Wall Street Journal
The paper suggests five things to watch for in the minutes from the Federal Open Market Committee’s March 15-16 policy meeting, due out Wednesday. Investors and analysts will attempt to parse the minutes for clues about future action. At the meeting, the central bank opted to maintain the current short-term interest rate. “The minutes could shed light on the Fed’s internal debate over the inflation outlook, which will be a key factor in interest-rate decisions,” the paper writes. The paper advises to pay attention to discussions about uncertainty about interest rate projections; global developments particularly in China, Japan and Europe; the outlook on inflation and its potential impact on rates; moves in the stock market and early-year volatility; and Kansas City Fed President Esther George’s lone dissenting vote against maintaining current rates.
European banks are less exposed to risky energy assets than U.S. banks, according to a Moody’s stress test. The agency assessed the potential impact of low energy prices on Europe’s 19 biggest banks that disclose their energy exposure, including Deutsche Bank and HSBC, and found European banks collectively had energy exposure equal to a third of their common equity tier one capital. The major difference between European and U.S. banks, according to the report, is Europe's banks are on the less risky end of the spectrum, while the North American banks have higher exposure to lower-rated sectors. Moody’s said the key conclusion of the stress test — which considered what would happen if credit ratings for various types of oil and gas companies fell by four notches — is that these exposures would be manageable.
New York Times
Presidential hopeful Bernie Sanders discussed his plan to break up big banks in an interview with the New York Daily News, and the Times suggests Sanders’ answers “seem to make sense.” In the interview, the Democrat candidate offers two scenarios: "having legislation passed, or giving the authority to the secretary of Treasury to determine, under Dodd-Frank, that these banks are a danger to the economy over the problem of too-big-to-fail.”
The Times, though, finds problematic Sanders’ use of the word “or,” which it said suggests he believes the Treasury secretary can use Dodd-Frank-backed powers to press banks to break up even without further legislation.
“This might be an option he’d take if Congress refused to pass new breakup legislation,” the paper wrote, noting that theoretically the Fed could raise capital requirements to such a level that the biggest banks would break themselves up. The Times publishes other excerpts in which the interviewer appears confused about Sanders’ grasp of the procedures and laws involved in breaking up banks. The paper concludes it doesn’t appear Sanders will use Dodd-Frank alone to slash the size of banks.
CNBC: Meanwhile, Federal Reserve Bank of Minneapolis President Neel Kashkari said while post-financial crisis changes have delivered greater stability to the financial system, policymakers must acknowledge that large banks continue to pose systemic risk. His remarks were made at a symposium in Minneapolis on Monday called "Ending Too Big to Fail.” Kashkari, who previously worked at the Treasury Department and Goldman Sachs, contends larger capital requirements and stress tests are steps in the right direction, but the banking structure still poses more risks than some recognize. Critics have said Kashkari is speaking outside his authority on matters of “too big to fail,” but he maintains he simply wants to spark discussion about reducing risk to the financial system. "I just don't want the American people to have a false sense of security that we've addressed 'too big to fail,' that this can't happen again," he told CNBC.
Charlotte Observer: Bank of America named a new treasurer, Andrei Magasiner, the New York-based chief financial officer of BofA's investment banking and trading division, on Tuesday. Magasiner becomes treasurer immediately, replacing Greg Hackworth, 47, who will retire on May 31 after nearly two decades with the company. The treasurer position will now be based in new York, rather than Charlotte.