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5/30/13 - Financial Regulators Flag Systemic Concerns

The financial services industry has closely followed regulators' efforts in the past three years to implement the sweeping reform agenda that lawmakers enacted in response to the financial crisis. Regulators' own observations about current and future vulnerabilities — drawn from their continuous monitoring of the financial system — have attracted less attention, but may inspire additional policy reforms.

The Financial Stability Oversight Council's annual report released last month may serve as a roadmap to regulatory action in the coming months. Complexity of financial institutions and markets is a common thread in many of the emerging risks discussed in the report, as is the concern that the current regulatory framework may not be adequate to address them. Please click below to read a Sightlines InFocus by Susan Krause Bell, "Financial Regulators Flag Systemic Concerns," which concludes that financial institutions can expect a growing focus on the risks presented by the very largest institutions, and on the vulnerabilities created by complex and rapidly evolving technology — including complex, assumption-driven models.

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