The Clearing House Bank Conditions Index (TCHBCI) declined slightly in the fourth quarter of 2017 but continues to show an extremely resilient banking system, reflecting in large part the very… Continue Reading
June 1, 2018
March 3, 2018
The Value of Diversity in Bank Credit Portfolios
Diversity – in nature and in human activity – is usually seen as a force for good. This view has strong support among credit market participants, especially the banks that… Continue Reading
March 3, 2018
The Resurgence of Debt as Capital
Before the financial crisis, the Federal Reserve Board (FRB) had explored the use of hybrid capital instruments at the bank holding company (BHC) level that combined the cost efficiency (including… Continue Reading
September 3, 2017
Banks’ Own Models Should Play a Key Role in U.S. Supervisory Stress Tests
The role of supervisory stress tests in banking supervision has increased dramatically since the aftermath of the 2007–2009 financial crisis. In particular, the Federal Reserve’s stress tests are a key… Continue Reading
September 3, 2017
Stress Tests: Restore Compliance with the APA
Since the financial crisis ended, the authority of banking regulators, particularly the Federal Reserve, has greatly expanded to include the power to disapprove of distributions to shareholders under the Fed’s… Continue Reading
September 3, 2017
Why Banking Systems Today Are More Unstable than Ever
Economic explanations for why banking crises occur focus on two influences: macroeconomic shocks that cause banks’ loans to become riskier, and banks’ tendency to fund themselves with large proportions of… Continue Reading
September 3, 2017
Structural Limitations and Activity Restrictions
For at least a century, the U.S. regulatory framework has increasingly hindered the financial intermediation process, particularly in the banking industry. The current regulatory regime is counterproductive for many reasons,… Continue Reading
June 3, 2017
Has Something Gone Wrong with Over-the-Counter Markets?
Post-crisis increases in the capital requirements of large bank-affiliated dealers have reduced the liquidity of financial markets. The Volcker Rule may also have contributed to a loss of market liquidity…. Continue Reading
March 3, 2017
A Delicate Balance
Post-crisis, U.S. bank regulators have imposed capital requirements that are very high relative to historical norms and current international standards. They have also introduced more granular capital requirements, determining the… Continue Reading