Hannah Lang

While analysts agree banks are in better shape than in 2008, lawmakers are dusting off a crisis-era tool used by the Federal Deposit Insurance Corp. to soothe potential liquidity fears during the coronavirus pandemic.

The central bank's sweeping actions suggest a cash shortage gripping sectors directly hit by the pandemic. Banks were supposed to be protected by Dodd-Frank but are still vulnerable to a funding domino effect.

The Federal Reserve committed Monday to conducting more asset purchases of Treasury securities and mortgage-backed securities and announced $300 billion in new financing for credit facilities.

Accommodations for borrowers affected by the coronavirus pandemic, such as payment delays and fee waivers, are "positive and proactive actions that can manage or mitigate adverse impacts," the regulators said.

Mark Calabria said Fannie Mae and Freddie Mac are currently equipped to handle elevated delinquencies, but they might need congressional or Federal Reserve help if fallout from the coronavirus persists.

FHFA Director Mark Calabria said the health crisis will complicate the release of a proposal establishing new capital requirements for Fannie Mae and Freddie Mac.

The temporary foreclosure moratorium on loans backed by HUD, Fannie Mae and Freddie Mac comes after lawmakers and housing advocates had pushed for steps to avoid consumers getting booted from their homes.

The central bank said it was establishing the Commercial Paper Funding Facility to "support the flow of credit to households and businesses."

The actions include cutting the federal funds rate to between 0% and 0.25% and other steps to ease economic stress from the spread of the coronavirus.

Banks may be protected from a direct hit, but they have invested in vehicles that include such loans, potentially exposing them to defaults.

In announcing the central bank’s emergency rate cut, Chairman Jerome Powell warned that the Fed can only do so much.

The Federal Reserve has voted unanimously to cut the interest rate 50 basis points to 1.10% effective March 4, in the first emergency rate cut since 2008.

An effort by the Federal Housing Finance Agency to examine membership rules for the Federal Home Loan Bank System is reigniting an argument over whether to allow more nonbanks in or impose tougher barriers.

The agency plans to conduct a review of how it regulates the 11 Federal Home Loan banks amid concerns that some companies are inappropriately seeking a back door into the Home Loan Bank System.

Dana Wade would succeed Brian Montgomery, the acting deputy secretary of the Department of Housing and Urban Development.

A proposed change could resurrect bond buckets, but loan industry observers also point to "covered fund" changes shielding loans from a potentially disruptive court decision.

Federal Reserve Chairman Jerome Powell told senators that the central bank is willing to explore a credit-sensitive interest benchmark in addition to the secured overnight financing rate, which some banks say could cause problems during economic stress.

With policymakers focused on ending Fannie Mae and Freddie Mac’s conservatorship, their regulator is reorganizing key units and adding staff to position itself for the long term.

The regulator said the investment bank and financial services company will help in the process of strengthening Fannie Mae and Freddie Mac’s capital standing for their eventual exit from conservatorship.

In another rollback of the bank trading ban, the federal agencies unveiled a plan to allow financial institutions to invest in multiple companies through certain fund structures.