New bank liquidity proposals could slash bank MBS holdings

By Alexander Saeedy
05 Nov 2018

The Federal Reserve unveiled changes to US bank regulatory standards last week that would reduce or eliminate liquidity coverage ratios at mid-size financial firms. Many in the agency MBS market expect the move to weigh on demand for tier one Ginnie Mae bonds.

Category III firms with total assets of $250bn-$750bn will gain partial capital relief under the Fed proposals, while the LCR ratio requirement will disappear altogether for Category IV banks with $100bn-$250bn in total assets. Category III banks include Capital One, PNC Financial and US Bancorp. Category IV banks ...

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