Chair Jerome Powell told a congressional panel that the Federal Reserve is weighing whether to extend temporary relief from the “supplementary leverage ratio” — meant to help banks lend more during the pandemic — beyond March 31.
The Federal Reserve's “mid-cycle” assessment — conducted in light of the uncertainty posed by COVID-19 — showed that several banks would maintain just the bare minimum level of capital under hypothetical scenarios.
Executives from U.S. banks continue to play down near-term expectations, but they say customers are growing more confident ahead of the rollout of coronavirus vaccines, and that key commercial lending segments could drive an economic rebound.
Fannie hasn't completed any credit risk transfers to private investors since the second quarter. Some experts worry the decision — likely spurred by the company’s concerns about a recent capital regulation — could put the mortgage giant on unsteady footing.
Vice Chairman of Supervision Randal Quarles said the agency wants to figure out why banks are holding on to capital that could be used more aggressively to respond to the pandemic.
The Federal Housing Administration said in its annual actuarial report that capital reserve ratio on its mutual mortgage insurance fund increased to 6.10% in fiscal year 2020, up from 4.84% a year earlier.
The legislation would help institutions with less than $15 billion of assets avoid regulatory requirements resulting from participating in the small business relief program.
Kashkari, who oversaw the 2008 bank bailouts as a then-Treasury official, has been outspoken in favor of higher capital requirements since he took over at the Minneapolis Fed in 2016.
Regulators in the spring temporarily eased a key benchmark of balance-sheet strength to allow institutions to help customers navigate the pandemic, but Federal Reserve Vice Chairman Randal Quarles said it would be “premature” right now to suspend it for good.