Lucas Questions Reduced Liquidity in the Treasury Market

Washington, DC – Today, the House Financial Services Committee held a hearing entitled, “Oversight of Prudential Regulators”. Congressman Frank D. Lucas questioned Vice Chair Mikki Bowman about reduced liquidity in the Treasury market, and if she expects to increase capital levels.

SELECTED REMARKS: Lucas: “The government shutdown, quantitative tightening, and reluctance to use the Fed’s Standing Repo Facility have raised concerns about reduced liquidity in the Treasury market. Vice Chair Bowman, as you finalize the Basel endgame proposal how will you keep in mind the implications of capital requirements on Treasury market liquidity and functioning – given the Fed’s report that the banking system is well capitalized, do you expect to increase capital levels?“ Bowman: “We’re currently in the process of reviewing the capital framework by looking at all four of the pillars of capital, including the SLR which we just finalized… It’s critically important that all of the work that we’re doing does not result in impairing the ability of the banks and of the economy to support the Treasury market and its functioning so we are certainly attune to any risks that might be presented by the calibration of those proposals.”

You can watch his full remarks by clicking here or on the image above.

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