Week inBrief

Quotes of the Week

"FSOC, charged with identifying risks to our financial stability, continues to mention only in passing the need for fundamental housing finance reform. It fails to adequately analyze the substantial risk that Fannie Mae and Freddie Mac - institutions at the epicenter of the last financial crisis - pose for precipitating the next.  [My committee's focus must remain on FSOC's] frightening and likely unconstitutional powers".
Jeb Hensaring (R-Texas)
Chairman
House Financial Services Committee

"With Wall Street reform, we created FSOC to look across the entire financial system, identify gaps that may exist between regulators, and take action to prevent another meltdown.... No longer would we allow banks to shop around for the weakest regulator or move money around the globe to escape regulation."
Maxine Waters (D-California)
Ranking Member
House  Financial Services Committee
Friday, September 23, 2016
Let's recap
In case you missed it . . .

Regulators deliberate tighter reporting rules on Treasury market: regulators mull over public comments on proposal to require Treasury trades to be reported by day's end, a move intended to improve market transparency (Sep 20)

G20 derivatives reforms show little result - seven years on: exchanges struggle to attract derivatives trading from OTC markets, despite a 2009 G20 edict (Sep 19

Money is pouring into property deals banks won't touch: i nvestment firms seek record funds for real estate debt; OCC, Fed raise concerns after doubling of prices in six years (Sep 19)

The SEC and market structure: five things to watch: SEC Chairman Mary Jo White has much work left to do on equity market structure; consolidated audit trail, anti-disruptive trading rule, maker-taker pilot program top her priorities (Sep 15)
FSOC meets on asset managers
Potential risks to financial stability assessed
(Sep 22) The  Financial Stability Oversight Council met in an executive session to discuss
  • its ongoing assessment of potential risks to U.S. financial stability from asset management products and activities
  • a staff progress update regarding the ongoing work of FSOC's hedge fund working group
  • an Office of Financial Research potential proposal to establish a permanent collection of bilateral repurchase agreement data; previous FSOC annual reports have identified data gaps in the repurchase agreement market as a concern
  • an update from the Office of the Comptroller of the Currency on the most recent review of the Shared National Credit Program, which assesses credit risk and trends as well as risk management practices associated with the largest and most complex credits
  • an update from the Federal Reserve, Commodity Futures Trading Commission, Securities and Exchange Commission, and Federal Deposit Insurance Corporation regarding recent developments related to standards for the resiliency, recovery, and resolution of central counterparties
  • a presentation on (and a vote to approve) FSOC's fiscal year 2017 budget, and a vote to approve the minutes of its July 18 meetings
SEC's money fund reforms
FSOC monitoring market response: Lew
(Sep 22) "Risks to financial stability arising from the money market mutual fund industry were an important area of focus for the Council in the aftermath of the financial crisis," Treasury Secretary Jack Lew said in written testimony to the House Financial Services Committee during a hearing on the Financial Stability Oversight Council's annual report.
  • Lew said FSOC continues to monitor potential threats posed by non-bank financial companies
  • FSOC's designations authority has been a "critical tool" to address "key weakness" from the financial crisis: "that the failure of large, complex and interconnected financial companies could threaten financial stability"
  • FSOC voted in June to rescind designation of GE Capital since it had made strategic changes that made is less risky
"It would be a mistake to roll back the clock on these protections or to constrain the ability of the Council or its member agencies to address new risks as they arise, including the Council's non-bank financial company designations authority," Lew said.
Threats to financial stability
Are 'moderate' says Yellen
(Sep 21)  Fed Chair Janet Yellen  said asset valuations are not out of line with historical norms and threats to financial stability appear to be "moderate" during a press conference.
  • Not seeing signs of leverage building up in same way as during pre-crisis era; Fed "keeping a close eye on it" 
  • "I do have concerns about the scope for monetary policy"
  • Zero lower bound is a concern
The Fed's so-called "dot plot," which it uses to signal its outlook for the path of interest rates, shows that policy makers expect one quarter-point rate increase this year. Officials scaled back their expectations for hikes in 2017 and over the longer term. The Fed left its policy rate  unchanged  for a sixth straight meeting.
Binge reading disorder
Hand-curated, chosen with love
Welcome to the Dark Net , a wilderness where invisible world wars are fought and hackers roam free

Please don't call it a blockchain if it isn't one : how not to render the technology behind bitcoin more palatable to the world of high finance

The greatest bubble of all time? t hinking and acting long-term for the long-term is one of the few edges remaining in the markets

The professor who was right about index funds all along: "Believe me, there are plenty of smart people behind the robots."

Markets and pundits have a data-point fixation: data points only capture a moment in time,  more like part of a film, rather than as a snapshot  
Transparency.
Inclusiveness.
Consensus.