U.S. Treasury Secretary Janet Yellen has proposed stricter rules for nonbanks.
Janet Yellen – US Secretary of the Treasury
To keep things simple, Yellen wants the U.S. Federal Reserve to monitor nonbanks and remove what she says are “undue barriers” introduced by reforms under the Trump administration in 2019.
Non-banks are entities that do not have a banking license but provide certain financial services. These entities are also not covered by the Federal Deposit Insurance Corporation (FDIC).
For example, some non-banks are venture capital firms, crypto institutions, and hedge funds.
A recent report by the International Monetary Fund stated that confirm The financial system faces many emerging threats, such as soaring inflation, rising interest rates, and liquidity crises for non-bank institutions.
Under the framework proposed by the U.S. Financial Stability Oversight Council (FSOC), there would be a two-step process to determine whether the Fed should regulate a company.
The FSOC was established in 2010 under the Dodd-Frank Act following the 2008 financial crisis to identify and manage risks to the overall stability of the financial system.
First, non-banks will pass progress The analysis is based on data provided to the FSOC, which then monitors the company during an “in-depth valuation” of data from the company itself, regulators and public information.
The committee voted unanimously to seek public comment on the proposal.
Yellen explain The proposal would allow the FSOC to “cooperate with the firm’s lead regulator in any designation review. Through a separate proposed analytical framework, we provide the public with more information on how non-bank designations fit in with the Commission’s broader monitoring and risk mitigation approach.” Unanimous. Financial Stability”.
Last month, the collapse of Silicon Valley Bank (SVB) and Signature Bank raised concerns about the overall stability of the banking system.
Yellen said on Friday:
“Our banking system remains stable with adequate capital and liquidity.”
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