Mar 2, 2020 - Economy & Business

Bank group calls for return of financial crisis measures

Illustration: Sarah Grillo/Axios

Top officers at America's largest bank lobbying organization are calling on the Fed not only to cut U.S. interest rates, but also to institute a series of reforms that were last put in place during the 2008 financial crisis.

What's happening: The president and CEO, the chief economist and the head of research of the Bank Policy Institute, which represents the nation's leading banks, posted a blog Sunday laying out a set of policy prescriptions they encourage the Fed to use to fight possible economic damage from the coronavirus outbreak.

  • The proposals include cutting banks' reserve requirements to zero, lowering the Fed's discount borrowing rate, and several other measures designed to increase banks' resilience to a major financial shock.

Why it matters: The note shows how worried banking industry advocates are about the impact of COVID-19.

  • It's also the latest example of the industry attempting to use a crisis to roll back Dodd-Frank financial regulations that were designed to prevent another market meltdown.

Watch this space: Since rates in the repo market spiked in September, the Fed has been working with officials at major financial institutions to revise some of its rules.

Go deeper: Federal Reserve: Coronavirus poses "evolving risk" to the economy

Go deeper

Fed cuts interest rates to near zero in emergency coronavirus intervention

Photo: Mark Makela/Getty Images

The Federal Reserve on Sunday cut its benchmark interest rate to almost zero and launched a $700 billion quantitative easing program in response to the expected economic downturn and stock market slump caused by the coronavirus.

Why it matters: This is the most drastic measure the Fed could take to try to shield the economy amid a global pandemic. The central bank hasn’t made moves this dramatic since the financial crisis.

Go deeperArrowUpdated Mar 15, 2020 - Economy & Business

After its emergency rate cut, investors wonder what the Fed knows

Jerome Powell. Photo: Mark Makela/Getty Images

Investors and President Trump want the same thing after Tuesday's surprise 50 basis point cut by the Fed: more cuts.

The state of play: The announcement, two weeks to the day before the beginning of the central bank's scheduled March 17–18 policy meeting, has investors scratching their heads. "The Fed pulled the fire alarm without telling anybody why," Bernard Baumohl, chief global economist at the Economic Outlook Group, tells Axios.

Goldman Sachs expects a full percentage point of rate cuts from the Fed

Fed Chairman Jerome Powell. Photo: Sarah Silbiger/Getty Images

Fed chair Jerome Powell's statement on Friday afternoon that the U.S. central bank was "closely monitoring developments" and would "act as appropriate to support the economy" has eliminated any doubt that the Fed will cut U.S. interest rates at its meeting on March 17–18.

What we're hearing: "A Fed cut in March appears nearly certain," analysts at Goldman Sachs said in a late Sunday note to clients.