Al­most half of big US banks fail to sat­isfy Fed

Belleville News-Democrat - - Stay Connected - BY JESSE HAMIL­TON Bloomberg News

More than 40 per­cent of ma­jor U.S. lenders are fail­ing to sat­isfy the Fed­eral Re­serve’s ex­pec­ta­tions in key ar­eas of risk man­age­ment, the cen­tral bank said Fri­day in a re­port that re­veals the reg­u­la­tor’s over­all assess­ment of the in­dus­try.

The Fed’s in­au­gu­ral Su­per­vi­sion and Reg­u­la­tion Re­port high­lights a num­ber of pos­i­tives, but it also shows how risks may now come from mis­man­age­ment, cy­ber­at­tacks and fail­ures to pro­tect the bank­ing sys­tem. Those faults are con­tribut­ing to so many firms fail­ing to make the top two of the five cat­e­gories that mea­sure a bank’s strength.

The Fed also tal­lied the num­ber of pri­vate in­ter­nal di­rec­tives it is­sues to bankers to fix prob­lems. The big­gest U.S. banks get dozens of them each year, and the num­bers have gen­er­ally been de­clin­ing.

De­spite some of the short­com­ings re­vealed in the re­port, Fed Vice Chair­man for Su­per­vi­sion Ran­dal Quar­les pointed out at a Wash­ing­ton event ear­lier in the day that “all the data would show that it’s a very healthy in­dus­try.” He and other reg­u­la­tors ap­pointed by Pres­i­dent Don­ald Trump have been re­vis­ing reg­u­la­tions put in place after the 2008 fi­nan­cial cri­sis, seek­ing to re­duce cap­i­tal bur­dens, dial back stress-test de­mands and re­write Vol­cker Rule lim­its on banks’ abil­ity to bet with their own cap­i­tal.

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