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What the FSOC’s Annual Report Means for Banks

Claimed that post crisis financial reforms have helped temper the risk of another crisis

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  • Written by  Banking Exchange staff
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  • Comments:   DISQUS_COMMENTS
What the FSOC’s Annual Report Means for Banks

Not surprisingly, the Financial Stability Oversight Council claimed that post crisis financial reforms have helped temper the risk of another crisis in its annual report.

“It is clearly stronger and much better positions to withstand shock or an economic downturn than it was before the crisis.” Well, maybe and maybe not, as many of the regulations do not match up to where the FSOC sees the greatest risk. While the risk remains moderate in its estimation, the FSOC has sighted the following threats to financial institutions.

  • Cybersecurity
  • Effective transition away from Libor to continue
  • Federal Debt burden
  • Brexit

The report did not focus on the size of the banks that could be threatened by these factors.  It is likely, in the estimation of Banking Exchange, that all but Cybersecurity could pose a bigger threat to the nation’s largest banks than small to midsize banks that are less exposed to institutional investments.   However, Cybersecurity should be on the front of every bank’s priority list because it can effect any bank.     

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The U.S. has come a long way in its journey to real-time payments, with TCH and Zelle in market and FedNow just around the corner. COVID-19 has accelerated that demand to move to real-time. Yet many financial institutions remain unconvinced of the need to move, with less than 3% of financial institutions signed up today.

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