Liquidity requirements

The finalized rule adds flexibility to the capital rules applied to the Federal Home Loan banks to help them extend credit to their members.

The Federal Reserve's vice chair for supervision said the central bank is weighing regulatory and supervisory changes to liquidity management standards. Current approaches, he said, might not be able to contend with the speed of modern runs.

The proposal builds on guidance the agency gave to Fannie Mae and Freddie Mac earlier this year.

Regulators said they will allow banks to deduct Treasury securities — a source of market volatility in the pandemic — from the net stable funding ratio on the same day they provided relief from auditing requirements.

The industry is warning regulators putting the finishing touches on the Net Stable Funding Ratio that the measure could exacerbate volatile market events like the spring selloff of Treasury securities.

Whoever wins the White House in November may have immediate agency openings to fill, while a key decision looms about who will run the Federal Reserve after Jerome Powell’s term expires in 2022.

Chris Dodd and Barney Frank said the legislation — nearing its 10th anniversary — put banks in position to be a stabilizing force during the coronavirus crisis.

The change — effective immediately — will reduce capital demands by about 2% overall, the Fed estimated, and will be open for a 45-day comment period.

The central bank's sweeping actions suggest a cash shortage gripping sectors directly hit by the pandemic. Banks were supposed to be protected by Dodd-Frank but are still vulnerable to a funding domino effect.

The agencies said banks could receive Community Reinvestment Act credit for activities addressing the virus fallout, and clarified earlier guidance encouraging banks to dip into their capital buffers.

Regulators issued a rule that gives banks the OK to dip into capital to help households and businesses cope with the economic impact of the coronavirus.

Policymakers could recommend banks establish backup facilities and the Federal Reserve could stand ready with emergency loans to limit economic shock waves.

The Treasury secretary suggested a role for lawmakers in containing any fallout with financial contracts stemming from the transition to a new interest rate benchmark.

Federal Reserve officials said they contained fallout from the rate spike in the repurchase agreement market, but the episode poses longer-term repercussions for liquidity rules, the transition to a new interest rate benchmark and other issues.

The Bank of England fined Citi $57 million for failing to properly report capital and liquidity levels at its European investment bank and other global operations.

Federal Reserve Chairman Jerome Powell said Wednesday that he does not think revamping capital or liquidity requirements is necessary despite recent volatility in the repurchase markets.

Treasury secretary says regulators could look to help ease liquidity logjam in money markets; workers will get special bonuses for the third straight year.

JPMorgan Chase had the cash and willingness to calm short-term funding markets when they went haywire in mid-September, but the banking giant said regulations held it back.

The central bank finalized a host of regulatory-relief changes mostly benefiting midsize and regional banks that hew closely to proposals issued in April and last fall.

The central bank will consider rules to create a tiered structure for supervising banks with over $100 billion of assets and to ease resolution plan requirements.