Fed orders post-crisis crackdown at big banks
Source: McClatchy Newspapers
The Federal Reserve moved Tuesday to correct one of the main causes of the 2008 financial crisis, ordering the nation’s largest domestic banks and foreign ones operating in the United States to hold more capital in case things go bad.
The long-anticipated rule covers banks both domestic and international with assets above $50 billion. It was required as part of the sweeping revamp of financial regulation back in 2010 that followed the most devastating financial crisis since the Great Depression. It aims to reduce system-wide risks.
Before the crisis, large interconnected financial institutions, many of them global in scale, were spottily supervised or had portions of their businesses supervised by multiple regulators. No one regulator was seeing the complete picture of the financial institution’s activities and risks.
“As the financial crisis demonstrated, the sudden failure or near failure of large financial institutions can have destabilizing effects on the financial system and harm the broader economy,” said Janet Yellen, the new Fed chairwoman. “And as the crisis also highlighted, the traditional framework for supervising and regulating major financial institutions and assessing risks contained material weaknesses.”
Read more: http://www.sacbee.com/2014/02/18/6169126/fed-orders-post-crisis-crackdown.html
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