The big guessing game in D.C. right now is who will replace Fed Vice Chair Lael Brainard, who is stepping down from his role at the central bank to direct the White House’s National Economic Council as one of Biden’s top advisers. Her departure from the Fed portends yet another gloves-off confirmation fight in the Senate for her replacement. No decision has been made, but some are suggesting Austan Goolsbee, who just took the reins of the Chicago Fed last month, might be a good candidate. He’s a former economic advisor to President Obama, which may - or may not - help the confirmation process go smoother.
While the Federal Housing Finance Agency conducts a historic review of the Federal Home Loan Banks’ mission, several critics are questioning whether the housing government-sponsored enterprises have lost sight of their original purpose.
U.S. banks saw declines in overdraft fee income drop in the fourth quarter of 2022, capping a year in which regulators and the White House applied increased pressure on the industry. The pressure resulted in overdraft fee income dropping sharply in 2022, pulling in $1.55 billion during the fourth quarter, which was down 12% from a quarter earlier and 34% from the end of 2022.
Inflation came down in January, and while many analysts saw this as a sign it will continue to drop, a recent piece in The Wall Street Journal suggests otherwise, reminding readers the pace of last month’s decline was slower than expected. What happens with inflation in 2023 will depend on what happens with the costs of goods, shelter, and key services.
U.S. banks borrowed $7.2 billion in short-term loans during the third quarter of 2022, the highest level in nearly two years. The increase was driven by declining cash balances at banks with assets of $3 billion or less. According to the New York Fed, banks with assets of $10 billion or less saw their cash-to-assets ratio decline by approximately 50% over the first three quarters of 2022.
Last month, Fed Gov. Michelle Bowman said regulators need to act quicker in reviewing and approving proposed mergers and acquisitions. She pointed out that of the eleven merger applications that received adverse public comments in the first half of 2022, it took on average 197 days to review, compared to those without public comments, which took about 65 days to vet.
Banks have trillions in deposits, but as rates rise, these funds are increasingly flowing into investment platforms. So why aren’t more banks providing digital wealth and investment services? In a recent opinion piece, Christopher LaVine makes the case that more community banks should consider offering a wealth strategy component to better serve and retain customers.
Senate Majority Leader Chuck Schumer, D-NY, has been meeting with senators on both sides of the aisle in an effort to recharge interest around marijuana legislation. The latest conversations mark a renewed effort to determine if bipartisan consensus on cannabis reform is a possibility. Last year, Schumer led the charge behind the Secure and Fair Enforcement (SAFE) Banking Act, which was intended to include provisions further enabling banks and cannabis businesses to work together.
In a recent report issued by the U.S. Department of the Treasury, the “insufficient transparency” many cloud service providers offer inadvertently put financial institutions — especially for mid-sized and small banks — at risk. Most of the risks mentioned in the report stem from the fact that the cloud market is currently divided among just a few large providers, raising fears that a cyberattack at one bank could spread throughout the financial sector. The lack of competition among cloud providers also means banks have less room to negotiate on contracts.