There is a bit of a benefit from all this SLR “cliff” business, though tangential in nature. It is another test of the “too many” Treasury hypothesis, the idea that a lot of the problems in funding markets like repo had been caused by the government’s fiscal profligacy (especially following December 2017’s TCJA “tax reform”). With foreigners selling UST’s, and [...]
The SLR exemption is ending! The SLR exemption is ending! Doesn't exactly roll off the tongue, does it? There has been rampant speculation the last few weeks about the fate of the exemption the Fed provided banks a year ago with regard to the Supplemental Leverage Ratio that allowed them to ignore Treasuries and reserves. The banks themselves warned that [...]
The Federal Reserve has allowed itself an image of a marshmallow when it comes to the banking system it is (one-third) charged with regulating. First and foremost, along with the two other (redundant) triplets, the OCC and FDIC, the US central bank is not a central bank at all; it is near exclusively a domestic bank regulator. And while “macroprudential” [...]
A few have asked, so I’ve written up what is actually a shorter piece on this SLR business is all about. First, SLR stands for Supplementary Leverage Ratio (and it’s not SLF, as I managed to leave two of the same typos in the main article referenced below, to the point the mistake made it into the headline). Parts of [...]
JP Morgan’s CEO Jamie Dimon has been running around Washington claiming that mid-September’s repo rumble was the result of the post-crisis regulatory environment. He now says that his bank had the spare cash and was willing to cash in on double digit repo rates but it was government rules which prevented that from happening. It’s unclear (but we can, and [...]
The US Treasury released its first report (under Trump) on re-examining financial regulations and their impact on economic growth. The publication was little noticed because most people don’t much care about Supplemental Leverage Ratios (SLR), though they should. For decades, regulators allowed banks to operate under Basel rules as if capital ratios were sufficient criteria for identifying risks, only to [...]
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