What I know about cryptocurrency can be inscribed on a head of pin with a jackhammer. But I know it’s a thing; I know it’s a big thing and getting bigger. So, these past few weeks I have been reading with interest (interest, to be clear in this context, is the emotion one experiences watching a NASCAR pileup, whilst not being in one of the cars) the breathtaking collapse of Terra’s stablecoin. Having previously been entirely bereft of any knowledge of the topic, I read with considerable interest that the Terra coin was pegged to the dollar and backed by “algorithms.” Algorithms? The Terra peg was protected, theoretically (let’s emphasize that theoretical part) by allowing Terra’s owners to “burn” coins and buy another cryptocurrency which was designed not as something pegged to the dollar but as a repository of value which would rise and fall on market sentiment (backed by those marvelous algorithms again). A shock absorber to protect the peg. The companion cryptocurrency in this case was called Luna. As Terra lost its peg, you would burn Terra and buy Luna. And if Luna went down, you would burn Luna and buy Terra. Apparently, this all worked as long as everyone firmly believed it worked. Now, apparently, they don’t and it doesn’t. Terra tanked to fractions of pennies on the dollar, as did Luna. How’s that for a hedge? Ouch!
Continue Reading Contagion
risk based capital
Proposed Changes to HVCRE Open for Comment
At long last (at least for those of us who have been checking the Federal Register daily), the proposed HVADC rule has been published in the Federal Register and is open for comment. The public (that’s us!) has 60 days to comment – so all comments are due by December 26, 2017 (Ho ho ho!). …
Yakety Yak – Talk Back: Regulators Respond to HVCRE Complaints
On September 27, 2017, the Federal Reserve, FDIC and OCC released a Notice of Proposed Rulemaking (NPR) that they describe as simplifying compliance with certain aspects of the agencies’ risk based capital (RBC) rules to, among other things, replace the standardized approach’s (SA) treatment of HVCRE loans with a simpler treatment for most acquisition, development or construction (ADC) loans called high volatility acquisition, development or construction (HVADC). Spoiler alert: it just replaces vague and confusing rules with a slightly different set of vague and confusing rules.
Continue Reading Yakety Yak – Talk Back: Regulators Respond to HVCRE Complaints