Bankers and their difficult semantics

QT. Bank reserves. Balance sheet normalization.

They really are going through all the motions in 2019. It’s as if officials can sense something just isn’t quite right. This would amount to a serious setback, of course, having assured the public repeatedly how the financial system has been remade into “resilient.” Janet Yellen, call your current office, Jay Powell’s Federal Reserve isn’t quite so sure any more about that whole bank crisis thing you said.It’s hard to gauge whether it is mainstream thought that is evolving, or merely the form of its continued stupidity. Nothing ever stands still in this world, but that doesn’t always represent progress.The Federal Reserve’s Vice Chairman for Supervision is Randall Quarles. He also chairs the Financial Stability Board. Both are resume-padding devices, filling out required requirements about pedigree. Thus, his opinions on monetary matters are given great consideration regardless of their content.Recently, speaking at a monetary policy forum, he made what sounds like a very odd claim:Occasionally we hear that banks feel they are under supervisory pressure to satisfy their [high-quality liquid assets] with reserves rather than Treasury securities…. that’s not the case… I don’t think we should have an official preference for reserves.What he’s really trying to say is that bankers are telling him, and presumably FRBNY, that they are worried about the level of bank reserves. The Fed is reducing that level as it winds down its four prior QE’s. As assets runoff the asset side of its balance sheet, unless something offsetting is done the remainder on the liability side, bank reserves, must fall by an equal amount

OK, this is a complaint about the mis handled floor thing, no corridor.  The central banker wants a representative sample of all depositors.  In this case the central banker proposes offering deposits to primary dealers who have HQLA thiniges as collateral.

Here is what needs to be changed.  OK, great, bring in this new class of players, but give them direct access to deposit and loan facilities, on a cash in advance with expectation of interest swaps applied as needed.  Their deposits backed by their loans, or visa if you want.

The HQLAS thingies become a pre-qual reserve requirement, in this case.  It is a congestion fee applied on entry and exit, bu delivered in the form of reserve regulations that result in a tding badge.

I do not are if the Fed is worried about Congress, we all are. What I want is:
A  congestion priced free entry and exit from Fed S/L accounts such that Fed reserves cover a typical 3% price variation at any given moment. An asynchronous interest swap, fair price neutral S/L currency function.