#2023-6, March 17, 2023

FedNow to Launch in July, Mass Bankers Hosting Workshop in Late March

The Federal Reserve Bank’s FedNow instant payments service will begin operating in July, the agency announced on March 15th.  There will be a certification process for participants that will begin in April.  It is important to understand what FedNow is and is not – to that end, the Massachusetts Bankers Association will be exploring this issue and many other concerns at a professional development workshop, “Are You Ready for FedNow?” on March 29th at the Sheraton Hotel in Framingham, MA.

This workshop is being hosted jointly by the MBA and the Federal Reserve Banks of Boston and Chicago.  Fiserv and COCC will also participate in the workshop to provide their unique role in assisting community and regional banks with building on the FedNow service.

The certification process mentioned above will ensure that early adopters complete a robust testing program to ensure their readiness for implementation, as well as provide an assessment on the network experience ahead of the go-live date.

To read the Federal Reserve press release, please click here.

FDIC Clarifications on Bridge Banks and Contractual Obligations

On March 14th, the Association attended a listening session and meeting with key FDIC staff overseeing the structure and organization for the two bridge banks, Silicon Valley Bridge Bank and Signature Bridge Bank.  These bridge banks will assume the deposits and obligations of the two failed banks and the agency confirmed these new institutions are operating as full-service banks.  FDIC staff directly stated on the call that “everything [SVB and Signature Bank] could do last week, they can do this week.”

Notably, the FDIC staff indicated that the bridge banks will pay insurance assessments if they persist into the next billing periods.  They expressed hope that this wouldn’t be necessary as they remain optimistic to find a private sector buyer.  Finally, the FDIC would not speculate on the structure of the special assessment to the industry to replenish the Deposit Insurance Fund, saying only “we all want that assessment to be as small as possible.”

To read more about the contractual obligations, please visit the FDIC website by clicking here.

Secretary Yellen Testifies to the Senate Finance Committee

Treasury Secretary Janet Yellen testified to lawmakers on Capitol Hill yesterday that the United States banking system is sound and Americans can feel confident that their deposits will be there when needed.  The Secretary fielded rounds of questions from lawmakers about the state of the banking system following recent failures of Silicon Valley Bank and Signature Bank.  Senator Elizabeth Warren (D – MA) asked about supervisory stress testing for intermediate-sized banking institutions, and the Secretary then explained the tests referenced were related to bank capital, not liquidity.  “And in these bank failures, liquidity played an important role,” Yellen said.

The Senate Finance Committee Hearing can be viewed by clicking here.  Full notes on the Secretary’s remarks are not available in text at press time.

Joint Statement by Government Agencies on First Republic Bank

The Treasury Department, Federal Reserve, FDIC, and OCC announced on Thursday March 16th that 11 banks made $30B in deposits to First Republic Bank.  The bank has experienced stock price declines and deposit losses, and the deposit injection comes after reported meetings in recent days with Washington officials.

The statement is brief but can be read by clicking here.