Fed considering tougher capital rules
By Jim Puzzanghera LOS ANGELES TIMES
PAUL BEATY ASSOCIATED PRESS
Janet Yellen and the Fed may go further than the new capital rules for the biggest banks
WASHINGTON — The Federal Reserve is considering tougher rules for big banks to keep credit flowing in case of another financial crisis, Fed Chairwoman Janet Yellen said yesterday.
Although officials from the Fed and regulatory agencies approved more-stringent requirements for the eight largest banks last week, Yellen said more measures might be needed to keep short-term credit markets from freezing during stressful financial conditions.
- “In 2007 and 2008, short-term creditors ran from firms such as Northern Rock, Bear Stearns and Lehman Bros., and from money-market mutual funds and asset-backed commercial-paper programs,” Yellen said in a video speech to the Federal Reserve Bank of Atlanta’s financial-markets conference.
- “Together, these runs were the primary engine of a financial crisis from which the United States and the global economy have yet to fully recover.”
The market’s near-meltdown in 2008 led to an international accord to require banks to hold more and higher-quality capital to offset potential losses.
Last week, U.S. officials went further than the international rules. Federal regulators approved phased-in requirements forcing the nation’s biggest banks to raise a total of about $68 billion in additional capital.
Yesterday, Yellen said Fed officials are “actively considering additional measures” that could further reduce risks to short-term wholesale funding markets. Those markets help provide the liquidity that keeps the financial system working.
Some changes, such as requiring firms to hold even more capital, “would likely apply only to the largest, most-complex banking organizations,” Yellen said.
But the Fed also could enact other measures that would apply to all financial firms, she said.
- A 2010 study by the Basel Committee on Banking Supervision, which sets international standards, found economic benefits to requiring banks to hold more capital and have more liquid assets that could be used to weather short-term funding crises, Yellen said.
But she acknowledged there were potential problems with forcing banks to hold more capital. Bank executives have complained that the requirements would reduce the money available to lend to businesses and individuals.
- Fed officials are “carefully thinking through questions about the trade-offs associated with tighter liquidity regulation,” Yellen said.
I’m just so impressed with this lady’s thinking. In fact recently, we’re seeing wonderful women in high places do some amazing things. . . and we are being given this new vision of raising the bar on excellence and ethical standards. They are getting the job done because it’s the right thing to do and they know what they’re doing. I’d say its about time they put to rest some of those old platitudes about the stability and emotional complexity of women for what they are — erroneous and short-sighted. So often, people forget who it is that generally keeps those home-fires burning so brightly and is able to attend ‘everyone’s needs’, while insuring the balance of the whole. . . so it is with Yellen; like everyone else (male) who has had that position, she is expert on the financial wizardry to keep the wheels turning, but she is also anticipating some “what-ifs” down the road. . .because that’s the way life works. Such a keenness in her perspective.
Humans are complex beasts for sure and I don’t really enjoy simplistic generalities of the sexes, for we “all” have strengths and weaknesses. Clever, dedicated, perceptive and creative individuals will always rise to the top, rather like the cork once released from the bottle. . . . unless held down — will rise to the top. So there is just as much ability and talent to be found in women as we have always recognized in men. . . . so let the world continue spinning around. Now if we could manage to gather the muscle to elevate Elizabeth Warren for the heralded 2016 race, our prospects would really be looking up toward the possibilities of a rosier future.
Another example also today , in a story about Yahoo is the following:
Better Revenue, earnings from Yahoo
Yahoo reported first-quarter sales that exceeded analysts’ estimates, showing the turnaround effort under Chief Executive Officer Marissa Mayer is displaying some signs of success.
Revenue, excluding that passed onto partner sites, was $1.09 billion during the first quarter, up from $1.07 billion a year earlier, the Sunnyvale, Calif.-based company said in a statement yesterday. That compared with analysts’ average estimate of $1.08 billion, according to data compiled by Bloomberg.
Profit, minus items such as stock-based compensation, was 38 cents a share, while analysts had projected 37 cents a share.
The sales gains were the first from Yahoo since the fourth quarter of 2012, reflecting how Mayer’s moves to revamp the company to attract users and advertisers might be paying off. Mayer has added content, redesigned services and changed the executive team to spur growth.
Yahoo shares rose in extended trading, after increasing 2.3 percent to close at $34.21 in New York. The stock is down 15 percent so far this year.