Fed an­nounces new re­port on fi­nan­cial sta­bil­ity

The Trentonian (Trenton, NJ) - - BUSINESS - By Mar­tin Crutsinger

WASH­ING­TON >> The Fed­eral Re­serve said Fri­day it will be­gin is­su­ing a new re­port twice a year as­sess­ing the sta­bil­ity of the U.S. fi­nan­cial sys­tem.

The Fed said the first re­port will be is­sued on Nov. 28. It will pro­vide in­for­ma­tion on po­ten­tial fi­nan­cial vul­ner­a­bil­i­ties tracked by the cen­tral bank such as val­u­a­tions for bank loans, bor­row­ing by busi­nesses and house­holds and bank fund­ing risks.

“We learned from the fi­nan­cial cri­sis that a re­silient fi­nan­cial sys­tem is crit­i­cal for a healthy econ­omy,” said Fed board mem­ber Lael Brainard. “The pub­li­ca­tion of the Fi­nan­cial Sta­bil­ity Re­port will be an im­por­tant step in pro­vid­ing the pub­lic with more in­for­ma­tion about the board’s as­sess­ment of fi­nan­cial sta­bil­ity.”

The Fed said the new sta­bil­ity re­ports would be is­sued ev­ery spring and fall.

After the fi­nan­cial cri­sis, Fed of­fi­cials de­cided bank reg­u­la­tors had done a poor job in mon­i­tor­ing fi­nan­cial mar­ket threats and the cen­tral bank cre­ated a new di­vi­sion to fo­cus on these threats.

Ran­dal Quar­les, the Fed’s vice chair­man for su­per­vi­sion, said in a speech Fri­day that the cen­tral bank is cur­rently re­view­ing pos­si­ble changes to the an­nual stress tests it per­forms on the coun­try’s largest banks. The Fed be­gan con­duct­ing the tests in the wake of the 2008 cri­sis.

“Our stress test­ing regime — like the bank­ing and fi­nan­cial sys­tem that it eval­u­ates — will and should evolve as we con­tinue to learn from ex­pe­ri­ence in the man­age­ment of this tool.”

Quar­les will tes­tify be­fore House and Se­nate com­mit­tees next week dis­cussing the cen­tral bank’s su­per­vi­sion ac­tiv­i­ties this year.

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