Tag Archives: Federal Reserve

Earlier Tuesday the FDIC went forward with a notice of proposed rulemaking in the Federal Register that calls for annual stress tests to determine capital adequacy for banks. The notice built on the Basel Accords, which the Basel Committee on Banking Supervision revisited with help from a consortium of central bankers over 2010 and 2011. Basel III is the latest by BCBS to require stress tests for systemically important financial institutions, which include Bank of America, Citigroup, JPMorgan Chase, Wells Fargo, and several other U.S. lenders.

Federal Reserve Gov. Elizabeth Duke offered to reassure bank executives Friday that the central bank wants to avoid a one-size-fits-all approach to regulation and work with smaller financial institutions to ensure that new mortgage banking rules work effectively. Speaking before the California Bankers Association in Santa Barbara, the official, a former banker-turned-regulator, said that the Fed will strive to prepare examiners and work with banks ahead of stress tests and final rules. She said regulators will include statements before every rule for bankers.

Still-tight credit supply is at fault for anemic demand in the housing market, preventing a full-fledged recovery from exerting itself, according to one governor on the Federal Reserve Board. Delivering a presentation before trade groups in Virginia earlier Friday, Fed governor Elizabeth Duke faulted underwriting and lending standards, among other market forces, for delaying financial support for homeowners. She said tight credit conditions persist even when the GSEs and FHA offer lenders a number of opportunities to shield themselves from additional risk.

With the euro zone crisis deepening, members of the Federal Open Market Committee elected to stay the course in November by keeping interest rates historically low and pooling investments from agency debt into agency mortgage-backed securities. Minutes framed discussions around concerns about weakening confidence in the markets as a result of any potential default by euro zone nations, even while the U.S. economy signaled that it would continue climbing out of the financial crisis. Europe helped rattle markets and compel the Fed's action in 2011.

Financial institutions now have more elbow room for their commentary, thanks to the decision by four federal agencies to extend commentary for a controversial rule under the Dodd-Frank Act. The FDIC, Federal Reserve, Office of the Comptroller of the Currency, and Securities and Exchange Commission acted in unison Friday by agreeing to delay commentary deadlines for the Volcker Rule, which proposes to ban short-term proprietary trading for financial institutions. The agencies will receive public commentary over the rule until February 13, 2012.

Lack of action from the Fed on monetary policy, wrangling in the nation├â┬ó├óÔÇÜ┬¼├óÔÇ×┬ós Capitol, and ongoing problems overseas helped push mortgage rates to new record lows this week. Finance Web site Bankrate.com recorded an all-time low for the 30-year fixed-rate mortgage, which slammed into 4.19 percent, down from 4.24 percent. Mortgage giant Freddie Mac countered with rates for the benchmark loan that again fell to 3.94 percent, down from 3.99 percent from the week before.

Acknowledging improvements in the larger economy, the Federal Open Market Committee said Tuesday that it would keep a heel on zero interest rates and continue shepherding funds from mortgage-backed securities into agency mortgage-backed securities. The rate for federal funds remains between zero interest and .25 percent since December, and follows an earlier decision by the Fed to buy up $400 billion in Treasuries to ensure lower borrowing costs.

Members of the Senate Banking Committee voted Tuesday to send nominees for top posts at the Federal Housing Administration and Federal Reserve Board to the full Senate floor. Lawmakers approved FHA Acting Commissioner and former BRIDGE Housing CEO Carole Galante 13 to 9 on a largely party-line vote, with only Sen. Bob Corker (R-Tennessee) breaking ranks with GOP faithful to cast in favor of the nominee. Thomas Hoenig meanwhile moved to the Senate floor on a unanimous vote.

The Federal Reserve released the Beige Report, describing a stable national economy eclipsed by low consumer confidence and a housing market focused on rental properties.

A bold move to shore up global financial liquidity by the Federal Reserve and central banks from five other countries created a surge in confidence for investors Wednesday, inspiring a pickup in stocks and shares for the nation├â┬ó├óÔÇÜ┬¼├óÔÇ×┬ós four biggest U.S. lenders. The Dow Jones Industrial Average jumped nearly 500 points to crest at 12,045.68 by end of day in response, with shares climbing for Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo. Central banks agreed to lower prices for U.S. dollar liquidity swaps by 50 basis points.