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Fed proposes series of risk management rules for banks

Dec 26, 2011 Philip Burgess

Regulators are pushing for enhanced risk management procedures in the U.S. financial industry, reflecting continued pressure from officials to prevent a market collapse such as the one suffered in 2008. This week, the U.S. Federal Reserve is proposing standards that would establish triggers for regulatory enforcement of weak firms and mandate risk oversight and planning by boards of directors, Bloomberg reports. The rules target banks with assets of $50 billion or more and financial firms deemed "systemically important." "You do see a sense of regulatory forbearance that continues with the Fed in that they understand that to help these banks earn their way back to financial health, you just can't slap an increased capital requirement overnight," Mark Williams, executive-in-residence at Boston University and a former bank examiner, told Bloomberg. The measures are also part of mandatory regulations set forth by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. Looking ahead to 2012, banks and financial institutions can expect an increasingly advesre marketplace, as they are forced to balance risky credit decisions, profit demands, public displeasure and regulatory compliance.