Kate Judge

Very misleading explanation of capital requirements. In lowering capital requirements, regulators are allowing to banks to take on additional debt. Capital is not money locked in a vault. It is the amount of equity a bank uses to fund its operations. wsj.com/finance/bankin…

Spot on comment from @ProfKateJudge in @morningmoneypro if @federalreserve Gov are exercising “independent judgment on matters of financial regulation. If they aren’t, or if they feel like they cannot, then perhaps the Fed should play a smaller role in financial regulation.”

The legal system is working. Judge Boasberg: "The Government has produced essentially zero evidence to suspect Chair Powell of a crime; indeed, its justifications are so thin and unsubstantiated that the Court can only conclude that they are pretextual." cnn.com/2026/03/13/pol…

The exodus from private credit is a reminder to be wary of claims that nonbank financial intermediation can serve as a reliable source of credit in good times and bad. wsj.com/finance/invest…

My partner @kieranwgoodwin has been so right about this space for over a year which has really sharpened my vision. Outflows beget outflows. Gating begets outflows. Selling some of the underlying portfolio to meet minimum redemptions creates losses and begets outflows. Four recent fake abs frauds begets outflows. NAV write downs beget outflows. How is this not going to get way worse, when ‘Frankenstein’s Monster’ of 700bn of products that vastly overpromised liquidity to retail, are so out of favor?

SO banks have ~ $2.8 trillion in unused credit lines to NBFIs.... 200% Exposure at Default for Basel III Just saying. IRA Bank Book industry quarterly released tomorrow. @FDICgov @bankpolicy @BankRegData @tomkeene @SheilaBair2013 @rbrtrmstrng

CPI and PPI translations into PCE suggest core prices in January rose around 0.43%, give or take. That would be the highest month-over-month reading since February (which was +0.448%) and annualizes to 5.3%. It corresponds to a 3.1% y/y rate, the highest since March 2024.

The Fed wants to prevent examiners from probing "reputation risk." This change would cripple the ability of examiners to question a bank like JPM when it persisted in banking Epstein. Debanking can be a problem. Defanging supervision is not the solution. wsj.com/finance/bankin…

Efforts to prevent money laundering and enforce sanctions are broken in the US. Banks continue to incur massive compliance costs. Illicit funding has tended to move to crypto where the enforcement is laughable. Net result = high expense, little impact wsj.com/finance/curren…

@JillCastilla This is a really valuable perspective. The decentralized design of the Fed largely arose out of the nation's commitment to a decentralized banking system. Small banks that are part of, and really serve, their communities. Revitalizing that dynamic is a worthwhile priority.

The swing under Barr's leadership was the most significant and Board-centralized shift I've seen in my career. Decentralized sup/reg allows for better understanding of local communities and should prevent a future SVB type failure. I hope that we don't see an overcorrection, but an undoing of the overdone is necessary if main street banks are going to survive.

The dramatically different regulatory agendas of VC Bowman and VC Barr reveal why it will be very hard for the Fed to retain its role in sup and reg and also remain independent.

SCOOP: There’s only one enforcement attorney left at the CFTC’s Chicago office. Known as a group of heavy-hitters, attorneys and investigators in the Chicago office have had a role in most major CFTC enforcement actions since the birth of the agency in 1975. In recent months, that office has become a ghost town. Three former CFTC attorneys say the office’s reputation made it an appealing target for reductions in force. “I believe I was retaliated against, along with some of my colleagues,” says one who lost their job last summer. “Chicago is the spiritual home of the futures markets; it’s where it all began,” says one former attorney in the Chicago enforcement division. “To wipe out the enforcement staff in a place like Chicago sends a very bad signal to market participants about whether the government is watching what they’re doing and whether or not they have to abide by the law.” Many attorneys pushed out of the agency were mid-career. “If I was a different person,” one told me, “I would launch a crypto scam right now, because there’s no cops on the beat.”

So predictable and so devastating. After the pandemic, an understaffed IRS answered less than 20% of calls it received and tens of millions of taxpayers waited years for their returns to be processed. Rather than modernizing the IRS for the 21st century, we are going backward.

Historical trivia given the focus on whether or not Powell will resign his Fed board seat at the end of his term as chair: Alan Greenspan would “almost certainly” have stayed on the Fed’s board if Clinton hadn’t reappointed him to another term as chair in 1996, according to Bob Woodward’s 2000 biography. “If he had to move down the table out of the chairman’s seat, he felt that there was enough respect for his views that he could still have some influence,” Woodward wrote. H/t @sam_a_bell

Great quote.

Kevin Warsh is a qualified nominee with a deep understanding of monetary policy. However, the Department of Justice continues to pursue a criminal investigation into Chairman Jerome Powell based on committee testimony that no reasonable person could construe as possessing criminal intent. Protecting the independence of the Federal Reserve from political interference or legal intimidation is non-negotiable. My position has not changed: I will oppose the confirmation of any Federal Reserve nominee, including for the position of Chairman, until the DOJ’s inquiry into Chairman Powell is fully and transparently resolved.

Minnesota has been the center of America’s heartbreak—but we are also the center of America’s courage and hope. Ordinary people have done extraordinary things: they have stood up, marched, brought food to their neighbors, and they have not blinked. I am so proud of our state.

Caution in order! Before GFC, bankers pleaded for “light touch” regulation; said they exercised due diligence. GFC showed bankers didn’t understand the complexity of the products or leverage built up. Regulators failed, behind or captured. Don’t forget lessons of the GFC.

@NickTimiraos Congress often has many different aims. When the other financial regulators were also semi-independent, many hoped that the partisanship that arose around DFA might dissipate. We are moving in the opposite direction. That makes sup&reg more of a threat to monetary independence.

If we accept the premise that the polarization of finreg along party lines has created serious political risk for the institution, the bigger question is this: Are we heading towards a similar polarization along party lines for monetary policy? After all, Congress essentially chose the former outcome when it created a VC-S position and then demanded that this person retain full autonomy for the regulatory agenda (first, with Warren's pointed questioning of Powell to ensure he would not interfere with Barr's agenda, and later, when congressional GOP signaled they would cheer any effort by then-President-elect Trump to fire/demote Barr). But I'm not sure Congress really wants a partisan monetary policy.