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8/9/18 - Art Angulo on the Federal Reserve’s Stress-Capital Buffer

Promontory Managing Director Art Angulo was quoted in a Risk.net article  about whether banks’ balance sheets should be allowed to shrink during times of stress.

“The Fed has had a bias of conservatism in the stress tests. They’ve dialed that back by saying ‘we’ll hold balance sheets constant’. Would they go so far as allowing balance sheets to shrink? It’s unlikely, but if they did, they might allow a floor – something like a 10% drop in trading assets to a 2% drop in loans, if they wanted to be generous,” Angulo said.

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