The Federal Reserve Bank of New York works to promote sound and well-functioning financial systems and markets through its provision of industry and payment services, advancement of infrastructure reform in key markets and training and educational support to international institutions.
Regional & Community Outreach connects the Bank to Main Street via structured dialogues and two-way conversations on small business, mortgages, and household credit.
Economic Education improves public knowledge about the Federal Reserve System, monetary policy implementation, and promoting financial stability through the Museum and programs for K-16 students and educators, and the community.
At the New York Fed, we follow the repo market closely and, with some of my colleagues, I’ve tried to keep readers of this blog informed about how the market works, how it’s being reformed, and what risks remain. We’re always encouraged when others share our interest in this market, so we read a recent Fitch report—“Repo Emerges from the ‘Shadow’”—closely (the report is available at www.fitchratings.com). At first glance, the report is a bit worrisome, as it argues that the repo market has recently seen a large increase in riskier types of collateral. So we decided to take a close look at some data to see if we could validate this finding. In this post, I use data made publicly available by the Tri-Party Repo Infrastructure Reform Task Force (the Task Force) to show that there is in fact no evidence of a broad-based increase in riskier types of collateral. The Task Force’s objective in publishing the data was to give a comprehensive view of the market, so the data represent 100 percent of the market’s volume. In contrast, the Fitch study is based on data from a sample of prime funds, representing only 5 percent of the market’s size.
Since October 2008, the Federal Reserve has increased the size of its balance sheet by lending to financial intermediaries and purchasing assets on a large scale. While these actions have increased the amount of reserves in the U.S. banking system and therefore raised concerns about excessive bank lending and inflation, we can document an important and overlooked benefit of the high level of reserves: a significantly earlier settlement of payments on Fedwire, the Federal Reserve’s large-value payment system. Quicker settlement on Fedwire improves liquidity throughout the economy, reducing uncertainty and risk for people and firms that rely on banks. At the same time, the Fed has been extending less intraday credit, which reduces the public’s risk exposure.
A paper by Delia Cabe, “Buying into the Future,” which appeared in the fall 2001 Radcliffe Quarterly, tells in an arresting way the story of how Americans became such big spenders. The article displays, at the bottom of each page, a timeline of first appearances of products in the American marketplace. Many iconic products originated much earlier than we might guess: Crayola Crayons (1903), Slinky (1945), Frisbee (1948), and so on.
Over the next few years, large volumes of homes are likely to flow from foreclosure onto lenders’ balance sheets as “real estate owned,” or REO. Without a significant boost to demand, this large volume of “distressed” real estate could potentially put substantial downward pressure on home prices. Accordingly, new policy initiatives are needed to increase the rate at which properties that flow into REO get reabsorbed back into use as renter- or owner-occupied units. In this post, I make the case for a tax credit for Gulf War II veterans’ home purchases.
Everything seems to be anthropomorphized at one time or another—especially in advertising, where one needs to get a point across simply and memorably. So it’s not surprising that the idea has been used in financial education for children.
February’s Empire State Manufacturing Survey (ESMS) indicates that manufacturing activity in New York State continued to expand for a third consecutive month. The survey’s headline index rose an encouraging six points to 19.5, its highest level in more than a year. Other indicators in the report show steady growth in orders, shipments, and employment, and fairly widespread planned increases in capital spending. In this post, we take a closer look at the recent results of the survey, which indicate that growth in New York’s manufacturing sector has rebounded in recent months from its decline during the summer and fall of 2011.
Credit rating agencies have been widely criticized in recent years for the poor performance of their ratings on mortgage-backed securities (MBS) and other structured-finance bonds. In response to the concerns of investors and other market participants, the 2010 Dodd-Frank Act incorporates a range of reforms likely to significantly reshape the rating industry. In this post, we discuss these reforms and their implications for investors, regulators, and the rating agencies themselves.
Policymakers are increasingly viewing colleges and universities as important engines of growth for their local areas. In addition to having direct economic impacts, these institutions help to raise the skills of an area’s workforce (its local “human capital”), and they do this in two ways. First, by educating potential workers, they increase the supply of human capital in a region. Perhaps less obviously, these schools can also raise a region’s demand for human capital by helping local businesses create jobs for skilled workers. In this post, we draw on our recent academic research and Current Issues article to outline these pathways and how they might inform local economic development policy. (We also discuss our findings in a new video.)
Payday lenders make small, short-term loans to millions of households across the country. Though popular with users, the credit is controversial in part because payday lenders are accused of targeting their seemingly high-priced credit at minority households. In this post, we look at whether black and Hispanic households are in fact more likely to use payday credit. We find that, unconditionally, they are, but once we control for financial characteristics—such as past delinquency, debt-to-income ratios, and credit availability, blacks and Hispanics are not significantly more likely than whites to use payday credit.
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