Liquidity

The Federal Housing Finance Agency issued a proposed rule for the Federal Home Loan Bank System that allows the FHFA director to set "reasonable" board compensation.

The Federal Housing Finance Agency has proposed a change to capital rules on interest-bearing deposit accounts that would increase the Federal Home Loan Banks' flexibility to manage liquidity during times of stress.

Federal Reserve Vice Chair for Supervision Michael Barr conceded major points to the industry on last year's capital reform proposal. But how regulators will approach other reforms in light of that experience is uncertain.

Home Loan bank executives said Congress would have to pass a law for the system to increase its affordable housing contribution above 10% of earnings.

The president of the Federal Reserve Bank of Dallas and former manager of the central bank's open market account said a slower approach to balance sheet reduction may be warranted sooner rather than later.

Federal Reserve officials point to overnight reverse repurchase agreement activity as an indication of excess liquidity, which the central bank is working to reduce. But some analysts say that excess liquidity may be drying up faster than expected, with important implications for banks.

In her first remarks since the release of a sweeping report on the banks, Federal Housing Finance Agency Director Sandra Thompson urges them to strengthen underwriting and communication with their members' regulators.

The use of the Federal Reserve's emergency lending facilities was largely unchanged this week, indicating to some that the recent liquidity crisis isn't getting any worse.

States have the option of adopting the oversight framework issued by the Conference of State Bank Supervisors, which resembles capital and liquidity plan proposed by the Federal Housing Finance Agency.

The move comes a day after the Federal Reserve had balked at the Treasury Department's demand that it return funds meant for pandemic relief that have so far gone unused.