Fed’s Tarullo proposes raising foreign banks’ costs
/WASHINGTON (Reuters) – A top Federal Reserve official launched a plan to subject foreign banks to the same tough oversight rules as their U.S. rivals, a policy shift that could make it less attractive for banks to do business in America.
Fed Governor Daniel Tarullo outlined a three-pronged approach that would force the largest U.S. divisions of foreign banks to establish holding companies over all subsidiaries. Under this proposal, the Fed would stop relying on foreign oversight of banks.
At the Fed, there’s a way to raise rates — but is there a will?
The Federal Reserve has kept its key federal funds rate at near-zero for four straight years, and it expects to keep it there for at least two more. But with each trip around the sun, outsiders wonder whether central bank policymakers will act without hesitation when the time finally comes to tighten monetary policy?
This week, the official with his hand on the Fed’s interest-rate lever, so to speak, asked that same question. Simon Potter, head of the Federal Reserve Bank of New York’s open market operations, was at NYU‘s Stern School of Business discussing the various ways the central bank can tighten policy: the federal funds rate; the interest rate on excess bank reserves; reverse repurchase agreements. Potter runs the unit that carries out Fed policy in the market, and sits in on most policy-setting meetings in Washington. Asked by a student about the inflationary or deflationary risks associated with tightening policy in the future, he had this to say:
Fed mulls new rules for U.S. operations of foreign banks
NEW HAVEN, Connecticut (Reuters) – The Federal Reserve’s top regulation official on Wednesday called for broad new liquidity and capital rules for the U.S. operations of large foreign banks, which would align them with that of American banks and protect the financial system.
Fed Governor Daniel Tarullo, who oversees the so-called bank stress tests, outlined a three-pronged approach that includes forcing the largest U.S. operations of foreign banks to establish a “top-tier U.S. intermediate holding company,” or IHC, over all subsidiaries.
Fed’s markets chief applauds early QE3 successes
NEW YORK, Nov 27 (Reuters) – The official overseeing the
U.S. Federal Reserve’s massive asset purchases said on Tuesday
they have had some recent success reducing longer-term rates,
leaving the door open for investors to take advantage.
In his first public comments since taking the reins of the
central bank’s open market operations in June, Simon Potter
defended the Fed’s decision in September to launch a third and
controversial round of quantitative easing, dubbed QE3.
G20 needs modified global growth plan – BoC official
NEW YORK, Nov 27 (Reuters) – The world’s major economies
have only half-delivered on promises made three years ago to
restore global growth and need to agree on a modified plan to
get back on track, including gradual U.S. fiscal tightening, a
Bank of Canada official said on Tuesday.
John Murray, deputy governor at the Canadian central bank,
said the Group of 20 advanced and emerging economies have not
done as much as expected to implement a four-point framework for
growth, which they endorsed in late 2009.
Britain favors credentials over countrymen for BoE’s top job
NEW YORK (Reuters) – Britain’s choice of a Canadian to run the Bank of England could usher central bankers into the realm of globe-trotting elites that dominate the top jobs in business and sports.
When Bank of Canada Governor Mark Carney takes over the BoE next summer, as announced Monday, it will be the first time a foreigner has held the top position at a major national central bank.
Bernanke sees good 2013 if U.S. ‘fiscal cliff’ avoided
NEW YORK, Nov 20 (Reuters) – Federal Reserve Chairman Ben
Bernanke said on Tuesday that 2013 could be a “very good year”
for the U.S. economy if politicians can strike a quick deal to
avoid the so-called fiscal cliff.
The powerful central bank chief called for a credible
long-term framework to put the federal budget on a sound path,
but warned against action that would needlessly add to the
headwinds facing the economy.
Budget fight threatens recession, Bernanke says
NEW YORK (Reuters) – Federal Reserve Chairman Ben Bernanke said on Tuesday that 2013 could be a “very good year” for the U.S. economy if politicians can strike a quick deal to avoid the so-called fiscal cliff.
The powerful central bank chief called for a credible long-term framework to put the federal budget on a sound path, but warned against action that would needlessly add to the headwinds facing the economy.
Fed’s Lacker warns on monetary policy “thresholds” plan
NEW YORK (Reuters) – A top Federal Reserve official on Tuesday challenged an idea that is gaining traction at the U.S. central bank, arguing that adopting so-called thresholds to guide policy would be a risky move that fails to take into account broader economic conditions.
Richmond Fed President Jeffrey Lacker used a speech in part to pour cold water on an idea publicly endorsed by a few Fed policymakers, including influential Vice Chair Janet Yellen: setting specific rates for unemployment and inflation as markers for when the Fed would consider lifting interest rates.
Pitfalls lurk as Fed marches toward transparency
NEW YORK (Reuters) – Federal Reserve officials want to tell the world what would cause them finally to reverse four years of easy U.S. policies, but something is keeping them up at night.
In the central bank’s nightmare scenario, anxious investors drive up Treasury yields and abandon stocks as the nation’s unemployment rate edges toward a level officials had flagged as a goal — effectively tightening financial conditions and undermining monetary policy before the Fed was ready to act.
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