Regulators said they will allow banks to deduct Treasury securities — a source of market volatility in the pandemic — from the net stable funding ratio on the same day they provided relief from auditing requirements.
The industry is warning regulators putting the finishing touches on the Net Stable Funding Ratio that the measure could exacerbate volatile market events like the spring selloff of Treasury securities.
Whoever wins the White House in November may have immediate agency openings to fill, while a key decision looms about who will run the Federal Reserve after Jerome Powell’s term expires in 2022.
Chris Dodd and Barney Frank said the legislation — nearing its 10th anniversary — put banks in position to be a stabilizing force during the coronavirus crisis.
The central bank's sweeping actions suggest a cash shortage gripping sectors directly hit by the pandemic. Banks were supposed to be protected by Dodd-Frank but are still vulnerable to a funding domino effect.
The agencies said banks could receive Community Reinvestment Act credit for activities addressing the virus fallout, and clarified earlier guidance encouraging banks to dip into their capital buffers.
Regulators issued a rule that gives banks the OK to dip into capital to help households and businesses cope with the economic impact of the coronavirus.
Policymakers could recommend banks establish backup facilities and the Federal Reserve could stand ready with emergency loans to limit economic shock waves.
