:34-04:00July 21st, 2023|2- Daily Briefing|

GOP’s Crypto Bills Still Face Significant Partisan Problems

HFSC is now set for a Wednesday mark-up of two controversial crypto bills, one with shared jurisdiction with the Agriculture Committee governing regulatory jurisdiction and the other setting federal standards for payment stablecoins.

Senior GOP Senator Proposes Sweeping FRB Reform

Going beyond bipartisan legislation with Sen. Warren (D-MA) to redesign Fed governance to increase political accountability, Sen. Scott (R-FL) on his own has introduced a legislative package that would sharply contract the Fed’s monetary-policy and emergency-liquidity authority.

Clawback Bill Faces Tuberville Blockade

Reinforcing his stand against the executive-compensation clawback bill reported 21-2 by Senate Banking (see FSM Report COMPENSATION37), Sen. Tommy Tuberville (R-AL) today posted an op-ed laying out his reasoning.

Daily072123.pdf…

11 01, 2023

FedFin on: An Implacable Problem With a Policy Solution

Eliza Allen2023-01-11T16:47:56-05:00January 11th, 2023|The Vault|

As the Fed has hiked interest rates, mortgage rates have of course also gone up, sending a sudden chill through the residential market and putting home ownership even more out of reach for all but those for whom the home equity they still have after prices correct suffices for long-term wealth accumulation. However, mortgage rates have often risen higher than expected from usual yield spreads and thus Fed tightening is even more excruciating not just for the mortgage market, but also for FHFA’s equitable-finance mission and the Fed’s hoped-for soft landing…

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

…

11 01, 2023

GSE-011123

Eliza Allen2023-01-11T13:13:55-05:00January 11th, 2023|4- GSE Activity Report|

An Implacable Problem with a Policy Solution

As the Fed has hiked interest rates, mortgage rates have of course also gone up, sending a sudden chill through the residential market and putting home ownership even more out of reach for all but those for whom the home equity they still have after prices correct suffices for long-term wealth accumulation. However, mortgage rates have often risen higher than expected from usual yield spreads and thus Fed tightening is even more excruciating not just for the mortgage market, but also for FHFA’s equitable-finance mission and the Fed’s hoped-for soft landing. In this analysis, we assess the dynamics of recent mortgage pricing and what might be done about it.

GSE-011123.pdf…

3 01, 2023

Karen Petrou: Why Congress will Try to Recapture Fed Payments to Banks in 2023 and Why It Can’t

Arezou Rafikian2023-01-03T16:13:39-05:00January 3rd, 2023|The Vault|

Among the unmourned victims of 2022 is to be found modern monetary theory. Although it seemed clear from the start that MMT was a product of magical thinking, it engendered insouciance that kept fiscal deficits rising ever higher. Now, Republicans will press for fiscal austerity. Democrats will fight back, but they too will seek as much fiscal constraint as compatible with gaining power in 2024. Congress thus will look for new revenue sources that aren’t taxes and quickly find one at the Fed on which both sides agree: cutting payments to the nation’s biggest financial institutions.

It is difficult to calculate just how much the Fed is sending back over the transom into the financial system. One recent paper estimates it as over $100 billion a year and this might well be the case once interest on bank reserves is totaled up with the interest the Fed pays within the gigantic overnight reverse repo program (ONRRP). Whatever the sum now, it’s large and it will only go up in 2023. The more rates rise, the more the Fed pays out even as it is still saddled with billions of low-yield portfolio assets.

These interest payments are already on the radar of at least one conservative analyst. His arguments channel those Republicans raised when these interest payments were last on the fiscal chopping block, a time when Democrats also said pretty much the same about wanting billions for taxpayers, not banks.

To be sure, nothing came of all these …

27 10, 2022

DAILY102722

Eliza Allen2022-10-27T16:55:34-04:00October 27th, 2022|2- Daily Briefing|

CFPB Seeks Comment on Consumer Data Rights, Market Power

Following remarks from Director Chopra earlier this week, the CFPB today announced a formal kick-off of its consumer data-rights rulemaking.

Gruenberg Reminds Markets of TLGP Backstops at Time of Liquidity Stress

In remarks today, Acting FDIC Chairman Gruenberg stoutly defended the agency’s final rule hiking DIF premiums (see Client Report DEPOSITINSURANCE115).

Warren Reignites Anti-Zelle Campaign

In another appeal to the CFPB to tackle Zelle, Sen. Warren (D-MA) today sent a letter to Director Chopra calling on the Bureau to increase consumer protections in peer-to-peer lending platforms and curtail what she again describes as “rampant” fraud.

Democratic Pressures Grow Against Fed Rate Hikes

Adding to critiques from Sens. Brown (D-OH) and Warren (D-MA), Sen. Hickenlooper (D-CO) today called on the Fed to halt interest-rate increases.

Fed Study Details QE Alternatives, Expanded Fed Role

A new FRB staff paper explores the past, present, and future as an approach to achieving the Fed’s increasingly-problematic monetary-policy transmission: “funding for lending.”

Daily102722.pdf…