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MNI TRANSCRIPT: Powell on Liquidity and Capital Requirements

     WASHINGTON (MNI) - The following is the portion of a transcript from
Federal Reserve Chairman Jerome Powell's press conference after the FOMC meeting
     Q: Have the problems in repo market led you looking to whether the
liquidity and capital requirements for banks are too high? Is that something
that the Fed might review?
     A: So we are -- I think again the most important basic thing is to get the
level of reserves back up so that reserves move up and down with sol volatility.
We don't want them to move below the level they were at in the beginning of
September which is again between 1.45 and 1.5 trillion. That's the main thing.
That's the first thing and we are on a path to do that between our temporary
open market operations and also our bill purchases. In addition to that, in
addition to that we are looking at -- there are -- it is a -- it is a big
complicated marketplace and there was the one of the surprises was that banks
that had told us that their lowest comfortable level of reserves was here, they
were well above that and yet they didn't deploy that liquidity when seemed to be
great opportunities to do that. But didn't happen. So why is that? So we are
doing careful analysis of that. I -- you ask would we lower capital liquidity
requirement because of that. I don't that's where this go. Where it may go is to
look at, for example, intraday liquidity which used to be a common thing. Used
to be a common thing for banks to have intraday liquidity from the Fed. That's
something that we can look at. There are just a few technical things that we can
look at that would perhaps make the liquidity that we have which is ample in the
financial system, move for freely and be more liquid. Those are things we would
do only if we can do without compromising safety, soundness or financial
stability. >>
--MNI Washington Bureau; +1 202 371 2121; email:

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