Breakingviews

Fed stress-tests idea of negative interest rates

February 2, 2016

That’s part of the “severely adverse” scenario that big U.S. banks have to run this year to satisfy regulators. The ECB and now the Bank of Japan are giving it a try. The Fed has started pushing rates upward – but going negative is becoming a very plausible downturn assumption.

Fed liftoff will reinvigorate key market gauges

December 15, 2015

Everyone used to watch fed funds futures like hawks (or doves). Seven years of zero rates made them a less important indicator. Along with Eurodollar futures and other traded hints on rates and inflation, though, they are due fresh attention – even if their meaning has morphed.

Jobs and wages mean rate hikes are go!

December 4, 2015

Barring market meltdown at home or abroad, American job creation in November looks strong enough to allow Janet Yellen’s Fed to lift interest rates this month after seven years near zero. The shift in stance is overdue, but unexciting growth will keep the central bank wary.

Bank living-will laggards risk capital punishment

November 30, 2015

Big American lenders will soon hear whether their resolution plans are to be rejected for a third time. New global bail-in rules remove the pressing need for regulators to break banks up. But in an election year they could punish insolence by insisting on higher capital buffers.

Investors get too comfy over US-euro divergence

November 19, 2015

Twin the prospect of higher U.S. policy rates with the chance of more euro zone easing and the result is eye-catching divergences in currency and interest rate markets. The problem is, such price trends are vulnerable to setbacks even if rate-setters do what’s expected of them.

White House wannabes give Wall Street much to fear

November 11, 2015

The fourth GOP presidential debate unleashed many fanciful notions about the financial crisis and its aftermath. Ben Carson blamed stock buybacks, Jeb Bush botched bank capital and Ted Cruz flubbed monetary policy. It’s modern history whose lessons are too dangerous to repeat.

Fed feeds Goldman conspiracy-theory machine

November 10, 2015

Hiring former dealmaker Neel Kashkari to run Minneapolis means the investment bank’s alumni are in charge of three of the central bank’s 12 regional branches. It’s great fodder for those seeking evidence of a system in thrall to Wall Street and Goldman. The reality is less juicy.

Review: Fed founders wouldn’t recognize their baby

By Edward Chancellor
October 30, 2015

In “America’s Bank,” Roger Lowenstein shows how the Federal Reserve was created to act as lender of last resort and little more. Since then, there’s been mission creep with many ill consequences. A century after its foundation, the central bank needs to address its failings.

Chancellor: Bernanke’s courage hides bigger error

By Edward Chancellor
October 15, 2015

The Fed chairman did what was necessary to hold the financial system together after the 2008 Lehman bust. Yet his memoirs reveal that he still doesn’t understand the dangers posed by low interest rates, or the difficulties of escaping from his extraordinary monetary remedies.

Record-slow U.S. bank deal offers cautionary tale

October 1, 2015

The Fed took three years to OK the $16 bln M&T’s takeover of smaller Hudson City, having demanded fixes to the buyer’s back office. CEO Bob Wilmers now looks like he’s paying over the odds for a struggling rival. Others in the industry with problems won’t find M&A a quick fix.