After the financial crisis forced governments to bail out systemically important banks, regulators implemented measures to safeguard the financial system. Recent studies suggest that their efforts are working – but they still have a long way to go.
CAMBRIDGE – Headlines about banks’ risks to the financial system continue to dominate the financial news. Bank of America performed poorly on the US Federal Reserve’s financial stress tests, and regulators criticized Goldman Sachs’ and JPMorgan Chase’s financing plans, leading both to lower their planned dividends and share buybacks. And Citibank’s hefty buildup of its financial trading business raises doubts about whether it is controlling risk properly.
CAMBRIDGE – Headlines about banks’ risks to the financial system continue to dominate the financial news. Bank of America performed poorly on the US Federal Reserve’s financial stress tests, and regulators criticized Goldman Sachs’ and JPMorgan Chase’s financing plans, leading both to lower their planned dividends and share buybacks. And Citibank’s hefty buildup of its financial trading business raises doubts about whether it is controlling risk properly.