The Federal Reserve, seeking to cut risks in the financial system, is pushing Bank of New York Mellon Corp. to speed changes in a $1.8 trillion bond-lending market that helped fuel the 2008 crisis.
BNY Mellon, which handles about 80 percent of loans in the so-called triparty repo market, will complete computer upgrades and projects aimed at bolstering the system by 2014, two years earlier than planned, according to a document on its website. The bank had pledged in February to finish the tasks by 2016, prompting the Fed to criticize industry-led reforms as too slow.
Since then, the Fed has used its supervisory powers to get quicker results, said three people with knowledge of the matter, who requested anonymity because the talks are confidential. JPMorgan Chase & Co., which clears the rest of triparty repo trades, previously agreed to complete reforms before 2014. The upgrades would make the market less prone to the panics that destroyed Bear Stearns Cos. in 2008 and triggered a $148 billion Fed bailout program to keep other brokerages from collapsing.
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