Sunday, April 23, 2017

Are Bank Regulations Harming Small Businesses?

Fed Survey Finds Small Businesses Face Credit Challenges

Author: David Schwartz J.D. CPA

A Federal Reserve Report published on April 18, 2017 found that U.S. small businesses are facing hurdles in obtaining much-needed financing for growth. The study indicated that small businesses presently face significantly more stringent credit conditions when approaching their traditional sources of loans for equipment and expansion. The Fed report itself does not point the finger at regulation as the cause for this restriction in the ability of small businesses to access credit. However, large banks have had to tighten credit conditions significantly as a result of increased capital requirements, liquidity restrictions, and stress tests. Because these big banks are the primary source of the for all business financing in the U.S., and the number one source of loans to small businesses, any restrictions on the flow of financing arising out of new banking regulation will perforce affect small businesses. 

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Wednesday, June 15, 2016

April Fed Statistics Reveal Decrease in Collateral in the U.S. Tri-Party Repo Market

Author: David Schwartz J.D. CPA

The Federal Reserve Bank of New York's (Fed) recently released its April 2016 statistics for the U.S. Tri-Party Repo Market reveal that between March 9, 2016 and April 11, 2016, total tri-party repo collateral decreased by approximately $82 billion to $1.517 trillion. The bulk of the decrease in collateral was attributed to US Treasuries, excluding Strips.  The collateral value for US Treasuries Strips actually increased slightly from approximately $32 billion to $35 billion. Reversing an increase in March, April figures show that equities collateral decreased by $5 billion to total collateral of $113.5 billion, a 12-month low. The data showed very little change in the collateral value for agency MBS which saw a slight decrease of $820 million to a total value of $419.54 billion.

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Friday, March 18, 2016

Is Liquidity Suffering from Too Much Regulation?

Fed Cautiously Admits Regulation May be Having Negative Effects on Liquidity

Author: David Schwartz J.D. CPA

In a March 7, 2016 speech at the Institute of International Bankers Annual Washington Conference in Washington, DC, Federal Reserve Governor Lael Brainard remarked that new regulations may be having inadvertent effects on market liquidity. Governor Brainard’s statement is notable because Fed officials and regulators have been careful to avoid that inference.

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Tuesday, October 6, 2015

Fed Pres. Dudley Addresses Market Liquidity

Author: David Schwartz J.D. CPA

In a September 30, 2015 speech before the SIFMA Liquidity Forum in New York, Fed President and Chief Executive Officer William C. Dudley addressed concerns that market liquidity is being hindered by regulation.  While open to the idea of finding a better balance between new regulations and improved trading conditions, Dudley stated that he found, "the evidence to date that liquidity has diminished markedly is, at best, mixed."  In addition, Mr. Dudley does not find any real evidence that regulations are the primary cause of changing liquidity conditions in the bond and other markets.  

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Monday, August 10, 2015

Summer 2015 Financial Regulatory Update

Author: David Schwartz J.D. CPA

The Fed, Financial Stability Board, and the Bank for International Settlements have beein quite busy this summer, and each issued rules or consultations in July furthering Basel III initiatives. On July 1, the Basel Committee issued a consultative document on its review of the credit valuation adjustment risk framework; on July 2, the FSB launched a peer review on the implementation of its policy framework for financial stability risks posed by non-bank financial entities other than money market funds (i.e., shadow banks"); and on July 20, the Fed finalized its capital surcharge rule for the eight US global systemically important banks (G-SIBs).

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