Sky Blog
The best way out of the bank stability problem revealed by the run on Silicon Valley Bank – but spreading to other banks – may be a new style of prime money market fund (“MMF”) that, unlike existing prime MMFs, …
The sudden collapse of Silicon Valley Bank (SVB) surprised many investors and industry experts, given the bank’s recent accolades and long-standing reputation as one of the best national and regional banks in the U.S.[1]Moreover, there had been no …
The failure of Silicon Valley Bank to find a buyer opens up the possibility (and the need) for a new kind of bank that is focused on financial stability as well as the traditional banking functions of lending and running …
Non-bank financial intermediation (NFBI) – encompassing a broad range of capital sources, including broker-dealers, private funds, and open-end funds (OEFs) – is vital for the financing of the real economy, serving as a critical complement to the traditional banking sector. …
As U.S. financial institutions assess their ESG risks, opportunities, policies and procedures for 2023, key considerations include the numerous significant ESG developments in 2022—in particular, recent proposals and initiatives announced by financial regulators with respect to climate-related risk management and …
The Board of Governors of the Federal Reserve System (Federal Reserve), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) (collectively, the agencies) are issuing the following statement on crypto-asset1 risks to banking …
Responses to financial crises can have the unfortunate effect of creating “zombie” firms, companies whose operating profits are insufficient to cover their debt service. These companies would probably have gone bankrupt without the forbearance of banks or regulators or other …
Here are the key takeaways from the Basel Committee’s final Principles for the Effective Management and Supervision of Climate-Related Financial Risks (the “Basel Principles”).
In the wake of the 2007-2008 financial crisis, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Dodd-Frank created a new financial regulatory landscape with intensified federal oversight and an extensive set of regulations on banks, …
Antitrust is back. The Chicago School relegated antitrust policy to obscurity during the latter half of the 20th century, but a new cohort of antimonopoly scholars has recently rekindled concerns about industrial consolidation and corporate “bigness.” This antitrust revival …
Banks operate in one of the nation’s most heavily regulated industries, where policy intervention aims for wide-ranging goals that include limiting risk, protecting consumers, and ensuring fair treatment of individuals through equal access to credit. The Community Reinvestment Act (CRA), …
In November 2021, the President’s Working Group on Financial Markets (PWG) issued a report analyzing the rapid expansion and growing risks of the stablecoin market.[1] Stablecoins are digital assets that claim to maintain a “stable” value with reference to …
As previously reported, the LIBOR settings for one-week and two-month USD LIBOR tenors will cease being representative after December 31, 2021.[1] This cessation is expect to have less of an impact because these tenors are not as widely used
In a new paper, The Leverage Effect of Bank Disclosures, we challenge the widespread view that disclosure requirements prompt banks to reduce their risk and leverage. That view has prevailed since at least 2004, when the Basel Committee introduced Pillar …
Two decades ago, Congress repealed the Glass-Steagall Act’s Depression-era separation between commercial banking and other financial activities, paving the way for bank holding companies (BHCs) to expand into investment banking and insurance. At the time, some critics – most notably, …
Congressional critics of the agencies reviewing bank mergers have in recent months claimed that those agencies “rubber stamp” mergers and that merger review standards relating to antitrust are too lax. We believe those critics are misinformed.
Bank …
When the COVID-19 pandemic shuttered major economies in March 2020, it also wreaked havoc on financial markets. In the first few weeks of March, investment-grade corporate bonds lost roughly a fifth of their value, on par with the declines in …
On June 25, 2021, the Federal Deposit Insurance Corporation published new guidance for resolution plans to be filed by insured depository institutions with $100 billion or more in total assets. The guidance establishes a three-year filing cycle for these IDIs, …
The Federal Reserve can, under 12 U.S.C. § 1818(e), remove bankers from office if they violate the law, engage in unsafe or unsound practices, or breach their fiduciary duties. Yet the Fed has used this power so rarely that few …
In a new paper, we explain that variation in prospective liquidity in an industry or economy prompts changes in corporate lending and banking, including changes in the level of corporate borrowing, the type of debt contracts issued, the covenants contained …