Let’s Make a Deal, Like … Now?
‘The real power in the country will see to it that default is avoided.’
While nervousness over the protracted debt ceiling talks grew this week, there was still a general expectation that, somehow, a deal to prevent a U.S. default would get done.
As the hours ticked away:
- The New York Times reported that, depending on the government’s cash flow, a deal might not be needed until a few months after the much-discussed June 1 target.
- And a Seeking Alpha piece said the investment community as a whole does not seem concerned because “the real power in the country will see to it that default is avoided.”
As we wait to see the outcome, here are some other developments from the world of government and regulation:
Fed Governor Says Go Slow on Post-Failures Regulation
As regulators continue to contemplate recent bank failures—and plan ways to prevent future turmoil—they should be careful about rules for small and regional banks, Federal Reserve Governor MichelleBowman said last week. In remarks to the Texas Bankers Association, Bowman said, “complex new rules could hasten the consolidation of the banking industry and potentially push more activities outside the regulated banking system.”
FDIC Assessment Fee Update
Earlier this month, RMA Insider noted that the largest banks would bear the brunt of replenishing the Deposit Insurance Fund, which was down $16 billion after covering uninsured deposits at two failed banks. This week, American Banker is reporting that Senator Elizabeth Warren has asked FDIC Chairman Martin Gruenberg to bar banks from using Treasury bills to pay their related assessment fees.
Another AI Alarm
Finally, add the financial system’s stability to the long list of very important things threatened by artificial intelligence. At a Financial Industry Regulatory Authority conference, The Wall Street Journal reported, SEC Chair Gary Gensler theorized about a future crisis “because everything was relying on one base level” of AI.
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