Safety and Soundness Improvements Made Within the Financial Sector
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- Created on Wednesday, 03 October 2012 20:33
Since the economic crisis, U.S. financial institutions have enacted numerous reforms that have strengthened the safety and soundness of the financial system and have reduced the likelihood of future market collapses. Improvements include:
- capital and liquidity are double pre-crisis levels;
- balance sheets are much more solid;
- proprietary trading desks have been shut down;
- risk management and governance structures have been dramatically improved;
- banks have significantly deleveraged;
- compensation structures have been reformed to closely align the personal incentives of employees with banks’ long-term performance and safety and soundness;
- banks have passed multiple stress tests imposed by the Federal Reserve;
- and banks recently submitted “living wills” to regulators, detailing the structure of each bank company and how companies could be dismantled in the event of a failure.
Overall, the U.S. banking system is safer, more transparent, and more accountable. A sound financial sector is essential to getting the U.S. economy back on track, creating jobs, expanding opportunities for all Americans, and maintaining our global economic leadership.
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Welcome to ForumBlog. This is where our policy team analyzes the latest proposals, ideas, and news surrounding financial sector regulatory reform, trade, and the economy. Our goal is to provide thoughtful insights on the issues impacting the intersection of Wall Street and Washington, as we pursue policies that encourage savings and investment, promote an open and competitive global marketplace, and ensure the opportunity of people everywhere to participate fully and productively in the 21st-century global economy.
