Semi-annual update of the Global Capital Index. Federal Deposit Insurance Corporation (FDIC) Vice Chair Thomas Hoenig released the semi-annual update of the Global Capital Index, which measures the capital ratios for Global Systemically Important Banks. According to Hoenig, the index showed that the largest financial firms continued to overstate the capital available to absorb losses relative to the total balance sheet. (9/28/2015) Hoenig statement.
OCC releases bank trading and derivatives activity quarterly report. The Office of the Comptroller of the Currency (OCC) released its second quarter report regarding bank trading and derivatives activities, which noted declines in the trading revenue of U.S. commericial banks and savings institutions, as well as in trading revenue from interest rate and foreign exchange products. (9/21/2015) OCC press release.
CFPB modifies mortgage rules to assist small and rural creditors. The Consumer Financial Protection Bureau (CFPB) released a final rule that amends its mortgage rules to increase access to credit in rural and underserved areas. The amendments will apply to small creditors generally as well as those operating specifically in rural and underserved areas. The final rule will become effective on January 1, 2016. (9/21/2015) CFPB press release.
FDIC Vice Chair argues against a weakened leverage ratio for derivatives. In a speech before the Exchequer Club of Washington, FDIC Vice Chair Thomas M. Hoenig criticized recent proposals to weaken leverage capital requirements for derivatives for large banking organizations,emphasizing the need for strong capital requirements and the leverage ratio to protect the financial system by maintaining a strong check on excessive debt financing. (9/16/2015) Hoenig remarks.
OFR models market structure to study prices under stress. The Treasury Department’s Office of Financial Research (OFR) released a working paper that studies the relationship between sharp price declines and market liquidity. Using an agent-based model to mimic the behavior of market participants, the study found that funding constraints of market makers and the slow reaction of liquidity providers contribute to sharp price declines. (9/16/2015) OFR press release.