Liquidity requirements

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.