Today the New York Fed’s Center for Microeconomic Data released its Quarterly Report on Household Debt and Credit for the second quarter of 2017.
August 15, 2017
August 10, 2017
Just Released: Economic Press Briefing Focuses on Regional Wage Inequality
The New York-Northern New Jersey region is home to some of the most and least unequal places in the nation, based on research presented today at our economic press briefing examining wage inequality in the region. Wage inequality—meaning the disparity in earnings between workers—has increased significantly in the United States since the early 1980s, though some places have much more wage inequality than others. Fairfield, Conn., for example, ranks as the most unequal metropolitan area in the country, and the New York–Northern New Jersey metropolitan area ranks in the top ten. On the other hand, most of the metropolitan areas in upstate New York are among the least unequal places in the country.
August 9, 2017
Investor Diversity and Liquidity in the Secondary Loan Market
Over the last two decades, the U.S. secondary loan market has evolved from a relatively sleepy market dominated by banks and insurance companies that trade only occasionally to a more active market comprising a diversified set of institutional investors, including collateralized loan obligations (CLOs), loan mutual funds, hedge funds, pension funds, brokers, and private equity firms.
August 7, 2017
Regulatory Incentives and Quarter‑End Dynamics in the Repo Market
Since the global financial crisis, central bankers and other prudential authorities have worked to design and implement new banking regulations, known as Basel III, to reduce risk in the financial sector. Although most features of the Basel III regime are implemented consistently across jurisdictions, some important details vary.
August 4, 2017
A Closer Look at the Fed’s Balance Sheet Accounting
An earlier post on how the Fed changes the size of its balance sheet prompted several questions from readers about the Federal Reserve’s accounting of asset purchases and the payment of principal by the Treasury on Treasury securities owned by the Fed. In this post, we provide a more detailed explanation of the accounting rules that govern these transactions.
Posted at 7:00 am in Central Bank, Federal Reserve, Monetary Policy, Treasury | Permalink | Comments (6)
August 2, 2017
Were Banks Ever ‘Boring’?
In a previous post, I documented that much of the expansion into nontraditional activities by U.S. banks began well before the passage of the Gramm-Leach-Bliley Act in 1999, the legislation that repealed much of the Glass-Steagall Act of 1933. The historical record actually contains many prior instances of the Glass-Steagall restrictions being circumvented, with nonbank firms allowed to operate as financial conglomerates and engage in activities that go beyond traditional banking. These broad industry dynamics might indicate that the business of banking tends to expand firm boundaries beyond a traditional—“boring”—perimeter.
July 31, 2017
Were Banks ‘Boring’ before the Repeal of Glass‑Steagall?
Since the global financial crisis and Great Recession, many critics have called for regulatory and legislative reforms to restore a system of “boring” banks constrained to traditional banking activities like deposit taking and lending.
July 11, 2017
How the Fed Changes the Size of Its Balance Sheet: The Case of Mortgage‑Backed Securities
In our previous post, we considered balance sheet mechanics related to the Federal Reserve’s purchase and redemption of Treasury securities. These mechanics are fairly straightforward and help to illustrate the basic relationships among actors in the financial system. Here, we turn to transactions involving agency mortgage-backed securities (MBS), which are somewhat more complicated. We focus particularly on what happens when households pay down their mortgages, either through regular monthly amortizations or a large payment covering some or all of the outstanding balance, as might occur with a refinancing.
July 10, 2017
Just Released: Updated SOMA Portfolio and Income Projections
The Federal Reserve Bank of New York’s Markets Group today published a report presenting updated staff projections [LINK TO REPORT] for the future path of domestic securities held in the System Open Market Account (SOMA) and portfolio-related income. The updated projections incorporate very recent information and are provided as a tool for the public to further understand factors affecting the evolution of the Federal Reserve’s balance sheet.
How the Fed Changes the Size of Its Balance Sheet
The size of the Federal Reserve’s balance sheet increased greatly between 2009 and 2014 owing to large-scale asset purchases. The balance sheet has stayed at a high level since then through the ongoing reinvestment of principal repayments on securities that the Fed holds. When the Federal Open Market Committee (FOMC) decides to reduce the size of the Fed’s balance sheet, it is expected to do so by gradually reducing the pace of reinvestments, as outlined in the June 2017 addendum to the FOMC’s Policy Normalization Principles and Plans. How do asset purchases increase the size of the Fed’s balance sheet? And how would reducing reinvestments reduce the size of the balance sheet? In this post, we answer these questions by describing the mechanics of the Fed’s balance sheet. In our next post, we will describe the balance sheet mechanics with respect to agency mortgage-backed securities (MBS).
Posted at 7:00 am in Central Bank, Federal Reserve, Monetary Policy, Treasury | Permalink | Comments (8)
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