Governor Sarah Bloom Raskin
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FRB: Speech--Raskin, Community Banking Supervision 2012.01.06 - 2 views
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The ultimate focus of examination and supervision is the safety and soundness of the bank, as well as compliance with laws and an assessment of the bank's ability to withstand risks and shocks.
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how the Federal Reserve's monetary policy aims to increase the availability of credit to foster economic growth, and how we are tailoring our examination and supervision of community banks to ensure that we are not inadvertently constraining lending.
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examination and supervision of community banks is a timely and important topic. Why do I say that? Because, as I will discuss shortly, lending by community banks plays an important role in the ongoing economic recovery, especially by providing credit to small businesses. And it is absolutely critical that examination and supervision do not produce outcomes that are barriers to small business expansion.
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potential effects of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).
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good examiners will help them to be proactive and identify problems early, and because a strong and durable banking system is in everyone's best interest.
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They are relatively diversified, but also tend to be more highly leveraged than smaller institutions, and often rely on more volatile wholesale funding. These organizations often are tightly interconnected, raising the prospect that the failure of one institution could rapidly destabilize the wider financial system, giving rise to the "too-big-to-fail" problem.7
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the examination and supervision of the lender should not hinder the ability of creditworthy businesses to access credit.
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While profitability remains below long-run historical norms, returns on equity and assets have reached their highest post-crisis levels.3
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we must continue to think about how we can improve the examination and supervision of community banks. One issue that we constantly must evaluate is the appropriate balance in the allocation of responsibilities between banks and examiners.4
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there are key differences between these two sets of institutions, and these differences have implications for our supervisory framework.
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over at least the past decade indicates a trend toward greater concentration. Ninety-nine percent of banks in the United States are community banks, with most of these holding less than $1 billion in total assets. The remaining 1 percent of banks together hold more than 80 percent of the assets in the banking system, with much of this concentrated at a handful of the very largest banks. The four largest commercial banks, each of which has more than $1 trillion in consolidated assets, collectively hold just under half of all U.S. banking assets.6
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The largest commercial banks are characterized not only by their size, but also by their scope of operations and complexity.
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we must always think about whether the allocation of responsibilities should be different depending on whether the supervision is of a community bank rather than a large bank,
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The characteristics of the largest commercial banks stand in contrast with those of community banks.
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community banks are not immune from taking on excessive risk. But there are reasons why risks at community banks are likely to be less dangerous to the financial system. First, community banks generally are less complex and more easily understood. Second, community banks tend to be more traditional in approach.
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our supervision of these firms has become arguably much more intensive, which I believe is perfectly appropriate given the effect that problems at the largest firms had on the financial system and the broader economy.
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All of these characteristics have implications for how large and complex banks should be supervised, as compared with community banks. Notably, our supervision of large banks reflects the scope and complexity of their activities as well as their interactions with other firms and possible effects on financial markets, and incorporates systemic risk considerations that could arise from the failure of these banks.
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In recognition of their systemic importance, the largest firms also are required to plan for their own orderly resolution in the event that they should fail.
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Because of their complexity and risk characteristics, these firms require intensive and continuous on-site supervision;
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examiners also understand local market conditions to be able to put the bank's management and credit decisions in the proper context.
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The community banking model is very different from that of the largest banks. Community banks are local by their very nature. They have deep roots in their communities.
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This trait is particularly important when it comes to small business lending, where a local community bank may understand things about a prospective customer that cannot be captured in a more quantitative credit-scoring model that might be used by a larger institution.
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these characteristics call for a very different model of examination and supervision than what is required for the largest banks.
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Third, community banks are less interconnected, so when a community bank fails, the effects are less widespread.
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Examiners need to listen carefully to management to understand their perspective where views may differ
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We encourage our examiners to be responsive to questions from bankers and help banks understand new regulatory requirements, and they take this responsibility seriously.
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the risk-management system of a healthy bank can be pictured as a series of concentric circles. The inner circles consist of the systems and functions that keep the bank healthy and allow it to meet the credit needs of its community while remaining financially sound and compliant with its legal and regulatory obligations. Moving outward, additional circles include processes and checks such as internal audit, executive management committees, risk-management and internal controls, and appropriate governance by the board of directors. The outermost circle is effective supervision. The critical element of this model is that problem identification is first and foremost the responsibility of the bank, while banking supervisors kick the tires of the bank's risk-management and internal control systems. The examiners are, in this sense, a last line of defense and do not substitute for a bank's own processes for risk identification and mitigation. They are not a guarantee of the bank's ultimate success or failure.
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this model of concentric circles generally holds true for banks of all sizes, the complexity of the largest institutions requires far more complex inner circles.
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the outer circle that is necessary at a systemically important bank should be far more layered than what is needed at a small community bank.
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think about the effects these policies are likely to have on community banks and the areas they serve.
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Federal Reserve are working to ensure that our supervisory program is properly tailored to the wide array of institutions
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we consider not only whether specific policies are appropriate for community banks, but also whether these policies could have the effect of reducing the availability of credit to sound borrowers.
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I hope my remarks will at least continue our conversation about how best to structure a regulatory and supervisory framework for the banking system that effectively supports the real economy and encourages sound and sustained lending to creditworthy borrowers. In order to sustain the economic recovery, we need strong, well-run community banks that operate in a framework of smart and effective supervision
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México: Expectativas para 2012 en niveles moderados - 0 views
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banco de méxico banxico confianza consumidor crecimiento economía expectativa inflación pib tasas interés tendencias
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Las empresas mexicanas más rentables en el segundo trimestre de 2011 - 0 views
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acciones américa móvil bolsa de méxico cemex desarrolladora homex empresas ica grupo aeroportuario del centro pacífi televisa resultados telmex valores
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Los resultados de las empresas mexicanas no han sido el catalizador que se esperaba para la Bolsa de México, a pesar de que en general estuvieron en línea con nuestras expectativas. A continuación realizamos un análisis destacando a las emisoras con mejores balances del periodo abril-junio de 2011, con objeto de determinar el potencial de sus acciones durante el resto de este año.
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Los futuros del petróleo alcanzan máximos de una semana - 0 views
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brent commodities crudo energia europa futuros materias primas petroleo west texas intermediate wti
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Los mercados de los EE.UU. suben por los buenos resultados de las empresas - 0 views
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AB Kansas City Fed Chief Esther George Takes Simpler-Is-Better Approach 2012.03.07 - 0 views
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didn't the Dodd-Frank Act of 2010 end "too big to fail," and won't its "living wills" provision nudge our largest banks to become smaller and simpler?
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realizes regulatory tactics and strategies must evolve as banks balloon in size and scope, George insists boots-on-the-ground supervision is crucial. She worries complex approaches are overshadowing common-sense judgments.
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Stress testing is a "useful tool to gauge potential losses from different economic scenarios. It is no substitute for supervisory judgment and examination," she said.
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While the central bank has taken many steps in recent years to open its monetary policy decisions to more scrutiny by outsiders, its regulatory policy making has grown more opaque. Gone are the days when Fed governors debated policy decisions in open meetings. George would reverse that trend.
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You can make any rule as complicated or as simple as you want. The more complicated you make it, and I learned this watching Basel II get crafted, I don't think you ensure any chance of success."
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I would like to see us go back to a time when examiners were required to use judgment. You gave them simple, clear rules and they had to make judgments."
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I have watched over the years. It is an accumulation of compliance, and community banks do not have the scale to spread those costs, so they bear them disproportionately."
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Consumer compliance issues seem to cause the most friction among bankers and their examiners, she said.
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due to prescriptive rules that tell the examiner that you don't get to apply judgment here. If it meets this, this and this test, then it's a problem. That's the frustration of bankers."
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I think about it pretty simplistically. Anytime you have an asset, a loan, that gets into trouble, somebody has to take the loss. The sooner you take the losses," the better.
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George belongs to a growing cohort of folks who question some of the conventional wisdom growing up around community banks, namely that a massive wave of consolidation is coming and the average size must increase.
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both margin pressure and competition from larger banks that can use lower funding costs to undercut smaller rivals.
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is they [banks] need more yield so they will go out for more risk," she said. "And when they do that in a low interest rate environment it can look OK. But those borrowers start looking worse when rates start ticking up.
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I am going to have to start making some credits that I wouldn't normally make because I have to generate earnings.'
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Community banks that survive will be the ones that hold the line on risk but continue to adapt, she said
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community banks are core to the payments system and core to lending in these markets. I don't see that model being outdated. It's always got to be tweaked, but I worry the thing that is going to drag them down is regulation. That seems like something we could address and should address."
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Impulso alcista para las acciones de Ford (F) por la reinstauración de los di... - 0 views
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FT Davos What future for economics? 2012.01.26 - 0 views
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being a study of complex human behaviour, in which the world is created by human understand and motivations, economics is hard
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talking to political scientists and even sociologists. They also recommended looking at the causes of inequality, the economics of happiness, the role of institutions, the importance of culture, and the effects of power.
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in theory it is right and proper to abstract in order to focus on a specific phenomenon. In addressing policy, this is irresponsible.
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even though economists get much wrong, they still have much to offer to non-economists who tend to assume that economic problems are far more simple than they actually are.
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great danger that in rejected the most simplistic pro-market mantras, economists and policymakers will embrace even more dangerous and naïve statism.
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George Osborne unveils new Financial Services Bill 2012.01.28 - 0 views
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to create a clear structure of who is in charge in the event of another credit crunch or financial crisis.
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FCA will focus on consumer protection and ensuring employees who work in financial services comply with the rules.
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"The Consumer Panel welcomes the intention to transfer responsibility for consumer credit regulation to the FCA
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George Osborne said: "The Financial Services Bill will overhaul the failed system of financial regulation which allowed such dangerous levels of leverage to emerge.
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"Everyone was so focused on ticking off a regulatory checklist that nobody felt it was their responsibility to use their judgment. "We are putting in place clear lines of accountability, and restoring that crucial element of judgment."
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ack of clarity over who was accountable for what created the conditions whereby the Royal Bank of Scotland (RBS) was able to complete its takeover of Dutch bank ABN Amro which led to RBS requiring a £45 billion bailout from the UK taxpayer
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“Good financial supervision is not just about structure - decisions taken made by bankers and regulators matter too.
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an important milestone in rebuilding trust in the financial services sector. There are still many issues to work though and we will continue working with government so the new structures, as they emerge,
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the Bank of England will be in charge of regulation in “normal” times but the Chancellor will have the power to take over in a crisis if taxpayers’ money is at risk.
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This is a once in a generation opportunity to reform our financial regulation and it is vital we get it right. Consumers have been losing out for too long.
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La inflación y la austeridad en Grecia, las claves de la semana en Wall Street - 0 views
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CD President Obama Joins the Cult of Economics Deniers 2011.08.15 - 0 views
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Obama intends to focus on reducing government spending and cutting programs like social security and Medicare.
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Obama intends to ignore the path for getting the economy back to full employment that most economists advocate.
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interest rates did fall, it is difficult to believe that it would have much impact on either investment or consumption
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lower deficits in the present and/or near future will reduce fears that government spending will be crowding out private economic activity. This would lead to lower interest rates. Lower interest rates will provide a boost to investment and consumption. Also, lower interest rates in the United States will make dollar assets less attractive to investors. This will cause the dollar to decline against other currencies, improving our trade balance.
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no part of this story makes sense in the current economic environment. US interest rates are already at ridiculously low levels,
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keep the dollar from falling too much against their currencies no matter how low interest rates fall.
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unlikely that cutbacks in government spending will do much to lower the dollar and reduce the trade deficit.
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politicians who think that biology has no place in teaching the origins of species, we now have politicians who think that economics has no place in designing economic policy.
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Keynes's basic insights have been supported by a vast amount of economic research over the last seven decades. And we have solid evidence showing (pdf) that the limited stimulus pushed through by Obama in 2009 worked pretty much as predicted in generating growth and jobs.
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El miedo cotiza en Wall Street - 0 views
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Lex Defining G-SIBs and additional loss absorbency requts 2011.08.12 - 0 views
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the greater the global reach of a bank, the more difficult it is to coordinate its resolution and the more widespread the effects of its failure.
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take into account the liabilities of all offices of the relevant bank to entities outside the home market and include all liabilities to non-residents of its home jurisdiction.
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bank’s distress or failure is more likely to damage the global economy or financial markets if its activities comprise a large share of global activity.
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contagion in respect of other institutions depending on the network of contractual obligations in which it operates.
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systemic impact of a bank’s distress or failure is expected to be negatively related to the substitutability of its services.
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these institutions and customers may be unable to process payments immediately, affecting their liquidity.
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The BCBS provides some opportunity for individual supervisors of banks to make adjustments to a bank's G-SIB criteria determined by reference to the above criteria but states that it believes the bar for any such adjustment should be high, and it only expects such adjustments in exceptional cases.
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not proposing to develop a fixed list of G-SIBs. Banks could therefore migrate in and out of SIB status over time
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G-SIBs, each bank will grouped into a category of systemic importance based on its score under the indicator based test specified above.
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Each of these indicators is given a 20% weighting and, as specified below, most of the indicators are made up of two or more sub-indicators
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contingent capital should not be capable of meeting the additional loss absorbency requirement for G-SIBs
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for consideration at the next G-20 meeting in November 2011, and it is expected they will be endorsed at such meeting.
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the common equity requirement for the largest global banks increasing from the current 2% of risk weighted assets to 9.5% (and potentially 10.5%)
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G-SIBs will have some time to plan for the new loss absorbency requirement. The BCBS is proposing that the requirement will be phased in at the same time as the new capital conservation and countercyclical buffers between 1 January 2016, becoming fully effective at the start of 2019
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the minimum “cut-off score” in relation to which banks will be regarded as G-SIBs will be set by 1 January 2014, and national jurisdictions will be expected to incorporate the new rules into legislation by 1 January 2015.
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new Basel III framework at the end of 2010, the BCBS mandated all banks to hold significantly more capital than is currently the case as well as introducing new leverage and liquidity ratios
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The Basel III rules apply to all banks. In addition, the FSB and the BCBS have been considering additional rules to apply to the largest global banks to deal with concerns that such banks are regarded as too big to fail
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Basel Committee on Banking Supervision (“BCBS”) and the Financial Stability Board (“FSB”) published two papers relating to entities regarded as globally systemic important financial institutions (“G-SIFIs”)
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Los sólidos resultados corporativos procuran alza semanal al Dow Jones - 0 views
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