SPONSORED:

On The Money: Fed will allow COVID-19 capital requirement exemption to lapse | Study: Climate change could reduce more than 60 countries' credit ratings

On The Money: Fed will allow COVID-19 capital requirement exemption to lapse | Study: Climate change could reduce more than 60 countries' credit ratings
© Greg Nash

Happy Friday and welcome back to On The Money, where we’re wondering if the Mets have any open board spots for fans left. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.

See something I missed? Let me know at slane@thehill.com or tweet me @SylvanLane. And if you like your newsletter, you can subscribe to it here: http://bit.ly/1NxxW2N.

Write us with tips, suggestions and news: slane@thehill.comnjagoda@thehill.com and nelis@thehill.com. Follow us on Twitter: @SylvanLane, @NJagoda and @NivElis.

ADVERTISEMENT

THE BIG DEAL — Fed will allow COVID-19 capital requirement exemption to lapse: The Federal Reserve announced Friday that it will allow a temporary reduction in capital requirements for major banks to expire but will consider future changes to prevent dysfunction in financial markets.

The Fed said that after March 31, banks will be required to hold a certain amount of capital to cover their holdings of Treasury bonds and deposits at reserve banks after it had exempted those assets from the Supplementary Leverage Ratio (SLR) in April.

  • The SLR is a capital requirement for major banks meant to ensure firms have enough cash on hand to handle financial crises. 
  • As financial markets seized during the onset of the coronavirus pandemic, the Fed exempted Treasury holdings and reserve bank deposits from the calculation of the SLR to make sure banks could still keep credit flowing through the economy.

Banks had been urging the Fed to extend the SLR exemption amid a surge in reserves driven by the fiscal response to the coronavirus pandemic. Democratic lawmakers and other financial regulatory hawks, however, said extending the exemption would make capital requirements weaker, as the U.S. still faces deep economic uncertainty driven by the pandemic.

I break it down here.

 

ADVERTISEMENT

ON TAP NEXT WEEK

Monday:

Tuesday:

Wednesday:

  • Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell testify before the Senate Banking Committee on the federal response to the coronavirus recession at 10 a.m.
  • The House Oversight Committee holds a hearing on gender pay equity at 10 a.m.
  • A House Financial Services subcommittee holds a hearing on public housing and COVID-19 at 12 p.m.
  • The Senate Small Business Committee holds a hearing on oversight of the SBA’s pandemic economic relief programs at 2 p.m.
  • A House Agriculture subcommittee holds a hearing on the rural economy at 2 p.m.
  • The American Enterprise Institute hosts an event entitled “The Biden stimulus, the Federal Reserve, and the everything bubble” at 2 p.m.

Thursday:

ADVERTISEMENT
  • The Senate Banking Committee holds a hearing entitled “American Rescue Plan: Shots in Arms and Money in Pockets” at 10 a.m.
  • Fed Vice Chairman Richard Clarida discusses the economic outlook at the Institute of International Finance Washington Policy Summit at 1:15 p.m.
  • The Senate Budget Committee holds a hearing entitled “Ending a Rigged Tax Code: The Need To Make the Wealthiest People and Largest Corporations Pay their Fair Share of Taxes” at 11 a.m.

 

GOOD TO KNOW

  • Dozens of countries could see a credit rating downgrade as a result of climate change, according to a study from researchers at the University of Cambridge, the University of East Anglia and SOAS University of London.
  • WSJ: “Jerome Powell on the Pandemic Year: Tools to Avoid a Meltdown and Save Livelihoods”
  • CNBC: “U.S. gasoline demand is approaching normal levels as Americans once again hit the road amid the economic recovery and the Covid-19 vaccine rollout.”
  • Reuters: “The U.S. Department of Justice is investigating whether Visa Inc engages in anticompetitive practices in the debit-card market, a source familiar with the matter said on Friday.”
  • WaPo: “Housing and Urban Development Secretary Marcia L. Fudge may have violated the Hatch Act this week in the White House briefing room when discussing the 2022 Ohio Senate race and promoting Democrats’ chances to win the seat, experts said Friday.”