Many banks have already scaled back home lending or even left the business. With profit margins shrinking, inventories of homes at crisis levels and competition from nonbanks intensifying, that’s unlikely to change.
It's tempting to reach for higher returns on securities in anticipation of tightening margins. However, that strategy has pitfalls, including underestimating risks or being caught flat-footed by future rate moves.
Former Federal Reserve Gov. Daniel Tarullo warned that a Fed proposal to weaken the stress capital buffer, among other things, could hurt safety and soundness.
Although higher corporate debt could hurt the economy, Federal Reserve Chair Jerome Powell argued changes made since the last crisis will guard against a meltdown.
The White House is considering Derek Kan, an undersecretary at the Department of Transportation, for one of two open seats on the Federal Reserve Board, according to two people familiar with the matter.
Democrats and Republicans on the House Financial Services Committee called for steps to minimize the harm to community banks and credit unions bracing for the new accounting standard.
As evidenced by a Senate hearing, Republican and Democratic lawmakers still live in alternative universes when it comes to financial regulatory policy.
