Sky Blog
The Federal Deposit Insurance Corporation (FDIC) is the U.S. agency responsible for insuring all bank deposits and facilitating all bank resolutions. Yet, as only one of three bank regulators, the agency relies on the Federal Reserve (Fed) and Office of …
Policymakers around the world have typically outsourced the detection of financial crime to the private sector. This approach is often referred to as the “gatekeeper” model, with the basic idea being that private firms, like bodyguards at a nightclub, are …
In late November 2024, the Bank of England published the results of its first system-wide exploratory scenario (SWES) exercise – a year-long effort to model how various financial entities, including non-bank financial intermediaries (NBFIs) and banks, would respond to a …
New bank formation in the United States is at an all-time low, and Americans increasingly rely on non-bank financial technology companies (fintechs) to satisfy their financial services needs. Fintechs that do not operate through banks mostly operate outside the direct …
A well-trodden path for banks to achieve regulatory capital reductions by mitigating credit risk is through a synthetic securitization, either by issuing credit-linked notes (CLNs)1 or engaging in bespoke bilateral credit derivative transactions. These transactions—while complex to execute—offer the …
Bank stocks surged the day after Donald J. Trump won election to a second presidential term, recording double-digit gains on a widespread view that financial regulation under the new administration will be more industry friendly than in the current one. …
I teach a course on “Financial Crises/Regulatory Responses” with the economist Patrick Bolton. This course addresses the struggle to establish and maintain financial stability, an apex goal of the financial system. Last week, I told the students that by the …
The announcement by Denver-based FirstSun Capital Bancorp and Seattle-based HomeStreet, Inc. on October 29 that the Federal Reserve and the Texas Department of Banking had asked them to withdraw their applications for approval of their pending merger illustrates the potential …
Given banks’ importance to global economic stability, how they manage liquidity – their capacity to transform short-term liabilities into long-term assets – plays a pivotal role in supporting growth while maintaining financial resilience. It also entails considerable risk. Creating more …
On October 9, 2024, the Commerce Department’s Bureau of Industry and Security (BIS) issued new guidance for financial institutions on best practices for compliance with export control laws and regulations (the Guidance).[1] The Guidance caps a series of notes …
The DOJ, FDIC and OCC have revised their bank merger review standards. The new standards are a major shift for bank M&A and will require a careful, detailed analysis to evaluate the viability of any proposed transaction.
The Federal Deposit …
We have argued that bank regulators should disclose more bank information than is now required.[1] This is because supervisory practices generally do little to promote transparency, which leads to opacity that interferes with the pricing of risk and undermines …
The Federal Deposit Insurance Corporation (FDIC) recently proposed and published a Federal Register notice for a proposed rule that would revise the agency’s Change in Bank Control Act (CIBCA) regulations. Specifically, the proposed rule would add a second layer …
On July 25, 2024, the U.S. prudential bank regulators released a Joint Statement on Banks’ Arrangements With Third Parties To Deliver Bank Deposit Products and Services (Joint Statement),1 along with a request for information on bank-fintech arrangements (RFI) issued …
On July 30, 2024, on a party line 3-2 vote of its Board of Directors, the Federal Deposit Insurance Corporation (the “FDIC”) approved a Notice of Proposed Rulemaking[1] (the “Proposal” or the “Proposed Rule”) to substantially broaden the scope …
On July 25, 2024, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency (together, the “Agencies”) issued a request for information (the “RFI”)[1] regarding arrangements …
On June 19, 2024, the U.S. District Court for the District of Colorado preliminarily enjoined the enforcement of a Colorado law that would have applied Colorado interest-rates caps to loans made by state-chartered banks—including banks located outside of Colorado—to Colorado …
Money is a complex construct consisting of public and private elements. It is not all coined or printed by a government; a significant portion originates with private-sector entities like banks, against which other private parties have contractual claims. In a …
We argue that bank regulation and supervision interfere with pricing risk by creating opacity. Given that market disclosures enhance the efforts of supervisors, and vice versa, more disclosure could enhance financial stability (see Spatt, 2010)[1]. In addition, we …
An increasing number of states have enacted or are considering enacting legislation requiring financial institutions to provide customers “fair access” to financial services. These fair access requirements, first appearing in Florida’s House Bill 3 (2023) (“FL HB 3”), generally prohibit …