• The federal reserve cannot allow the cabinet market to seize As happened in 2008, one of the reasons for that should be determined that Jpmorgan’s CEO JPMIRGAN requirements are required. These regulations are in place to prevent the repetition of the global financial crisis, but Treasury Secretary Scott Besin, President of the Federal Reserve Jerome Powell, and many economists agree that some amendments will allow banks and the mediator to intervene during market pressure times.

Bond market Sale It made investors wonder Safe mitigation state We are debts and we fear another Credit crisisWhen liquidity dries and economic activity stops. Jpmorgan Chase CEO Jimmy Damon said that the world’s largest lenders can help, but only if Systems It was developed to prevent the repetition of the global financial crisis.

Treasury Secretary Scott Bessin, Federal President Jerome Powell, and many economists agree that some changes can help banks and mediators keep more treasury in the market stress times. Damon went further, and called for comprehensive reform Capital requirementsThat has long argued the industry is the fame and the trick of consumer lending. He said that the current framework contains deep defects.

“It is not comfortable for banks,” Dienon said during the first quarter of JPMorgan. Profit call Friday. “It is comfortable for the markets.”

Capital requirements aim to guarantee banks, especially those that are considered “greater than failing”, can survive if they are exposed to heavy losses. Jpmorgan was one of a few major lenders who did not need to be controversial Government rescue In 2008-but Damon took money anyway when Treasury Secretary insisted at the time, Henry Bolson.

The Treasury market helps the global round of the economy, and closely monitors Wall Street signs that the Federal Reserve may have to intervene. Many suspects Bond market The disturbances are what forced President Donald Trump really to announce a 90 -day stand on his sweeping.Mutual definitions“But the buzz of fixed income is not over yet. A. High altitude In the returns, which rise with the low prices of bonds, it continued at a time when investors were exposed to the treasury, as they have long been considered some of the world’s origins in the world.

The Trump administration has been clear that it wanted to see a lesser return on the treasury for 10 years, the interest rate standard for real estate loans, auto loans, and other common borrowing types throughout the economy. It rose to 4.59 % on Friday, however, more than 30 basis points increased from Wednesday and more than 70 points as it started climbing on Monday.

Toristan, the behavior, chief economists in private stock prices, wrote Apollo, in A. Note Friday. “But this is not what is happening at the present time.”

Why can the banks intervene?

One of the perpetrators for this “mystery of killing”, Slooke said luck Earlier this week, it could be the so -called “Trade foundation“When hedge funds are highly borrowing to take advantage of small price contradictions between the treasury and future contracts associated with these bonds. In normal times, they benefit greatly, and thus, help in maintaining money markets.

During periods Extreme volatilityHowever, hedge boxes can be forced Relax Trade of $ 800 billion, which spells trouble if the market is struggling to accommodate a huge increase in the supply of the cabinet. Foreign sale may exacerbate the problem, and it seems that In playing On Thursday and Friday, with a decrease in the dollar.

However, large banks and brokers cannot intervene, due to restrictions such as supplementary leverage rate. As the name suggests, this scale limits the amount of borrowed money that lenders can use in investments.

“These restrictions have, of course, have become more narrow after the financial crisis in 2008, and for this reason the Wall Street banks are working as shocks in the current environment,” said behavior.

American debt is the dominant form of guarantee in the so -called ribo market, and it is a decisive part of the financial system that allows banks and companies to meet their obligations with short -term loans. In short, the Federal Reserve from the Treasury Market does not want to seize as it did in 2008, which is why Damon and other critics of the current capital requirements say that these regulations must be fixed.

“When you have a lot of volatile markets, very wide spread and low liquidity in the cabinet, it affects all other capital markets. This is the reason why you will do so, and it is not a good for banks themselves,” Damon said.

Such changes will not be unprecedented. During the Covid-19s, Federal Reserve Exempt The locker and banking reserves from calculating the percentage of complementary leverage, allowing banks to raise more American debts.

Pesin Shown He wants to make this change permanent as part of a broader decomposition batch. Although the Federal Reserve recently lost Bitter battle With large banks, especially Jpmorgan, on capital requirements, Powell did He said He agrees. Also, many academics support a slight amendment, which they say can be made without undermining the foundations of Dodd-Frank reforms that were created after the financial crisis.

Regardless, the Federal Reserve still purchases $ 1.6 trillion of the treasury to stabilize the financial markets at the beginning of the epidemic. Damon said that the central bank would once again have to take similar measures in the end.

“There will be Kerfuffle in the cabinet market due to all rules and regulations,” he said.

Damon hopes to change during the Trump era

Damon was not only referring to small changes in the percentage of complementary leverage. He said that reforming several different types of capital requirements can liberate “hundreds of billions of dollars” for JPMorgan to pair through the banking system.

The banks were Very successful When returning to the federal reserve efforts to implement completely Basel IIIA set of international standards that were developed after 2008 to prevent the collapse of the so -called “global systemic banks”. After a major reaction from this industry, the Federal Reserve canceled a proposal last year that would raise the requirements of capital by 19 %. The Supreme Central Bank was subsequently stepped in, allowing Trump to appoint Michelle Bowman, who voted against the tougher regulations, for this role.

On Friday’s profit call, Damon, who was attributed to persuading Trump to expand the scope of the customs tariff, was asked if he believed that there is a better opportunity for bank friendly reforms with the current administration compared to Biden.

He said, “I think there is deep recognition of the defects in the system,” and fortunately, they will take a good look at it.

This story was originally shown on Fortune.com

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2025-04-12 12:41:00