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Federal Reserve Board Chair Janet Yellen on Wednesday offered few clues when regulators would move ahead with issuing a proposal to address risks tied to short-term wholesale funding.
June 18 -
WASHINGTON Federal Reserve Board Chair Janet Yellen said Tuesday that the largest banks need to face higher capital requirements to stem potential risks to the financial system.
April 15
WASHINGTON The Financial Stability Oversight Council on Tuesday met in a closed session to discuss short-term wholesale funding reform.
The 10-voting member interagency group, headed by Treasury Secretary Jack Lew, received a presentation by the Federal Reserve Board and the Federal Reserve Bank of New York on short-term wholesale funding markets. No further details on the presentation were provided.
The Fed has spent considerable time weighing further measures to address risks tied to short-term wholesale funding. Last week, Fed Chair Janet Yellen declined to provide any timelines on when regulators would move ahead with issuing a proposal, but repeated her public support for taking "some action to diminish the incentives for heavy reliance on short-term funding."
"We still see that as one of the risks to the financial system that wasn't really addressed in the risk-based capital requirements that we put out, or in the liquidity coverage ratio that's out for proposal," Yellen said in a June 18 press conference.
Fed Gov. Daniel Tarullo, who leads bank supervision at the central bank, has endorsed imposing a capital requirement tied to a bank's use of wholesale funding an idea that Yellen has supported.
Separately, the council received an update on macroeconomic and market developments, including a presentation from the Office of Financial Research and a presentation on leveraged lending by the Office of the Comptroller of the Currency.
