Steven Kelly, Associate Director of Research at the Yale Program on Financial Stability, returns to Forward Guidance to update Jack on the Federal Reserve’s forthcoming plans to increase capital requirements for U.S. banks. Filmed on July 11, 2023.____Follow Steven Kelly on Twitter https://twitter.com/StevenKelly49Follow Jack Farley on Twitter https://twitter.com/JackFarley96Follow Forward Guidance on Twitter https://twitter.com/ForwardGuidanceFollow Blockworks on Twitter https://twitter.com/Blockworks_Kelly’s latest “Without Warning” Substack: https://www.withoutwarningresearch.com/p/the-macro-story-of-svb-isnt-just____Use code GUIDANCE20 to get 20% off Permissionless 2023 in Austin:https://blockworks.co/event/permissionless-2023Research, news, data, governance and models – now, all in one place. As a listener of Forward Guidance, you can use code GUIDANCE10 for a 10% discount when signing up to Blockworks Research https://www.blockworksresearch.com/____Get top market insights and the latest in crypto news. Subscribe to Blockworks Daily Newsletter:https://rb.gy/5weeywMarket commentary, charts, degen trade ideas, governance updates, token performance, can’t-miss-tweets and more. Subscribe to the Blockworks Research “Daily Debrief” Newsletter: https://rb.gy/feusos____Timecodes:(00:00) Introduction(02:45) Bank Capital Ratios, Explained(18:52) Busting Myths About Banks' Interest Rate Hedging(38:15) Accounting For Unrealized Losses(46:56) How Much Money Is Leaving the Banking System?(54:16) U.S. Banking System Is "Stable But More Fragile"(01:02:47) The Basel III Endgame(01:05:54) Interest Rates And Financial Stability____Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.

Steven Kelly, Associate Director of Research at Yale’s Program on Financial Stability and a financial markets expert, discusses the evolution of risks in the banking system. He explains the shift of lending from traditional banks to private credit, revealing how this has created new challenges. Kelly emphasizes that while risks may appear to be minimized, they often return, especially when outside entities rely on banks for leverage. The conversation highlights the need for proactive regulation to manage these evolving financial landscapes.

Steven Kelly, Associate Director of Research at the Yale Program on Financial Stability, dives into the Treasury Equity Model used in the Federal Reserve's emergency lending. He discusses its historical context, focusing on the 13(3) facilities and their evolution during crises. Kelly highlights challenges of equity funding amid recent banking turmoil, and critiques how political dynamics complicate fiscal decisions. The conversation also touches on the balance between liquidity needs and moral hazards, illustrating the intricate dance between finance and policy.

In this discussion, Steven Kelly, an expert in emergency lending at Yale, illuminates the evolving landscape of bank rescue strategies post-2008. He delves into the recent banking crisis sparked by Silicon Valley Bank, emphasizing the role of the Federal Reserve's discount window and new liquidity programs. Kelly proposes innovative reforms to enhance emergency financing and highlights the importance of pre-positioning collateral. His insights shed light on the delicate balance between maintaining liquidity and managing market perceptions.

Steven Kelly, Associate Director of Research at the Yale Program on Financial Stability, discusses the financial stability implications of the discount window with David Beckworth. They touch on issues with FHLBs, fixing reporting challenges, restarting term auction and liquidity facilities, and more.