Showing posts with the label Board of Governors of the Federal Reserve System

US. Bancorp and Union Bank/MUFG

Given changes in the social and economic environment, it is clear to us that the proposed merger between US. Bancorp and Union Bank is in serious trouble and should not, for reasons described below, be approved.  As with majority of large bank merger proposals over the past thirty years, the lead entity, in this case, US Bank, has claimed the transaction will provide significant social benefits. The bank stated the merger would “provide benefits for both customers and the communities served by the combined organization through improved technology, products and customer choice.” A review of bank mergers over the past forty years shows that this is untrue. There is no objective, fully independent data to support this contention. In fact, inequality has risen over the intervening years. Many merger opponents cite Covid-19 and the significant racial and economic divisions the virus revealed as reason to delay or oppose the merger. Other opponents have requested a public hearing on the prop

Aug. 26, 1996 - Bank Holding Companies. Docket Numbers R-0841, R-0701, and R-0932 Federal Reserve Board.

 August 26, 1996 (Revised & Resubmitted by Facsimile on August 28, 1996) Mr. William Wiles Secretary Federal Reserve Board 20th & Constitution Ave., N.W. Washington, D.C. 20551 Dear Mr. Wiles: I am writing with respect to three proposals (Docket Numbers R-0841, R-0701, and R-0932) recently announced by the Federal Reserve Board. The Board, in a July 31, 1996 press release stated: "The Federal Reserve Board today requested comment on three proposals to modify the conditions under which section 20 subsidiaries of bank holding companies may underwrite and deal in securities. The first proposal would increase the amount of revenue that a section 20 subsidiary may derive from underwriting and dealing in securities from 10 percent to 25 percent of its total revenue. Comment on this proposal is requested by September 30, 1996. The second proposal would amend or eliminate three of the prudential limitations, or fire walls, imposed on the operations of the section 20 subsidiaries:

The Next Fed Chair

We note ongoing discussions concerning the replacement of the current Chair of the Federal Reserve, Jerome Powell. While Mr. Powell was perhaps the most competent policymaker chosen by an Administration noted for it's lack of competence,  there are reasons to consider replacing him. In the face of novel crises like COVID, Global Warming and the George Floyd protests, we believe a new perspective is required.  We encourage Mr. Biden to consider replacing Mr. Powell with Roger Ferguson, retiring CEO of TIAA-CREF. As we noted, in 2006, Mr. Ferguson was directly responsible for saving the US economy in the days following 9/11. See: Mr. Ferguson will be better able to deal with the growing economic and social costs of racism. The Fed has consistently been wrong about, well, Black people. In response to a question from Congresswoman Joyce Beatty (OH) about Black unemployment, former Fed Chair Janet Yellen

Powell's October 6th Forecast by Christopher Moreira, Intern, American University

On October 6, 2020, Jerome H. Powell, Chair of the Board of Governors of the Federal Reserve System reviewed America’s economic status amidst the COVID-19 pandemic. Mr. Powell began his analysis at the beginning of 2020, before the pandemic hit. He then touched on the recession and the nascent recovery that must ensue. Mr. Powell closed with a look at what lies ahead on the road to normalcy. The speech was full of numbers and statistics that, to the casual observer wouldn’t fully explain what this means for the country. But, I can say with a fair amount of certainty that Chair Powell is wary of what's to come for our nation, which, before the COVID-19 pandemic was experiencing new highs in job creation and the stock market. Nevertheless, Chair Powell remains optimistic that the country will fully recover and return to what it once was. In terms of the pre-covid economy, Chair Powell stated that:  “The U.S. economy was in its 128th month of expansion—the longest in our recorded hist

Can monetary policy really benefit minority groups in the U.S.? Chenyue Zhu, Impact Investing Intern, Georgetown University

Facing the global challenge of the COVID-19 pandemic and the declining stock market, the Federal Reserve made a bold move to reduce the fed funds rate to zero, trying to boost the economy as a whole. However, it is uncertain whether minority groups will benefit from this policy. According to a report by the Fed, significant gaps exist between races and ethnicities in terms of interest rate on mortgages, and these differences vary geographically by State. The government usually makes up those gaps through mortgage lending programs designed specifically for the disadvantaged. However, the country shows no sign of putting forward any targeted monetary policy corresponding to the changing interest rate. Thus, people suspect that the current monetary policy will leave minority groups behind. In fact, according to Brookings Institution, Black businesses have long been undervalued, and their potential has yet to be developed. To reverse the declining market economy, the U.S. gover

The FedNow℠ Service: The Fed's Blockchain?

The Federal Reserve Board announced that the Federal Reserve Banks will develop a new round-the-clock real-time payment and settlement service, called the FedNow℠ Service, to support faster payments in the United States. This is a direct response to the threat posed by digital currencies and blockchain. According to one Fed official, "Last summer, the U.S. Treasury recommended that 'the Federal Reserve move quickly to facilitate a faster retail payments system, such as through the development of a real-time settlement service, that would also allow for more efficient and ubiquitous access to innovative payment capabilities.'” Sounds like blockchain to us, thus, we expect this new system to be blockchain enabled. (For more on blockchain, see: What is Bitcoin? How does it relate to blockchain? Henry Zhang, Creative Investment Research Impact Investing Intern. University of Toronto.  Online at: ) As we noted in our pa

Why the Fed is wrong about Libra

The Federal Reserve Act (FRA) requires the Chairman of the Federal Reserve System  to testify before the House Financial Services Committee and the Senate Banking Committee twice a year, in February and July, on how the Board handles monetary policy and its observations on economic developments. In keeping with that requirement, the current Chairman of the Federal Reserve, Jerome Powell, testified before the House on July 10th. He indicated as follows: Economic activity increased at a solid pace in the first part of 2019. The labor market has continued to strengthen: unemployment fell from 3.9% (Dec) to 3.6% (May), wage gains remained moderate.  Inflation has been running below the Federal Open Market Committee’s ( FOMC ) longer- run objective of 2 percent.  In June, the FOMC judged that current and prospective economic conditions called for maintaining the target range for the federal funds rate at 2 1⁄4 to 2 1⁄2 percent.  Inflation: Consumer Price Index = 1.5 (May).

Monetary Policy and the State of the Economy

On February 27th, The Committee on Financial Services of the US House held a hearing “Monetary Policy and the State of the Economy.” Chairman of the Board of Governors of the Federal Reserve System, Jerome Powell was the only witness. Lanxi He, Research Analyst Intern, Creative Investment. Georgetown University, attended the hearing and provided input for this post. The Federal Reserve Act (FRA) directs the Chairman of the Fed to testify before the House Committee on Financial Services and the Senate Committee on Banking twice a year. The testimony focuses on the management of monetary policy and its impact on domestic and global economic developments. Each appearance requires the Board submit a Monetary Policy Report. During this hearing, House members cited China's economic growth and the political allocation of capital. This line of questioning recalled the view of University of Chicago Professor Chang-Tai Hsieh. On February 25th, The Becker Friedman Institute for