Tags: Federal Reserve | Brainard | bank | regulation

Fed's Brainard Cites Need for Biggest Banks to Shrink

Thursday, 09 Jul 2015 12:04 PM

The eight most important U.S. financial institutions may still cast too large of a shadow over the banking system, according to a Federal Reserve official on Thursday, and the firms could realize it's in the best interest of stakeholders to shrink.

Risk has been dramatically reduced across the banking industry since the 2008 financial crisis, Fed Governor Lael Brainard said, but the size and scope of just a few firms remains a concern.

Brainard also suggested additional compensation measures that Wall Street could take to ensure bankers' incentives are properly aligned - measures that would be in addition to rules already proposed by law.

"Notwithstanding the fact that the law does not prescribe broad structural changes, some observers may judge whether reform has gone far enough based on the extent of changes in the scope or scale of the U.S. systemic banking institutions relative to the crisis," Brainard said in prepared remarks for a Bipartisan Policy Center event here that looks at the 2010 Dodd-Frank Wall Street reform law.

Brainard said the eight most important systemic banking institutions account for 57 percent of total assets in the U.S. banking system, or slightly less than they held in 2009.

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The eight most important U.S. financial institutions may still cast too large of a shadow over the banking system, according to a Federal Reserve official on Thursday, and the firms could realize it's in the best interest of stakeholders to shrink.
Federal Reserve, Brainard, bank, regulation
198
2015-04-09
Thursday, 09 Jul 2015 12:04 PM
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