Boston Fed's Rosengren Describe Progress Since Financial Crisis as 'Relatively Modest'

        By Ben Leubsdorf
        BOSTON--U.S. regulators have made only modest progress since the 2007-2009 financial crisis in addressing potential risks to the stability of the financial system, Federal Reserve Bank of Boston President Eric Rosengren said Saturday.
        "We've made some progress," Mr. Rosengren said during a panel at the American Economic Association's annual meeting in Boston. "I'd say the progress has been relatively modest, given the shock that we experienced."
        One success in efforts to address stability risks, he said, are the Federal Reserve's "stress tests" that evaluate whether big banks could survive an economic downturn.
        The Fed's supervision of banks in 2007 was "tied to backward-looking earnings," he said. But now, he said, the central bank can move quickly to address potential problems, for example by halting banks' dividend payments. He called the stress tests "one of the major innovations" in efforts to prevent another crisis.
        But, Mr. Rosengren added, "there's still an awful lot of risk" in the financial system. He mentioned wholesale funding as a particular area of potential concern.
        Mr. Rosengren used to head the Boston Fed's regulation and supervisory efforts until he became the regional reserve bank's president in mid-2007. In recent years, he has argued for additional efforts to address stability risks in financial markets, including money-market funds, broker-dealers and short-term funding.
        Write to Ben Leubsdorf at ben.leubsdorf@wsj.com
        (END) Dow Jones Newswires

        January 03, 2015 13:06 ET (18:06 GMT)

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