Under its aggressive quantitative easing program, the Fed is borrowing short-term and investing long-term, exposing itself to severe interest rate risk when short-term rates rise, writes former Fed economist Scott Hein.
The proposed Small Lender Mutual cooperative would be expensive for small firms to capitalize, and its securities may get inferior pricing compared to those issued by large banks and nonbanks.
As the U.S. and Europe impose sanctions against Russia, western banks are keeping closer tabs on their business dealings in the country. JPMorgan Chase's temporary hold on a Russian Embassy payment and the disruption of VISA services for SMP Bank could be just the tip of the iceberg.
Bankers are kidding themselves if they think bank-like supervision will ultimately catch up with nonbanks. Expect to compete on the current playing field, however uneven it may be.
Banks are likely to protest new Basel rules that would require them to hold more capital against their exposure to central counterparties, but the standard is necessary to prevent the fast-growing counterparties from becoming "too big to fail."
Regulators look at eight risk categories when determining a bank's health, but it's how banks deal with three in particular Â-- interest rate risk, liquidity risk and IT/operational risk -- that could make or break them.
If regulators really want banks to invest more heavily in their communities then they should consider giving banks some reward, such as reduced deposit insurance premiums, for achieving a top CRA rating.
On its surface, the initial plan for a central bank looked like a fair deal for a country as geographically spread out as the United States. What did not receive publicity was the way in which it was structured to provide an easy supply of money to the nation's biggest banks.
