Fed governor Dan Tarullo’s speech Friday on bank capital and regulation could well invigorate the same amount of public discussion as Jeremy Stein’s speech on the role of monetary policy and asset bubbles did.
Tarullo’s comments that the Basel III leverage ratio was perhaps “set too low” and that he might prefer tougher capital standards for the largest banks are likely attract particular attention. Read more
William Dudley, president of the New York Federal Reserve Bank, said the Fed could potentially do more to drive down mortgage rates to support the sector, says Reuters. Mr Dudley said another round of quantitative easing, or QE3, is one possible option the US central bank has to boost the slow recovery. “I don’t think the Fed has run out of bullets,” he said. “Breaking this vicious cycle is one of the most pressing issues facing policymakers,” Mr Dudley said in a speech at Fordham University’s Gabelli School of Business. “Clearly we’ve indicated our interest in supporting the housing market in keeping mortgage rate spreads, and spreads between mortgage rates and Treasury yields, from getting too elevated,” he said. “Depending on how the world evolves, we potentially could move to do more in that direction.” The comments follow remarks supportive of purchasing mortgage securities by Fed governor Daniel Tarullo, says the WSJ.
Daniel Tarullo, one of the five governors of the Federal Reserve board, says the central bank should consider large scale purchases of mortgage-backed securities if the economy does not improve, the FT reports. “A large-scale MBS purchase programme has many of the benefits associated with purchases of longer-duration Treasury securities, such as inducing investors to shift to other assets, including bonds and equities. But it could also have more direct effects on the housing market,” Mr Tarullo told an audience in New York on Thursday. The WSJ says the Fed is ‘poised for more easing’ as officials begin to build the case for MBS purchases, although it adds such a move is not a certainty and the bank appears unlikely to move quickly.
And it’s all because of one little speach by Daniel Tarullo. The Federal Reserve Board governor took to the Peterson Institute stage on Friday to recommend that systemically-important financial institutions (SIFIs) increase their capital ratios by 20 per cent to 100 per cent over their current levels. Read more
The “Further further readings” post usually runs in the late afternoon US time, but in this case you can file it under “we forgot to hit publish”. Doh! Or consider it a Tokyo special. Either way, sorry about this.
For the commute home, where you always pass your Irish stress tests,
And so it begins, again.
No surprise that the KBW Bank Index and the financials component of the S&P 500 both beat the broader index (red line below) on the day: Read more