TOP OF THE AGENDA
Give Banks Credit For Robust Contingent Liquidity Arrangements
In this blog post, BPI argues that banks should be allowed to hold liquid assets sufficient to meet their liquidity needs after 30 days of stress rather than their peak need over 30 days of stress, provided that they have collateral pledged to the Fed’s discount window that is sufficient to cover the difference. Banks that elect this option would be equally resilient to runs and yet able to provide more credit to businesses and households.
5 Stories Driving the Week
1. McWilliams: Agencies Hoping to Put out CRA Proposal in Next Few Months
In Case You Missed It
On May 30, the federal banking agencies issued a final rule on the treatment of municipal securities as high-quality liquid assets (HQLA) for the purposes of the Liquidity Coverage Ratio (LCR). The final rule adopts without changes the interim final rule released in August 2018, which treats liquid and readily-marketable, investment-grade municipal obligations as Level 2B HQLA in accordance with the Economic Growth Regulatory Reform and Consumer Protection Act. The final rule will be effective 30 days after publication in the Federal Register.
The Financial Stability Board (FSB) released a progress report on May 29 on its correspondent banking action plan. The FSB reports the number of correspondent banks declined by 3.4 percent in 2018, though at a slightly slowed rate compared to 2017. The FSB further indicates that there is growing evidence that national authorities are clarifying correspondent banking expectations, in line with Financial Action Task Force and Basel Committee on Banking Supervision guidance. Further, the FSB said that public sector technical assistance still requires ongoing coordination, but industry initiatives are gaining traction and there is more openness to innovative approaches.
The Federal Reserve Bank of New York announced the departure of two top officials. Simon Potter, executive vice president and head of the Markets Group, and Richard Dzina, executive vice president and head of the Financial Services Group, will be leaving from their roles effective June 1.
6/3/2019 —Quarles Speech on LIBOR Transition
6/4/2019 —Powell Speaks at Monetary Policy Conference
6/4/2019 —House Financial Services Committee Holds Ex-Im Hearing
6/4/2019 —House Subcommittee Holds Hearing on Leveraged Lending
6/4/2019 —SIFMA and BPI Host Prudential Regulation Conference
6/5/2019 —Senate Banking Hearing for Fed, SEC Nominees
6/11/2019 —House Subcommittee Hearing on Student Loans
6/11/2019 —House Financial Services Committee Holds Markup
11/19/2019 – 11/21/2019 —The Clearing House + BPI 2019 Annual Conference