#SLR – Page 2 – Federal Financial Analytics

16 11, 2022

REFORM215

Arezou Rafikian2022-11-22T15:02:46-05:00November 16th, 2022|5- Client Report|

HFSC Session Brings Crypto Action to Fore, “Holistic” Capital Under Scrutiny

HFSC today largely focused bank regulators on the same range of questions posed at yesterday’s Senate Banking session (see Client Report REFORM214). However, Chairwoman Waters (D-CA) emphasized the importance of federal legislation in sharp contrast to Chairman Brown (D-OH), also announcing a hearing in December on FTX. Ranking Member McHenry (R-NC), who will become HFSC chairman in the next Congress, concurred with the chairwoman’s views on the need for digital-finance statutory reform. However, he took strong issue with inter-agency policy with regard to new capital rules, merger restrictions, and third-party relationship constraints. Republican members also targeted Vice Chairman Barr’s holistic capital review, arguing that banks are currently well capitalized and that additional standards would hamper lending. Mr. Barr indicated that an SLR rewrite is part of the holistic review but not immediately necessary to quell Treasury-market volatility or illiquidity. As discussed in more detail below, regulators promised banking-sector crypto rules at least as stringent as Basel’s proposal.

REFORM215.pdf

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14 11, 2022

FedFin on: Treasury Inches Closer to All-to-All Trading

Arezou Rafikian2022-11-14T16:01:03-05:00November 14th, 2022|The Vault|

Building on our initial assessment, this report goes in-depth into the Treasury assessment of the market for its obligations and reforms necessary to avert another dash for cash. Although the Federal Reserve, which participated in this study along with other agencies, indicated in 2020 it will review the supplemental leverage ratio (SLR) to…

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

14 11, 2022

TMARKET3

Eliza Allen2022-11-14T15:46:49-05:00November 14th, 2022|5- Client Report|

Treasury Inches Closer to All-to-All Trading

Building on our initial assessment, this report goes in-depth into the Treasury assessment of the market for its obligations and reforms necessary to avert another dash for cash. Although the Federal Reserve, which participated in this study along with other agencies, indicated in 2020 it will review the supplemental leverage ratio (SLR) to enhance bond-market liquidity, it has yet to do so and no mention is made of any such reform in this report. To be sure, this is only a Treasury report that does not necessarily reflect the views of these other agencies, but the Fed and Treasury usually work closely on matters such as this and it seems unlikely that the matter would go unmentioned if plans were under way to revise the SLR. The 2022 report builds on the inter-agency working group’s 2021 analysis (see Client Report TMARKET2) but still does not reach firm conclusions or lay out specific recommendations suitable for near-term action. However, work is in fact under way at the SEC, which has proposed a new central-clearing mechanism for Treasury obligations that, if finalized, would create at least some of the infrastructure necessary for the all-to-all trading this report now explores in greater detail. Next steps for Treasury-market reform will be discussed at a conference later this week.

TMARKET3.pdf…

19 05, 2022

DAILY051922

Eliza Allen2023-02-21T14:33:03-05:00May 19th, 2022|2- Daily Briefing|

BIS Finds New Shadow Crypto Finance, Risks in Spotlight

The BIS yesterday released a paper concluding that, while bank exposures in this high-risk sector are small in aggregate, digital assets nonetheless pose systemic risks.

Commerce Asks About CBDC, Payment System

Following the direction of the President’s digital asset executive order (see Client Report CRYPTO26), the Department of Commerce today released a request for comment on enhancing US competitiveness in this sector.

Barr Breezes By

Today’s Senate Banking confirmation hearing with Michael Barr showed the Fed vice-chair nominee in careful form likely to assure him confirmation despite strong GOP opposition.

CFPB Tells States to Flex Their Enforcement Muscles

Turning again to actions outside the direct reach of public notice-and-comment requirements, the CFPB today issued an interpretive rule essentially encouraging states to enforce federal consumer-protection standards.

Fed Finalizes FedNow Framework

The Fed today issued a final rule laying out the legal framework governing the FedNow instant payment service it is racing to roll out (see FSM Report PAYMENT20).

Daily051922.pdf…

13 01, 2022

FEDERALRESERVE68

Arezou Rafikian2023-04-24T15:39:54-04:00January 13th, 2022|5- Client Report|

Brainard Navigates Troubled Waters; Looks Like Smooth Sailing for Thompson

At today’s confirmation hearing, Gov. Brainard took a lot of the heat on inflation Republicans only mildly mentioned during Mr. Powell’s Tuesday confirmation hearing (see Client Report FEDERALRESERVE67). As we anticipated (see Client Report FEDERALRESERVE66) this reflects the fact that the GOP is united in opposition to her appointment as Fed vice chair; should she hold Sen. Manchin (D-WV) she will be confirmed; if not, perhaps not. Ranking Member Toomey (R-PA) also used the occasion to signal – again unsurprisingly – GOP opposition should Sarah Bloom Raskin be nominated as the Fed’s supervisory vice chair.

FEDERALRESERVE68.pdf…

13 01, 2022

FedFin on: Brainard Navigates Troubled Waters; Looks Like Smooth Sailing for Thompson

Arezou Rafikian2023-04-24T15:40:10-04:00January 13th, 2022|The Vault|

At today’s confirmation hearing, Gov. Brainard took a lot of the heat on inflation Republicans only mildly mentioned during Mr. Powell’s Tuesday confirmation hearing (see Client Report FEDERALRESERVE67). As we anticipated (see Client Report FEDERALRESERVE66) this reflects the fact that the GOP is united in opposition to her appointment as Fed vice chair; should she hold Sen. Manchin (D-WV) she will be confirmed; if not, perhaps not. Ranking Member Toomey (R-PA) also used the occasion to signal – again unsurprisingly – GOP opposition should Sarah Bloom Raskin be nominated….

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

11 01, 2022

FedFin Assessment: Powell Sidesteps Many Challenges, Promises Much

Arezou Rafikian2023-04-24T15:54:45-04:00January 11th, 2022|The Vault|

As promised yesterday (see Client Report FEDERALRESERVE66), we listened closely today to gauge the extent to which Chairman Powell faces a serious challenge to reconfirmation. At least as far as Senate Banking Members are concerned, he doesn’t. Although Sen. Warren (D-MA) and other Democrats lambasted Mr. Powell over insider-trading allegations and what they called the Fed’s unresponsiveness, all still were cordial and seemed generally to blame the problem on institutional failures, not the chairman. Sen. Menendez (D-NJ) called the Fed’s diversity policy “outrageous,” but also does not seem inclined….

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

11 01, 2022

FEDERALRESERVE67

Arezou Rafikian2023-04-24T15:54:31-04:00January 11th, 2022|5- Client Report|

FedFin Assessment: Powell Sidesteps Many Challenges, Promises Much

As promised yesterday (see Client Report FEDERALRESERVE66), we listened closely today to gauge the extent to which Chairman Powell faces a serious challenge to reconfirmation. At least as far as Senate Banking Members are concerned, he doesn’t. Although Sen. Warren (D-MA) and other Democrats lambasted Mr. Powell over insider-trading allegations and what they called the Fed’s unresponsiveness, all still were cordial and seemed generally to blame the problem on institutional failures, not the chairman. Sen. Menendez (D-NJ) called the Fed’s diversity policy “outrageous,” but also does not seem inclined to block confirmation based solely on this issue. As anticipated, most senators focused on inflation and the economy; Mr. Powell often reflected this by affirming that the Fed will soon cease to be quite as accommodative. Senate Banking Chairman Brown (D-OH) urged Mr. Powell not to let up on economic stimulus, also complaining about big-bank consolidation, capital distribution, bank profits, and the need for more lending to “Main Street.”

FEDERALRESERVE67.pdf…

2 12, 2021

Daily120221

Arezou Rafikian2023-05-23T13:56:33-04:00December 2nd, 2021|2- Daily Briefing|

Fed Staff Assess Big-Bank Correlated Risk, Systemic Hazard
A new research note from the Federal Reserve looks at a critical question: how correlated have bank exposures become in the wake of stress testing and other rules many analysts, ourselves included, anticipated. To the extent exposures are correlated, systemic risk is likely to increase, especially if correlations are tightest at the biggest banks and/or correlated exposures are risky.

Quarles Defines Boundaries of Fed Emergency, Regulatory, Supervisory Policy and Politics
In parting remarks today, FRB Gov. Quarles not only defended his record, but also took a very different stand on future emergency facilities than another departing Fed official, Vice Chair Clarida. Unlike Mr. Clarida’s stout defense of 2008 and 2020 actions, Mr. Quarles argues that the credit facilities established in concert with those for emergency liquidity are problematic both in terms of central-bank mission and facility execution.

Daily12021.pdf…

12 11, 2021

GSE-111221

Arezou Rafikian2023-06-01T13:50:32-04:00November 12th, 2021|4- GSE Activity Report|

Taking Their Time On the Treasury Market

As Mark Calabria made clear earlier this year, reform of the Treasury market has direct, major impact on that for agency debt and MBS. Indeed, given ongoing Treasury-obligation issuance uncertainties at a time of brute-force fiscal policy along with continuing debt-ceiling drama, the two high-quality liquid assets are tied at the hip even if bank liquidity rules don’t recognize this. We thus review the new inter-agency Treasury-market report for its agency impact at a time of growing bond-market volatility. As our in-depth analysis of the new report makes clear, we had to look hard for near-term implications and, after doing our best, came away largely empty-handed.

GSE111221.pdf…