Tags: US | Fed | After | The | Crisis

Fed Report Looks at Ways to Detect Risks

Monday, 19 Apr 2010 01:18 PM

 

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink

An early warning system to detect financial problems before they reach crisis proportions must allow policymakers to better pinpoint areas of excessive risk-taking, according to a new Federal Reserve paper released Monday.

More up-to-date statistics — both at the level of individual companies and products as well as the big-picture, industrywide information — are needed, the staff paper said.

Policymakers' analysis of the information should focus on the "recurring underlying themes associated with financial instability" such as the competitive climate among companies that can lead to excessive risk-taking, the paper said.

Fed Vice Chairman Donald Kohn and two staffers wrote the paper to be presented at a statistics conference this week in Frankfurt, Germany.

A persistent challenge for the Fed and for other regulators will be spotting risky products and practices that could put the entire financial system and the broader economy in danger. Lawmakers in Congress overhauling the nation's regulatory structure would have the Fed and other regulators work together on this front.

The Fed has been blamed by lawmakers and others for failing to spot problems — namely the explosion of exotic mortgages and mortgage securities along with lax lending standards — that led to the worst financial crisis since the 1930s.

Both economic and financial conditions have improved since the depths of the crisis in 2008. Now policymakers are trying to learn from their mistakes as they consider ways to better safeguard against future crises.

Flexibility is crucial, the paper said.

"A key challenge, of course, is that the appropriate tools cannot generally be specified ahead of time but must be designed in response to the particular signals teased" from the data, the paper said.

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Country
Zip Code:
Privacy: We never share your email.
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
Top Stories
You May Also Like

Derek Jeter Launches site to Connect Athletes to Fans

Wednesday, 01 Oct 2014 08:18 AM

Derek Jeter was one of the world's most covered athletes in media during his 20-season career with the New York Yankees. . . .

600-Year-Old Canoe Found in New Zealand Has Ties to Polynesian Sailors

Wednesday, 01 Oct 2014 07:16 AM

A 600-year-old canoe discovered in New Zealand has given scientists and historians new insight into the people of the So . . .

Microsoft Announces Windows 10, Skips 9 as a 'Marketing Gimmick'

Wednesday, 01 Oct 2014 07:06 AM

Microsoft announced Windows 10 this week, surprising consumers who anticipated that version 9 would naturally follow 201 . . .

Most Commented

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved