Liquidity

The acting comptroller of the currency said regulators should give "serious consideration" to enacting a rule requiring banks to have enough assets pledged to the Federal Reserve's discount window to cover "ultra short term, acute outflows."

The Federal Reserve governor was one of two to vote against issuing the so-called Basel III endgame proposal. He says work is being done to address issues with the operational risk framework, but that regulators may need to go back to the drawing board for an adequate fix.

The president of the Federal Reserve Bank of Dallas and former manager of the central bank's open market account said a slower approach to balance sheet reduction may be warranted sooner rather than later.

Federal Reserve officials point to overnight reverse repurchase agreement activity as an indication of excess liquidity, which the central bank is working to reduce. But some analysts say that excess liquidity may be drying up faster than expected, with important implications for banks.

The lobbyist for the Home Loan Bank System has asked the Federal Deposit Insurance Corp. to confirm that the private consortium can continue to be a "lender of last resort," in direct conflict with the recommendations of its regulator, the Federal Housing Finance Agency.

The Federal Housing Finance Agency's report on the system at 100 years old signals major shifts in both policy and structure are on the horizon.

In her first remarks since the release of a sweeping report on the banks, Federal Housing Finance Agency Director Sandra Thompson urges them to strengthen underwriting and communication with their members' regulators.

In its biannual report on supervision and regulation, the Federal Reserve Board noted an uptick in governance issues with large banks. Regional and community banks, meanwhile, were plagued by IT problems and risk management struggles.

Federal Housing Finance Agency Director Sandra Thompson is pushing for a quick launch of pilot programs at the 11 Federal Home Loan banks to help underserved communities after its report this week prescribed major reforms to the system.

Changes being considered by the Federal Housing Finance Agency would make liquidity more expensive and complicated to obtain. But first, those reforms will have to overcome the political power of a wide range of financial institutions that benefit from the status quo.