While regulatory changes can take a while to be finalized and phased in, banks tend to adapt quickly to new capital rules, because it demonstrates safety and soundness and suggests to investors the new rules won't impact their businesses, explains American Banker's Kyle Campbell. Given this dynamic, some banks and lawmakers argue that announcing new capital requirements now could affect lending at a precarious time for the economy.
It's a point that the Banking with Interest podcast as he discussed how federal regulators' pending proposal to raise capital requirements on banks with more than $100 billion in assets could affect lending. He also touched on how the proposal fits into the overall Basel III framework and the potential response from banks and Republicans.
The nation’s 23 largest banks passed the Federal Reserve’s so-called “stress tests” recently, indicating the nation’s banking system remains resilient despite the recent banking crisis.
As expected, the top banks passed the tests. It's worth noting, however, that midsize banks and super regionals didn't do as well as big banks. Critics will also point out that banks have figured out how to glide through these annual exercises. Still, given the recent industry turmoil, the fact that the tests showed banks would still be able to lend in the event of a severe recession is a positive sign.
Sen. Elizabeth Warren (D-MA), who usually is an ally to Treasury Secretary Janet Yellen, criticized the Treasury chief for comments suggesting more bank mergers would be healthy for the sector. In a recent letter to Yellen, the Justice Department and bank regulators, Warren took both Yellen and Acting Comptroller of the Current of the Currency Michael Hsu to task, calling their conclusions after recent turmoil misguided. The Massachusetts senator believes more bank M&A would hurt consumers, small businesses, and the economy.
Fed economists recently rang an alarm bell in response to the historic percentage of distressed US companies. Approximately 37% of nonfinancial firms are in distress as a result of Fed policy, two Federal Reserve economists wrote, and the effects on employment, investment, and the overall economy could be devastating.
FTX, the failed crypto company, is in initial discussions with investors about relaunching its international exchange. The company was accused of stealing billions from customers to plug losses in its founder's hedge fund-among other chicanery-is engaged in discussions with investors for a potential relaunch (most likely under a different brand), insiders claim.
Cybercriminals and fraudsters may be responsible for stealing more than $200 billion from the Paycheck Protection Program and the Emergency Injury Disaster Loan Program during the pandemic, which is far more than previously thought, according to a new report from the inspector general. The Small Business Administration disagrees, though, citing "serious flaws" in the findings.
A former SVB risk officer, Vivek Tyagi, and Randal Quarles, a banking regulator who served under the Trump administration, have teamed up to launch a “bank.” The proposed institution, Currency Reserve, does not plan to make loans or take deposits. Instead, according to a description provided to the Financial Times by the company, it plans to sell and deliver dollars primarily to local banks outside the U.S.
Federal Reserve Chair Jerome Powell recently shared his view that the central bank may not be done squelching inflation, and could even implement consecutive rate hikes at its upcoming monetary policy meetings. Last quarter, inflation was too high, economic growth was too strong, and the labor market was too tight, Powell said during a panel for central bankers in Portugal. He also said that while government spending was high during the pandemic, it has normalized to the point where it is no longer driving inflation.
Banks and credit unions continue to identify cybersecurity threats and fraud as the greatest challenges to their digital banking strategy, according to new research by American Banker.
Ninety percent of more than 200 bankers who responded to a recent survey on digital banking claim cybersecurity and fraud present "moderate" or "significant" challenges.