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Journal Article
Reciprocal Deposits and the Banking Turmoil of 2023
Reciprocal deposits are deposits exchanged between banks to effectively increase deposit insurance coverage. Their use grew significantly during the banking turmoil of 2023. This Economic Commentary describes what they are, their connection to brokered deposits, how their legal treatment has changed over time, and which banks use them the most. It also discusses longer-run trends in uninsured deposits.
Working Paper
Interest Rate Risk at US Credit Unions
Rising interest rates have prompted concerns about losses on bank assets, especially following the failure of Silicon Valley Bank (SVB) in March 2023. In this working paper, we examine whether US credit unions could be subject to similar losses as banks and analyze how their regulatory capital would be affected. We estimate that after realizing losses from assets that have decreased in value and not yet been sold the overall net worth of the credit union industry would have fallen by 40 percent in 2023:Q1. Unrealized losses were most severe at the largest credit unions. Nonetheless, the bulk ...
How Large Are the American Rescue Plan Fund Distributions to State and Local Governments?
In March of this year, the American Rescue Plan (ARP) authorized the US Department of the Treasury to distribute $350 billion to state and local governments through the legislation’s Coronavirus State and Local Fiscal Recovery Funds (SLFRF) to help speed the nation’s economic recovery from the COVID-19 pandemic. Since then, candidates and advocates have stepped forward to say what community challenges they will solve with the funds. When we hear that a county is receiving $500 million and a state is receiving $5 billion, both figures sound very large, but what we don’t know is how much ...
Working Paper
Organizational Form and Thrift Risk During the US Housing Boom and Bust
We compare the performance of community-bank-sized mutual and stock thrifts during the housing boom of 2001-06 and the housing bust of 2007-13. During the housing bust, mutuals failed at a much lower rate than stock thrifts. To investigate this difference, we first estimate a probit model of thrift failure over the housing bust and show that this difference holds even when controlling for local economic shocks and differences in thrift characteristics. Furthermore, we find that a concentration in construction and land development loans is the only type of loan concentration that is predictive ...