The Fed’s recent action capping dividend payments might prove inadequate once the coronavirus crisis really hits banks’ capital.
In separate letters to Congress, the Fed asked for legislative action to ease Tier 1 capital minimums while the FDIC said it may use its own authority to address the market strain on banks.
The agency is still moving forward on key regulations dealing with payday lending and mortgage underwriting despite new demands posed by the crisis.
Critics who argue this crisis mirrors the 2008 financial panic when Congress bailed out banks have it wrong. The new relief package in response to the coronavirus pandemic was necessary to save livelihoods, and more can be done.
If the new accounting standard poses too many risks during an economic crisis, then it's probably not a good idea at all.
The Fed must set up a "family financial facility" that sends billions to households and small businesses so banks don’t misdirect relief funds.
There are several forbearance measures the agencies can take now to keep banks from failing in a downturn triggered by the coronavirus.
If banks are unable to weather the economic fallout from the outbreak, calls for more dramatic reforms could get louder.