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Newly Unsealed Documents Show Top FDIC Officials Running Operation Choke Point
"For those unfamiliar, Choke Point consisted of bureaucrats in several independent federal agencies taking it upon themselves to shut legal businesses – such as payday lenders and firearms dealers – out of the banking system. Given the nature of the U.S. regulatory framework, this operation was easy to pull off.

Officials at the Federal Deposit Insurance Corporation (FDIC), for instance, simply had to inform the banks they were overseeing that the government considered certain types of their customers “high risk.” The mere implication of a threat was enough to pressure banks into closing accounts, because no U.S. bank wants anything to do with extra audits or investigations from their regulator, much less additional operating restrictions or civil and criminal charges."
USA  political  abuse  against  FDIC  banks  awareness 
november 2018 by dandv
As Black-Owned Banks Withdraw, Community Sounds Alarm - WSJ
By Sharon Nunn
Aug. 6, 2017

The number of black-owned banks operating in the U.S. has been dropping steadily for the past 15 years and fell to 23 this year, the lowest level in recent history, according to the Federal Deposit Insurance Corp. That has left many African-American communities short of access to capital and traditional financial services, according to some banking experts....The 2008 recession hit the black banking sector especially hard, and if the current rate of closures of about two a year, as well as the industry-wide reluctance or inability to start banks, continues, black-owned banks could disappear entirely within the next eight to 12 years. The trend is worrisome to some analysts who argue fewer banks serving low-income, minority groups could expand “financial deserts”—communities with few or no banking institutions—and increase the likelihood that black and Hispanic communities could become susceptible to redlining, a discriminatory practice that excludes poorer minority areas from financial services....... [black-owned community banks were] the first bank some African-Americans had access to, making it a symbol of black enterprise and economic development, .......A survey of entrepreneurs by the U.S. Census Bureau in 2014 found that 47% of black business owners had gotten got the full amount of funding requested from banks, credit unions or other financial institutions, compared with 76% of whites.

That survey also showed fear of rejection was the top reason cited by black business owners who chose not to seek needed capital at all.
black-owned  banks  African-Americans  trends  decline  FDIC  financial_services  redlining  low-income  community_banks 
august 2017 by jerryking
FDIC: Data Hub
Main hub for spreadsheets from the FDIC.
hub  FDIC 
january 2016 by jatrimar
FDIC Survey of Banks’ Efforts to Serve the Unbanked and Underbanked 2013
FDIC's 2013 survey of the unbanked and underbanked. They asked good questions.
2013  FDIC  report  survey 
january 2016 by jatrimar
Filippo Occhino - Debt-Overhang Banking Crises | Cleveland Fed - Dec 2014
WP 14-25 -- This paper studies how a worsening of the debt overhang distortion on bank lending can explain banking solvency crises that are accompanied by a plunge of bank asset values and by a severe contraction of lending and economic activity. Since the value of bank assets depends on economic prospects, a pessimistic view of the economy can be self-fulfilling and can trigger a financial crisis: If economic prospects are poor, bank asset values decline, the bank risk of default rises, and the associated debt overhang distortion worsens. The worsening of the distortion leads to a contraction in bank loans and a decline in economic activity, which confirms the initial pessimistic view. Signals of the existence of systemic risk include: a rise in the volatility and the presence of two modes in the probability distribution functions of the returns of bank-issued bonds and of portfolios of bank-issued bonds and equities; and a surge in the correlation between bank-issued bond returns. Macroprudential policy should limit the sensitivity of bank balance sheets to the aggregate economy and to the financial sector, using investment restrictions, capital requirements, and stress tests. In the event of a crisis, policy options include reducing the above sensitivity with commitments and guarantees, stimulating the economy, and restructuring bank capital and ownership. -- didn't download -- wonder if he uses Minsky
paper  banking  financial_crisis  leverage  deleverage  economic_growth  risk-systemic  business_cycles  bank_runs  capital_markets  bond_markets  macroprudential_regulation  macroprudential_policies  volatility  default  firesales  FDIC  Fed  demand-side  credit  business-forecasts  Minsky  financial_economics 
may 2015 by dunnettreader
Living Wills or Phoenix Plans: Making sure banks can rise from their ashes — Money, Banking and Financial Markets
Re tranches of non-convertible debt in levels of subordination & conversion to equity in a resolution process - More important, safeguarding the financial system will still require other complex rules and enforcement. Above all, in addition to more equity, each systemic intermediary must issue an adequate supply of long-term debt in good times to absorb its potential losses in the worst times. Were it instead to issue short-term debt, the intermediary would be vulnerable to a run. In addition, (as one of us has argued here) rules must prevent other leveraged intermediaries from owning this risky long-term debt, because it is in fact a close substitute for equity capital. Otherwise, losses incurred by the holders of this debt would transmit one intermediary’s insolvency to the broader financial system. And there is no free lunch, at least not for the debt issuers. It remains to be seen whether unleveraged buyers of phoenix debt would price it in a way that is economically viable for systemic intermediaries. After all, in the worst state of the world, it is designed to be no different from equity. Making it attractive to buyers might require banks to issue more equity, to streamline and simplify their operations, and to become more transparent. But that kind of market discipline would go a long way to making the financial system safer, reducing our reliance on the omniscience of regulators.
financial_system  financial_crisis  banking  shadow_banking  financial_regulation  FDIC  capital_adequacy  leverage 
january 2015 by dunnettreader
Shadow banking, part 3: Some experts call for FDIC-style safety net for shadow banking
links galore to well curated set of papers analyzing scale and activities of shadow banking sector, especially money market funds, the mechanics and risks of different types of runs on shadow banking, and 10+ proposals for mitigating risks and managing runs if (when) they happen. Saved to Pocket. Review for papers to download
financial_system  banking  shadow_banking  money_market  financial_crisis  financial_regulation  GSEs  asset_prices  liquidity  firesales  deposit_insurance  central_banks  Fed  FDIC  SEC  links 
january 2015 by dunnettreader
Why Elizabeth Warren hates the government funding bill
In the grand scheme of things, Section 716 is not earth-shattering in its impact. Repeal would not end all regulation of derivatives, and it would not repeal the Volcker Rule which has some similar effects. But proponents of stricter regulation have two main concerns.

One is simply directional. They feel the banking sector remains under-regulated in the wake of Dodd-Frank, not over-regulated, and that any moves to loosen the chains are simply a step in the wrong direction.

The other concern relates to political economy. As long as lobbyists are fighting on Capitol Hill about swaps pushout, they have less time to fight about other things. If the banks win this fight, then that frees up time and resources to fight for the repeal of other provisions. And the precedent of repealing a bank regulation in a government funding bill would be very dangerous. If it works this time, the banks may ask for more repeals next time around.
business  bank  bailout  FDIC  ElizabethWarren  politics  congress  senate  usa  government 
december 2014 by jtyost2
Narrow Banks Won't Stop Bank Runs — Money, Banking and Financial Markets - April 2014
Banks serve capitalist economies in two ways that are costly to replicate. First, they are experts in providing liquidity both to depositors and to borrowers. For the former, it is deposits and for the latter, lines of credit (such as home equity loans that can be used when the borrower needs the funds). Second, they have expertise both in screening potential borrowers and then in monitoring those to whom they make loans. That is, they specialize in mitigating the information problems that plague all financial transactions.(..) the main point: would narrow banking really eliminate runs? Would it solve the fragility problem its proponents suggest is a consequence of fractional reserve banking? Our short answer to these questions is no. The mutual funds of the narrow banking world would be subject to the same runs. Indeed, recent research highlights that – in the presence of small investors – relatively illiquid mutual funds are more likely to face exit in the event of past bad performance. Thus, in practice, illiquidity plays the same role in a world of mutual funds with many investors as it does in the classic Diamond-Dybvig model of a bank run. And, without deposit insurance, the runs could be both more frequent and more devastating. Even modest declines in confidence, for reasons that are either real or imaginary, could readily turn into panics. (...) After this happened even once, people would simply flock to the narrow banks, and there would be no source of lending. That is, a financial panic in a system with narrow banks would devastate the credit intermediation process. (..) the government’s initial commitment to let the not-so-narrow funds fail in a crisis would not be credible, adding to the funds’ incentive to take on credit and liquidity risk and – contrary to the goals of narrow banking – raising the probability and cost of a future crisis.
financial_system  financial_crisis  banking  bank_runs  shadow_banking  NBFI  FDIC  liquidity  investors 
november 2014 by dunnettreader
Regulating Money Market Mutual Funds: An Update — Money, Banking and Financial Markets - July 2014
The SEC has finally acted(..) 859 pages of new rules for the operation of some money market funds. To summarize our reaction: we are underwhelmed! It is hard to see how the new rules will reduce systemic risk in any meaningful way. We first wrote about money market funds in May. The original post is here. (..) Let’s start by summarizing the new final regulation. It has three parts: 1) It applies to institutional prime money funds only. 2) These funds are required to have floating net asset values (NAV). 3) Fund boards will have the option to impose liquidity fees and redemption gates if the funds “weekly liquid assets” fall below a threshold. -- This new framework simply will not stop runs. Discretionary liquidity fees and redemption gates increase the risks of a run, not decrease them. Think about it. If you are worried that a fund you own is about to impose a 1% or 2% fee for withdrawals, would you wait around until they did it? What if you became concerned that the fund would suspend redemptions for the next two weeks? Rational, prudent, informed institutional investors will do exactly what we all expect: withdraw ASAP! -- good discussion of various recommendations and research, but it comes down to the MMFs are acting like depository institutions and should be required to maintain capital buffers and pay an FDIC fee. Liquidity fees might be imposed at all times across the board - probably wouldn't do much in a crunch but at least wouldn't create *incentives* for bank runs!
US_economy  financial_system  financial_crisis  banking  bank_runs  shadow_banking  NBFI  SEC  FDIC  capital_adequacy 
november 2014 by dunnettreader
Do Financial Institutions Want The Unbanked?
A survey from the FDIC in partnership with the U.S. Census Bureau sheds light on the demographics and needs of the un- and underbanked. But maybe retail financial institutions aren't interested
banking  unbanked  research  consumer  FDIC  USA  TheFinancialBrand  2014 
november 2014 by inspiral
The Two-Bit Idiot — About Inscrypto
In short, our product could securitize the holding risks of bitcoin. We plan to work with wallet services like Blockchain, Circle, Coinbase, etc. to guarantee the underlying purchasing power of “Inscrypted” bitcoins sitting in consumer and merchant wallets. Ideally, depositors won’t even know it, but they will be using our tech to offload price volatility onto professional investors.
inscrypto  bitcoin  security  fdic  startup 
april 2014 by igrigorik

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