Posted on 03/20/2021 8:07:02 AM PDT by Hostage
The Federal Reserve says it will restore capital requirements for large banks that were relaxed as part of the Fed’s efforts to shore up the financial system during the early days of the pandemic.
The Fed said it will not extend the relief from what is called the supplementary leverage ratio past March 31. The easing of the regulation had been intended to give banks flexibility in what assets they could hold to meet regulatory' requirements during the turmoil of the pandemic, when banks were having to suddenly write down billions of dollars of loans.
The banking industry had lobbied for an extension of the relief but on Thursday the Fed said that since the requirements were relaxed last year “the Treasury market has stabilized.”
..... snip .....
(Excerpt) Read more at newsmax.com ...
Bottom line is Democrats are pulling levers to cause interest rates to rise.
Ironically, I share the perspective with Elizabeth Warren that the 5 Big Banks (the actual central bankers) are in need of reform. But Warren is more a useful idiot. I back Trump’s reforms to collapse the Fed, replace Federal Reserve Notes with US Treasury Notes indexed to Gold for stability.
Warren’s idea of bolstering community banks is a ‘nice idea’ but that doesn’t solve the currency instability.
The CCP plays the long game and their Davos Build Back Better surrogates are the master planners.
Increased interest rates means more foreclosures, less business recovery, more taxes, more money paid to foreign interests including the CCP.
In effect, rising interest rates prolong the dying pandemic economy.
It will make getting new loans more expensive, or anything with a floating rate. Existing fixed rate loans shouldn’t be affected.
Inflation, by the way, cheapens principal as well, you get to pay back the loan with cheaper dollars. That effectively reduces the balance of the national debt, and also sticks it to holders of US debt, like China.
1) The Fed is not raising rates, for the near-term, the Fed boss said this week.
2) The Treasury has had to raise yields in order to sell bonds/notes. Treasury rates have not gone up because of demand.
3) Banks will likely raise rates a bit, in order to flow cash into reserve status, but raising rates means there is demand - where, surprise, Biden’s steps burden the economy. So, check bit.
True but read the article and it talks about banks dumping treasuries which causes interest rates to rise.
Fed’s rate doesn’t matter, Treasury rates do.
You’re thinking fixed rate securities. Most are variable these days based on Treasuries.
China CCP will benefit from the increased treasury interest rate payouts.
“Read the article” What?! Ach! Cough. Hack.
“banks dumping treasuries”
Thank you for all that.
In effect, rising interest rates prolong the dying pandemic economy.
Democrats never let a crisis go to waste massive spending ensues.
Elizabeth Warren and Sherrod Brown couldn’t run a tricycle down the sidewalk, let alone intelligently direct monetary policy. . . damned commies
It’s important to know that the 10-Year Treasury is the benchmark for consumer interest rates.
The market should set interest rates, not the US Treasury or the Federal Reserve. Market interest rates provide a return for savers which takes into account the inflation rate. Currently interest rates are artificially suppressed by the Federal Reserve meaning savers are being paid an interest rate below the rate of inflation, in effect an inflation “tax”. This penalizes the responsible citizens who live below their means and save for retirement to benefit others.
In addition suppression of interest rates encourages government debt and corporations incurring debt to finance stock buybacks which enrich executives and large financial institutions.
Capitalism where the market (supply and demand) sets prices results in efficient allocation of capital and prosperity for the largest number of citizens. A socialist managed economy where the government sets prices (including interest rates) and allocates capital benefits primarily those who make the decisions at the expense of the masses.
Eliminate the Fed, reinstitute a currency backed by gold, and allow the market to set interest rates. Market rates will compensate savers for risk and the impact of inflation. Under today’s Federal Reserve managed interest rates and money supply, government (through its creation the fed) is subsidizing its profligate and wasteful spending.
> “The market should set interest rates, not the US Treasury or the Federal Reserve.”
The market chooses to use the 10-year Treasury as benchmark.
Treasury yields (interest rate payouts) rise and fall according to demand. Dumping Treasuries cause their yields (market interest rates) to spike and their face values to decrease. Pending decrease in bond face values is why the bank stocks were off yesterday, the asset values are expected to decrease.
I work for a very large (top tier) bank here in the United States and our Bank Economist is a former Fed Reserve Board Member.
His commentary last week indicated banks will indeed start selling off Treasuries which will cause interest rates to rise.
Inflationary pressures will cause housing prices to fall (as they always do when interest rates rise) and impact the Stock Market. If we look at the short number of days it took the market to go from 32,000 to over 33,000 my own opinion is the Stock Market is over-heated and due for a correction. How big that correction is will be based on how quickly Treasuries are sold off (and interest rates rise.)
Then again, I'm no economist and I've only experience to tell me the above. We do live in "interesting" times though so I may be wrong of course.
More so, Treasury YIELDS. A Treasury bond may have a low coupon rate, but it will be bought in the open market, either at a discount or premium, to adjust the yield to the investor to the current market rate. The banks most likely will take losses to dump those Treasuries, hurting capital.
The problem with that is, loan losses typically lag behind and surface months after an economic hit. My community bank’s loan losses peaked in 2011, well after the 2007-8 real estate- then liquidity crisis. The timing of our loan losses were not unique to our bank.
Reinstating that capital standard is pre-mature. The need to give it at least another year to 18 months.
I agree with your experience and and your bank economist’s perspective.
But the priority real big picture economic problem is the currency instability. Trump had a plan for that and it was brilliant, it was America-first, it was tied to America’s surging energy independence which we see the Left is now moving to cripple.
I agree.
Your experience and knowledge confirms Warren is a well-intentioned useful idiot.
For real banks, it’s the Big 4 at this point. They have assets each of over $1.5 trillion. It’s a big drop to number 5 which is a little over 1/3 of that. And Golden Sacks is well down the list at #12 despite their global influence. And the US operations of HSBC are at #14. BNY Mellon is another surprise for me - they’ve dropped to the 9th spot.
BB&T (now Truist) is up to number 6 after its takeover of SunTrust.
The top 5 for those that don’t want to bother to look:
JPMorgan Chase
Bank of America
Wells Fargo
Citigroup
USBank
Looks like PNC (Pittsburg National) is trying to take over the US assets of BBVA (until recently branded Compass). That would move them up from 7 into the top 5.
Comerica is a company that’s seemed to have stagnated since they moved to Dallas. They should be on somebody’s target list.
Why are you violating FR’s excerpting rules by continuing the article into post 1? Are you asking for FR to get into trouble?
Newsmax carries the AP copyrighted story and can’t be seen as releasing the story indiscriminately because they are a for-profit company.
But AP copyrighted material is for fair use as long as those discussing it are not doing so as a for-profit enterprise.
I could have tracked down the original AP story but chose to excerpt Newsmax and post the rest of the AP story in the first comment. Not illegal.
Gas prices are up more than $1.00/gal where I live and food inflation is into the double digits.
We already have inflation, the Fed conveniently leaves out food, energy and housing costs to artificially deflate it.
One last comment: Yes, I agree 1000% with your comment that President Trump's plan to fix our economy (and all the issues that encompasses) was brilliant. "America First" was beyond the "progressive" left's understanding. We need to MAKE things here again and stop the damn' Chinese bastards from stealing our intellectual property too.
Energy Security was the KEY to bringing manufacturing back to America. I suspect you, like I, have known that for years already. With our energy independence being cast aside by the dementia addled idiot resident in the White House, we're already seeing manufacturing that was moving back here (Ford, GM, GE and more ..) now moving BACK overseas or to South America because of horseshit energy, taxation and monetary policy -- all thanks to the Xiden Administration.
My blood pressure's going sky high right now, I need to stop...
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