Blog: Has the Volcker Rule Affected Market Liquidity and Does it Matter?
Revising certain aspects of the Volcker Rule could reduce the unnecessary burdens and costs associated with implementing and complying with the rule.
Serving as the official blog of the Financial Services Forum, BankNotes is where our team analyzes and discusses the latest proposals, ideas, and news surrounding our eight member institutions, the U.S. financial sector, and the economy. Our goal is to provide thoughtful insights on the issues impacting the eight largest and most diversified U.S.-based financial institutions, as we promote policies that support savings and investment, deep and liquid capital markets, a competitive global marketplace, and a sound financial system.
The Federal Reserve last month highlighted a number of important advancements to the strength and resiliency of large financial institutions in its regular Supervision and Regulation and Financial Stability reports. “The safety and soundness of large financial institutions continue to improve,” the Supervision and Regulation Report said. Following are highlights of the reports as they relate to the eight members of the Financial Services Forum:
“The general trend in the overall level of supervisory findings indicates improved risk management” at 12 large banks operating in the United States, including the eight Forum members, the Fed said in its Supervision and Regulation Report. Notably, the central bank said that the number of supervisory findings for this group had fallen significantly during the past five years.
“As firms implemented and sustained improvements in governance, risk management, and controls, more supervisory findings were closed than were issued, resulting in an overall 35 percent reduction in outstanding findings,” the Fed said.
The Federal Reserve in both reports highlighted strong capital levels at large banks.
The largest U.S. banks remain strongly capitalized,” the Fed said in its Financial Stability Report. “Solvency risk at the largest banks appears to have remained low, and the results of the most recent stress test … indicated that these banks are well positioned to continue lending to households and businesses even in the event of a severe global recession.”
The eight members of the Financial Services Forum have increased their tier 1 capital by 43 percent since 2010. Capital acts as a buffer for banks to absorb unexpected losses.