With the deadline for a federal-debt-limit renewal nearly a month away, bankers are dreading the prospect of higher funding costs, strained liquidity, weaker commercial loan demand and other ramifications if Washington does not act.
In times of economic stress, customers tend to flood the U.S. banking system with deposits. But the leverage ratio penalizes banks for conducting this core banking function.
A Fed committee studying Libor’s replacement has dwelled heavily on the potential impact to the derivatives market. Loans may become a bigger part of the conversation later this year, but the panel plans to leave a lot of the specifics up to lenders.
Society has accepted central banks’ monopoly over creating and controlling the flow of money, but history and current technological innovations point to alternative approaches.
Federal Reserve Bank of New York President William Dudley took the unusual step of weighing in on who might be the next head of the U.S. central bank, saying that former Goldman Sachs executive Gary Cohn was a "reasonable candidate" for the job of Fed chief.
Having a leverage ratio as a backstop to risk-based capital requirements is sound, but the way it is currently calibrated is having a dramatic effect on financial markets.
Clearer criteria of what the Federal Reserve expects from directors will improve board oversight of banks, while also cutting down on misplaced demands on boards’ time and attention.
