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Fed to Rule out New Rules for Confining the Risk Faced by Banks

The Federal Reserve’s revised proposal will be the central bank’s latest step to minimize the systemic risk posed by the biggest banks—not based on size, but on interconnections with other large firms—by limiting how much exposure institutions may have to each other and to their counterparties.

One of the problems with big Wall Street banks in 2008 was that they had too many of their financial eggs in one basket. When Lehman Brothers and the American International Group started to collapse, the banks that did huge amounts of business with them also started collapsing. So the policy makers are planning to rule out a new plan that seeks to restrain, how quickly risk can spread among the country’s biggest banks.

News Characteristics

Date : Mar 15, 2016
Region : North America
Industry : Banks
Function : Risk Management
Sub-Function : Operational Risk