Congress authorized the Federal Deposit Insurance Corp. to intervene if the pandemic caused a liquidity scare, but nearly two months later deposits are through the roof and the agency has not acted on the expanded authority.
The German bank’s money laundering controls are still not up to snuff, among other problems; three Democrats say banks may have shortchanged small-business borrowers.
But market observers remain unsure whether changes to the $100 billion Term Asset-Backed Securities Loan Facility program will boost CLO investor demand or new-deal issuance, given key restrictions that remain in place.
At a Senate hearing with all the bank regulators, Joseph Otting got an earful over his agency’s decision to move forward with Community Reinvestment Act reform during the pandemic. Lawmakers also urged the Fed to speed up the rollout of coronavirus relief programs.
The central bank will disclose information on a monthly basis about its Term Asset-Backed Securities Loan Facility and its Paycheck Protection Program Liquidity Facility.
The agency is being methodical in its rollout of the Main Street Lending Program in hopes of avoiding missteps that followed the launch of other coronavirus relief efforts. But observers say delaying aid brings its own risks.
The Federal Reserve also said in a supervisory report released Friday that it would conduct stress tests this quarter as planned, taking into account sudden deterioration in the economy brought on by the coronavirus pandemic.
The pandemic is taking a toll on tax receipts, leading the central bank to establish a municipal debt facility. Without a turnaround, the consequences for the financial system could be dire.
