Bank regulation

• Top officials at Cboe Global Markets Inc., Nasdaq Inc. and the New York Stock Exchange in a letter to the Federal Reserve urged the central bank to ease capital rules around banks in options markets. The exchanges said that as options trading has grown in the wake of the coronavirus pandemic, providing a lifeline for investors looking to protect themselves from the otherwise volatile markets, regulations could sideline the banks that keep the market going. 

• Groups representing the mortgage industry, including the Housing Policy Council, the American Bankers Association and the Mortgage Bankers Association, said in a letter to Treasury Secretary Steven Mnuchin and other federal officials that they want to give borrowers a three-month break from making mortgage payments, with the possibility of extending the reprieve to 12 months. In return, the groups said they need help from the government, potentially including access to loans and liquidity programs via the Federal Reserve.

• Financial regulators urged banks to offer small-dollar loans, anticipating a growing need during the coronavirus pandemic. After most banks pulled back from offering small-dollar products to consumers after 2013 guidance from the Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency, those agencies and the Fed Board have discussed issuing new guidance that encourages banks to re-enter the market, and agency staff said that more permanent and detailed guidance is still in the works. 

• Financial regulators have given banks up to two additional years before they need to comply with the new “current expected credit loss” accounting standard, a move designed to encourage lending during the coronavirus crisis. The Fed, FDIC and the OCC also said they would speed up the implementation of a new methodology of measuring counterparty credit risk in derivatives transactions, with the aim of reducing the amount of capital lenders need to hold to make those transactions.

Economic stimulus bill

• President Donald Trump signed into law the $2 trillion economic stimulus package, the largest emergency spending bill in U.S. history. The law authorizes the Treasury Department to send $1,200 to many Americans and creates a $1 trillion business loan program to help cushion the economy from the coronavirus pandemic.

Trump administration 

• Trump said he wants to open back up the U.S. economy by Easter Sunday by easing off social distancing recommendations, saying on a cable show that “this cure is worse than the problem.” The World Health Organization has warned that the United States could become the new epicenter of the coronavirus pandemic, as Trump has increasingly floated his views on the subject.

• Mnuchin said the United States may consider limiting trade hours, but agreed with financial regulators at a meeting of the Financial Stability Oversight Council that markets should stay open. Mnuchin has previously mentioned shortening trading hours, prompting rare criticism from CME Group, the country’s largest exchange operator, which said in a statement that it was “quite surprised” about Mnuchin’s comment and that shorter hours “make no sense.” 

• Mnuchin indicated that the government would take stakes in airline carriers as the industry receives billions of dollars in direct grants to the companies — plans that were revealed when direct help for airlines became a roadblock for Republicans getting onboard the $2 trillion stimulus package, people familiar with the matter said. 

Federal Reserve

• The Fed unveiled unprecedented measures before U.S. markets opened Monday and signaled that it is willing to pull out its full playbook to help cushion the economy from the fallout of the coronavirus pandemic, saying it would buy unlimited amounts of Treasury bonds and mortgage-backed securities and would set up programs to make sure credit continues to reach companies and state and local governments. The central bank delivered the news with an unusually stark message that “it has become clear that our economy will face severe disruptions” and that “aggressive efforts must be taken across the public and private sectors to limit the losses to jobs and incomes and to promote a swift recovery once the disruptions abate.” 

• Fed Chairman Jerome Powell signaled that the Fed has not exhausted its toolkit to help offset the economic damage from the coronavirus pandemic, saying in a broadcast interview that “we’re not going to run out of ammunition.” Powell said the central bank is targeting “places where credit is not being offered where it should be offered” and that the U.S. economy “may well be in a recession.”

• The Fed has asked BlackRock Inc.’s Financial Markets Advisory Unit to manage the billions of dollars in bonds and mortgage-backed securities on behalf of the New York Federal Reserve as part of the central bank’s effort to ease the blow to markets dealt by the coronavirus pandemic. BlackRock will oversee another vehicle for buying already issued investment-grade bonds, including investment-grade bond exchange traded funds, of which BlackRock is the largest fund manager and could benefit from fees if the Fed buys its ETFs.

• Trump said he is “happy” with Powell and his moves to combat the economic fallout of the coronavirus pandemic. Trump said during a press conference that he called Powell and told him that he was doing a “good job.”

• The House and Senate are out of session this week. 

• Brookings will host a webinar titled “Wall Street Comes to Washington health care roundtable” on Tuesday.

1) House leaders seek to expedite emergency aid package amid uncertainty about GOP lawmaker delaying measure
John Wagner et al., The Washington Post

2) U.S. to Take Stakes in Airlines in Exchange for Grants, Mnuchin Says
Siobhan Hughes et al., The Wall Street Journal

3) Bankers Pledge Mortgage Help, but Want Billions
Emily Flitter and Matthew Goldstein, The New York Times

4) Trump weighs restarting economy despite warnings from U.S. public health officials
John Dawsey et al., The Washington Post

5) Regulators Issue Coronavirus Guidance on Small-Dollar Lending: Instant Reaction
Claire Williams, Morning Consult

6) Most Americans say they have no savings
Dion Rabouin, Axios

7) Powell on whether the Fed has enough firepower: ‘We’re not going to run out of ammunition’
Jeff Cox, CNBC

8) Voters More Worried About Health Than Economy, Want Social Distancing to Stay
Yusra Murad, Morning Consult

9) Debit cards may be used for stimulus payments
Brian Faler, Politico

10) Fed, Other Regulators Ease Constraints for Virus-Hit Borrowers
Jesse Hamilton, Bloomberg