U.S. financial regulators start contingency planning as virus reaches Washington

By Pete Schroeder, Chris Prentice and Katanga Johnson WASHINGTON (Reuters) - U.S. financial regulators are preparing contingency arrangements, including travel restrictions and home-working, to ensure they can effectively oversee the financial markets as the coronavirus closes in on the U.S

Reuters March 08, 2020 00:05:21 IST
U.S. financial regulators start contingency planning as virus reaches Washington

US financial regulators start contingency planning as virus reaches Washington

By Pete Schroeder, Chris Prentice and Katanga Johnson

WASHINGTON (Reuters) - U.S. financial regulators are preparing contingency arrangements, including travel restrictions and home-working, to ensure they can effectively oversee the financial markets as the coronavirus closes in on the U.S. capital.

On Friday, U.S. officials said the first three cases of the flu-like disease had been diagnosed in Montgomery County, Maryland, home to thousands of federal workers who travel in to offices in nearby Washington daily.

Agencies including the Commodity Futures Trading Commission (CFTC), the Securities and Exchange Commission (SEC), and the banking regulators also have offices in New York, San Francisco and New Jersey where other cases have been reported.

As New York banks start triggering their contingency plans, their watchdogs have also begun to take precautions, allowing more home-working, cancelling and limiting travel, calling off conferences, and restricting some external meetings.

"The safety and health of CFTC employees is our top priority," Michael Short, director of public affairs at the agency said on Friday. "The CFTC continues to make all necessary preparations to accommodate scenarios that might arise."

The derivatives watchdog has canceled some foreign travel and is allowing essential overseas trips on a case-by-case basis, he said. Domestic travel is still permitted, but staff are free to reschedule trips unless it is mission-critical.

Likewise, the Federal Deposit Insurance Corporation said it had taken steps to limit non-essential international travel. The Office of the Comptroller of the Currency (OCC) said it had reviewed its contingency plans, without elaborating.

On Thursday, the OCC along with the Federal Reserve and the FDIC canceled a joint conference on fair lending scheduled for next week "out of an abundance of caution," they said.

Reuters also reported on Friday that the U.S. Federal Reserve had taken the unusual step of quarantining U.S. dollars it receives from Asia for up to 10 days.

A spokeswoman for the SEC said the agency was following government advice that staff stay home when they are sick or when they have returned from coronavirus hotspots.

"The agency also is focused on ensuring telework readiness and adjusting travel arrangements where appropriate," she added.

JUGGLING

The coronavirus has spread to 85 countries, infecting more than 100,000 people, according to a Reuters tally based on statements from health ministries and government officials.

U.S. Treasury debt yields plunged to historic lows on Friday, while U.S. stocks tanked and the Dow Jones shed more than 800 points before paring losses.

The U.S. Office of Personnel Management, which oversees federal workers, trains federal agency staff annually on contingency plans for disruptions like a lapse in funding or epidemic-type scenarios.

"The first level of planning is behind the scenes and to make sure that you've got a contingency plan for anything and everything that can happen," said Thomas Vartanian, a George Mason law professor and former senior OCC official.

Still, the market turmoil is adding to the regulatory workload, requiring officials to ramp-up market monitoring, and communicate daily with one another and the industry.

Short said the CFTC's market intelligence team was providing multiple daily briefings, while the OCC said it had stepped up scrutiny of banks to ensure their plans are "relevant" and reflect a "comprehensive understanding" of their specific risks.

The agencies are also grappling with other issues, including how companies should disclose financial risks created by the virus, and which trading and lending rules may need to be relaxed to accommodate the disruption.

On Friday, the Fed said it was considering how it could encourage financial firms to ease loan repayment terms for people adversely affected by the virus. The central bank, alongside the OCC and FDIC and other agencies, also on Friday issued updated contingency planning guidelines to the industry.

Vartanian said regulators had to strike a balance between bolstering confidence in system safeguards, without taking measures that could actually increase market panic.

"Your job as a regulator is to make sure everybody has complete confidence in the system, because if the confidence disappears, it doesn’t matter what the crisis is."

(Reporting by Pete Schroeder, Chris Prentice and Katanga Johnson; Editing by Michelle Price and Alistair Bell)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

Greek police clash with protesters in rally against mandatory vaccinations
World

Greek police clash with protesters in rally against mandatory vaccinations

ATHENS (Reuters) - Greek police used teargas and water cannon to disperse people who had gathered in central Athens on Saturday to protest against mandatory COVID-19 vaccinations. More than 4,000 people rallied outside the Greek parliament for a third time this month to oppose mandatory inoculations for some workers, such as healthcare and nursing staff.

Two Turkish soldiers killed in attack in northern Syria
World

Two Turkish soldiers killed in attack in northern Syria

ISTANBUL (Reuters) - Two Turkish soldiers were killed and two were wounded in an attack on their armoured vehicle in northern Syria, and Turkish forces immediately launched retaliatory fire, Turkey's defence ministry said on Saturday. "Our punitive fire against terrorist positions is continuing," the statement on Twitter on said. It did not specify where the attack occurred, but media reports said it was in the al-Bab area.

Brazilians take to streets again to demand Bolsonaro's impeachment
World

Brazilians take to streets again to demand Bolsonaro's impeachment

By Marcelo Rochabrun SAO PAULO (Reuters) - Protesters took to the streets in several Brazilian cities on Saturday to demand the impeachment of far-right President Jair Bolsonaro, whose popularity has fallen in recent weeks amid corruption scandals against the backdrop of the pandemic. This week, news broke that Brazil's defense ministry told congressional leadership that next year's elections would not take place without amending the country's electronic voting system to include a paper trail of each vote. Bolsonaro has suggested several times without evidence that the current system is prone to fraud, allegations that Brazil's government has denied