Cap Markets

Securities and Exchange Commission Chair Gary Gensler and Treasury Under Secretary for Domestic Finance Nellie Liang see urgency in shoring up liquidity in government debt markets during times of stress.

The Infrastructure Investment and Jobs Act provides billions in grants for state and local governments. The challenge now is how quickly and effectively they can spend it amid an inflation–fueled rising–rate environment.

Bank loans to private equity, mortgage companies as well as other lightly regulated — and increasingly volatile — industries have soared in recent years. The central bank says it needs to know how leveraged those borrowers are and how much risk they pose to the banking system.

On paper, the deal was a no-brainer: a $15 billion debt financing that would net banks hefty fees and kick off a year of mega-acquisitions even as central banks tightened the spigots on their pandemic support. Yet eight months after agreeing to finance the leveraged buyout of Citrix Systems, Wall Street is now staring at a very different picture.

The Swiss bank's municipal-underwriting subsidiary lost out on a bond deal after the state comptroller included the parent company on a list of firms he deems "boycott" the fossil fuels industry.

The Fed chair said actively selling securities will become necessary as it looks to reduce its balance sheet, but not anytime soon.

A Texas city declined to award a bond deal this week to Citigroup even though the bank submitted the most competitive bid, showing how Wall Street is still contending with a Republican-backed state law that punishes financial firms for taking on gun policies.

JPMorgan Chase, which has mostly been absent from the business of underwriting Texas municipal bonds for the past year, plans to revive its work with the state and its local governments soon.

JPMorgan Chase led U.S. banks increasing direct loans to states and local governments last quarter as the firms filled a void left by mutual fund investors who fled the traditional municipal bond market amid soaring inflation and surging yields.

The Biden administration is poised to put its stamp on the banking regulatory landscape, but there are few slam-dunk solutions that will satisfy both the industry and a vocal Democratic base.