Clifford Rossi

Looking back on last summer provides some perspective. What's worse: a $2 billion nick to one bank's profits, or a massive computational error leading to the unprecedented downgrade of the world's most powerful economic force?

Risk management is fundamentally a social science built on market data that sometimes misbehaves. The models are fed by crucial assumptions about the likelihood of different market outcomes.

The Dimon Senate hearing was a missed opportunity to spotlight the criticality of risk management practices. When banks get into trouble, you can follow the trail back to a lack of governance, process and controls.

It's too easy to blame the agency. With a job as complex as the FAA's, but less than a tenth of the staff, the OCC for practical and philosophical reasons relies on banks to manage and monitor risk.

If ratified by the Fed, the new liquidity ratios could constrain lending, at the worst possible time. A proposed capital buffer is theoretically countercyclical, but needs more work.

Recent delays by the CFPB and Treasury point toward a systemic policy malaise that threatens to make the housing recovery a decade-long event.

JPMorgan's trading loss should send shudders down the spine of shareholders, management and regulators. The once paragon of risk management has turned into a case study of what not to do.