Now that the Federal Reserve has raised interest rates for the first time in seven years, it’s as good a time as any to worry about risks in the banking system—and, thankfully, two different regulators have given us some fresh reason fret. Let’s get to it.
We can start here in the United States, where the Office of the Comptroller of the Currency just released its semi-annual review of the banking system and what challenges lie ahead for it. To a certain extent, what the OCC says is not news: small and large banks alike still struggle to find growth, so they are easing up their loan writing standards, and many seem unprepared for the vigorous risk management you need should you be in a sluggish industry where taking bolder risks is required for growth.
