All eyes are on the Federal Reserve as concerns about the economic implications of recent policy changes regarding trade and other factors proliferate among consumers and business leaders.
The Fed indicated it is continuing to monitor the impact of these changes as it also seeks stakeholder feedback on possible changes affecting capital requirements for covered institutions.
Read about these developments and more in this regulatory roundup:
Fed requests comment on stress test proposal
The Federal Reserve requested comment on a proposal seeking to reduce volatility in capital requirements stemming from annual stress test results. The proposal is the first of several actions following the Fed’s announcement in December committing to enact broad changes to the stress test framework. The Fed concluded the current framework should be modified following an analysis of those changes to improve its resiliency. The modified framework proposed by the Fed would include “targeted changes to streamline the board’s stress test-related data collection” and would involve averaging stress test results over two consecutive years to reduce the year-over-year changes in the capital requirements. It would also delay the annual effective date of the stress capital buffer requirement from Oct. 1 to Jan. 1 of the following year to give banks additional time to adjust to new capital requirements. Comments on the proposal are due 60 days following its publication in the Federal Register. Learn more details here.
Fed chair intends to hold off on policy changes for now
While speaking at the Economic Club of Chicago on April 16Federal Reserve Chair Jerome Powell said markets are currently too unstable to recommend a change in the federal funds rate, given the volatile state of policies affecting trade and economic considerations. . He noted “the level of the tariff increases announced so far is significantly larger than anticipated” and are likely to cause temporary inflation and slower growth. Additionally, economic growth and labor market growth were demonstrably slower in the first quarter of this year compared to a year prior, and the Personal Consumption Expenditures price index rose 2.3 percent for the 12-month period ending in March. Powell cited these factors, combined with significant uncertainty regarding the Trump administration’s evolving approach to trade, immigration, fiscal policy and regulation, as reasons the Fed will continue to wait for better stability before changing course on monetary policy. Read more here.
OCC announces enforcement actions for April
The Office of the Comptroller of the Currency released details about three enforcement actions against individuals currently and formerly affiliated with banks under the agency’s supervision. These actions include a charge against a former associate banker at a New York branch of JPMorgan Chase for misappropriating $20,000, a charge against a former customer service representative at TD Bank in Delaware for fraudulently obtaining more than $40,000 in Paycheck Protection Program aid, and a former associate banker at a California branch of JPMorgan Chase for embezzling at least $34,900 and altering the bank’s internal records to conceal his embezzlement. Find more details here.