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MNI BRIEF: Quarles Says U.S. is Beginning Strong Recovery

WASHINGTON (MNI)

Fed Vice Chair for Supervision Randal Quarles said that while a strong U.S. recovery is underway and about to "enter this last stretch of the return to normal," some households and businesses are still vulnerable.

"The COVID event is not behind us, and the vulnerabilities it exposed are not gone," said Quarles in written remarks for testimony to be given to Congress Wednesday. The U.S. banking sector handled the Covid shock better than expected but Quarles called for reforms to Treasury and money markets, finalizing the post-crisis Basel III reforms and completing the transition from Libor.

"We are reviewing the design and calibration of the supplementary leverage ratio, which was originally gauged for a financial system with far lower levels of cash reserves and a much smaller Treasury market," he said. Sources have told MNI that efforts to retool the supplementary leverage ratio for big banks awash in reserves is seen as a pragmatic move for Treasury market liquidity but faces an uphill political battle.

MNI Washington Bureau | +1 202-371-2121 | evan.ryser@marketnews.com

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