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Working Paper
Macroprudential Policy: Results from a Tabletop Exercise
This paper presents a tabletop exercise designed to analyze macroprudential policy. Several senior Federal Reserve officials were presented with a hypothetical economy as of 2020:Q2 in which commercial real estate and nonfinancial debt valuations were very high. After analyzing the economy and discussing the use of monetary and macroprudential policy tools, participants were then presented with a hypothetical negative shock to commercial real estate valuations that occurred in the second half of 2020. Participants then discussed the use of the tools during an incipient downturn. Some of the ...
Journal Article
Smaller Banks Less Able to Withstand Flattening Yield Curve
For the overall U.S. banking system, the effect on profitability of yield-curve flattening?the lowering of the difference between the yields of short- and long-term debt?lasts about a year and is relatively small. After the first year, the impact on large banks? profitability becomes positive; for smaller institutions, it stays negative and becomes larger. Recent yield-curve flattening is likely to more strongly affect smaller banks, reducing their profitability.
Corporate Indebtedness: Improving Financial Stability Monitoring
U.S. nonfinancial corporate credit has been identified as an area where growth in the quantity of debt and deterioration in the quality of underwriting could be a source of concern.
Journal Article
Sovereign wealth funds allow countries to invest for more than the long term
Some experts question the investment motives, while others regard sovereign wealth funds as a helpful source of capital and even a vehicle for socially responsible investment.
Journal Article
Private equity industry: Southwest firms draw on regional expertise
Neiman Marcus, Harrah?s, Petco, J. Crew?these well-known names are among the holdings of companies owned or co-owned by private equity (PE) firms in the Federal Reserve?s Eleventh District. The region is home to more than 175 PE firms, including the world?s third-largest, Fort Worth-based TPG Capital.[1] Together, these entities have raised more than $109 billion over the past 10 years and sit on $31 billion pending investment. ; While the PE business model goes back to the times of early seafaring enterprises funded by limited private partners, its modern U.S. iteration dates back to the ...
Economic Policy Uncertainty Emerges as Drag on Stock Market
Over the past two years, virtually all of the downside pressure on stock prices has come from the elevated levels of such uncertainty.
Journal Article
Despite cautionary guidance, leveraged loans reach new highs
Leveraged lending has grown significantly since 2010 as underwriting standards have loosened. Despite regulatory concerns, markets have reached new highs that may hint at a buildup of risk.
Journal Article
Shadow banking reemerges, posing challenges to banks and regulators
Shadow banking has come roaring back and in new forms that still manage to escape bank regulation and could pose systemic risks since these activities remain deeply intertwined with traditional banking.
Journal Article
Foreclosures’ silver lining: they could restrain rent inflation
Rental inflation has surpassed historic levels despite a supply of housing that partly reflects a persistent inventory of foreclosed, vacant homes.