Federal Reserve Governor Jerome Powell and acting Comptroller of the Currency Keith Noreika have indicated willingness to ease banking rules imposed after the financial crisis, particularly the Fed stress test and the Volcker rule. "The Volcker rule provides a practical example of how conflicting messages and inconsistent interpretation can exacerbate [the] regulatory burden," Noreika said.
Analysts expect the Federal Reserve to announce today that all 34 banks that underwent an annual stress test overcame hypothetical hurdles. However, a 35% decrease in commercial real estate prices in the test would have been especially trying for banks with high exposure to this sector, analysts say.
The Basel Committee on Banking Supervision's requirement to establish a standardized capital floor for internal models still hasn't been resolved, according to a leaked committee memo. Sources say that all other aspects of the bank capital standards are in place.
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The broader hedge fund industry is experiencing a resurgence, but credit hedge funds are being left behind, continuing to suffer outflow. Credit hedge funds saw $5.4 billion in withdrawals in the first quarter.
The role of investor relations has expanded to encompass a range of responsibilities from strategic planning to corporate responsibility. Building strong relationships with internal and external stakeholders will help IR professionals meet these new demands.
Banks shifted into low-cost liabilities to weather seven years of low interest rates, though this move did not mitigate all impact on profitability. Banks are trying to determine how to change their asset and liability mix as interest rates rise.
Global banks will vote this week on an alternative to the London Interbank Offered Rate. "Getting a rate that's supported, that's well built and robust, is very important because they need to move a lot of the swaps market off of Libor," said Darrell Duffie, a Stanford University finance professor.
Thomas Ferlazzo, senior vice president of the Federal Reserve Bank of New York, says a proposed two-hour deadline for banks to recover from a cyberattack is still under review but might come into force. Ferlazzo says that he understands misgivings about the deadline but that banks should work toward it, rather than wait for the Fed to issue a regulation.
A panel of financial-technology experts and venture capital executives have discussed emerging-technology trends, Europe's revised Markets in Financial Instruments Directive, cloud computing and funding for startups. The vast amount of talent shed by the banking industry during the past 10 years is the reason for explosive growth in fintech, says Mark Beeston of Illuminate Financial Management.
The Commodity Futures Trading Commission's inspector general has decided not to follow up on an audit that discovered the agency's chief economist was blocking research on politically sensitive issues, such as position limits, a policy the audit described as "institutional censorship." CFTC Deputy Inspector General Judith Ringle said the office doesn't have enough staff to pursue the matter.
The Treasury Department's recommendation that safe, highly liquid assets, including Treasury bonds, be excluded from total leverage calculations would particularly benefit custody banks, according to this analysis. State Street, Bank of New York Mellon and Northern Trust could see as much as 38% of their total assets freed up, while Goldman Sachs and JPMorgan Chase could gain access to 21% of their assets, Goldman analysts estimate.
Easing US regulation, as outlined in a Treasury Department report, to match international standards wouldn't equalize the playing field between US and European banks, Duncan Wood writes. "It marks a radical shift in the country's post-crisis regulatory philosophy -- from leadership to gamesmanship," he writes.
Robert Steigerwald, a senior researcher at the Federal Reserve Bank of Chicago, said the Financial Stability Board's proposal for resolution of clearinghouses adds little to what the industry would already do if faced with a crisis. "In the absence of public funding for solvency, I'm not quite sure what more there is to do by the resolution authority that hasn't been done or can't be done by the primary stakeholders," Steigerwald told an advisory panel of the Commodity Futures Trading Commission.