Liquidity

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.

The Federal Housing Finance Agency says it wants to more closely tether Federal Home Loan bank advances to housing and community development. Doing so will first involve clearly defining the banks' mission through regulation.

The Federal Housing Finance Agency said in a long-awaited report that it will set up new guardrails for the Federal Home Loan Banks to ensure that the institutions are serving a housing-centric mission.

Data from recent bank failures suggests that prevailing assumptions about which deposits are the most volatile could be dangerously flawed.

Although the Columbus, Ohio-based regional emerged from the recent crisis relatively unscathed, management was still taking steps to shore up its balance sheet, including forgoing stock buybacks to strengthen a key capital metric.

The use of the Federal Reserve's emergency lending facilities was largely unchanged this week, indicating to some that the recent liquidity crisis isn't getting any worse.

It would be unwise to restrict the use of Home Loan bank advances to housing-related lending.

The liquidity facility launched by the central bank over the weekend saw limited uptake compared to other emergency funding options.

Small and midsize banks flooded the Federal Home Loan Bank System with demands for liquidity to avert potential bank runs and stave off taking unrealized losses on investment portfolios just as the Federal Reserve opened a liquidity facility for just that reason.

The Treasury Department issued a "systemic risk exception" allowing it to cover uninsured deposits at SVB and Signature Bank, which New York State closed on Sunday.

Both Silvergate and Signature banks, two of the most active crypto counterparties in the banking sector, received advances from the quasi-governmental lenders to offset falling deposits.

The amount of money parked at a major Federal Reserve facility climbed to yet another all-time high, surpassing the $2 trillion milestone for the first time, as investors struggled to find places to invest their cash in the short term.  

Calls for “reform” in times of high liquidity ignore the scalability of the system, and the need to have it around in times of trouble.