Capital requirements

The Federal Housing Finance Agency's proposal could undermine the companies’ mission to support the housing market and penalize consumers in underserved communities, industry and consumer groups say.

The central bank said it had miscalculated the loss rates for certain public welfare investments, which led to incorrect capital requirements for the two companies.

Why banks want in on Google checking accounts; readying new tech tools to tackle anticipated rise in delinquencies; more institutions opt to sell PPP loans as heavy lifting nears; and more from this week’s most-read stories.

Some criticized the Fed’s decision to temporarily lift capital restrictions for megabanks, but the move will help ease the crisis.

The Fed’s recent action capping dividend payments might prove inadequate once the coronavirus crisis really hits banks’ capital.

The Fed has already eased certain capital requirements in response to the coronavirus pandemic. It should avoid making any further adjustments to the surcharge, which is meant to keep global banks from creating systemic risks.

The lawmakers argued in a letter to the Federal Reserve that suspending dividend payouts would be the "prudent course of action," allowing banks to build their capital cushions and continue lending during the coronavirus pandemic.

Sens. Sherrod Brown and Elizabeth Warren are asking three federal agencies to reverse changes that allow banks to exclude certain items from their supplementary leverage ratio.

The senior official said the Federal Reserve’s gauge of a firm’s performance under economic recovery scenarios will affect decisions about its capital distribution, but individual results of the analysis will not be made public.

The industry was well positioned in terms of net worth before the pandemic and recession, but some institutions could run into issues with sluggish earnings and a surge in deposits.

In an effort to help the industry manage the economic downturn, some credit unions won't be required to submit plans to lower their retained earnings for the rest of this year.

The SBA issues guidance on Paycheck Protection Program loan forgiveness; after staffing up for PPP, Bank of America may need to delay investments to meet cost targets; American Express has leaned hard on cloud tech to help employees work at home during the pandemic.

COO says bank is on track to meet growth targets but expects more consumer lending losses; the mortgage agencies’ ability to raise $240 billion in capital before going private won’t be easy.

The FHFA says the two government-sponsored enterprises need at least $240 billion of capital before they can go private; Transunion says more than 3% of consumer loans it tracks are in financial hardship.

The much-anticipated proposal, which would not go into effect until after Fannie Mae and Freddie Mac are privatized, reflects Director Mark Calabria’s aggressive efforts to get the companies on a strong financial footing.

Director Mark Calabria, who abandoned the Fannie and Freddie capital proposal written by his predecessor, said he expects a revised framework to be ready “very soon.”

The interim rule will allow institutions with over $250 billion of assets to exclude certain assets from the supplementary leverage ratio to help them respond to the economic fallout from the coronavirus pandemic.

In separate letters to Congress, the Fed asked for legislative action to ease Tier 1 capital minimums while the FDIC said it may use its own authority to address the market strain on banks.

The Financial Stability Board said it stood ready to coordinate additional help on capital requirements, upcoming regulatory deadlines and other standards.

The Federal Reserve and other regulators are planning to grant a sweeping capital break for banks providing loans to small businesses as part of the government's response to the coronavirus-fueled economic crisis.