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OFR: Bank size not the whole story when measuring systemic importance

Joe Mont | October 27, 2017

.A new report from the office of Financial Research, an independent bureau within the Treasury Department, makes the case that, as its title says, “Size Alone is Not Sufficient to Identify Systemically Important Banks.” It argues that “a multifactor approach” is superior to considering asset size alone when assessing a bank’s systemic importance.

“Since the last financial crisis, policymakers have sought to impose tougher standards on any bank whose failure would pose the greatest risk to financial stability,” OFR Director Richard Berner wrote in an Oct. 26 blog post. “Where should the line be drawn in identifying banks to subject to those standards?”

OFR was established by the Dodd–Frank Act with a mission to promote financial stability through research, data collection, and analyzing market risks.

Some banks have been...

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