BOSTON – New laws and shake-ups in the regulatory structure are not enough to prevent systemic risk from putting the country’s financial industry in a precarious position.
That’s according to FDIC board member Thomas Curry, who told a group of examiners and supervisors at the NASCUS Annual Meeting here regulators “need to evaluate our own actions” as they pertain to the current economic climate.
The FDIC has shuttered more than 70 institutions this year, and is mulling a second special assessment this year for FDIC-insured banks. “We as supervisors would be remiss if we didn’t examine our own record,” he continued. “We have to acknowledge that most troubled financial service providers were subject to supervision at the state or federal levels, and in some instances supervision was not effective or sufficiently proactive.”
While credit unions and their regulators are mostly absolved of the root causes of the financial crisis, there are still distinct areas for improvement, especially at the highest levels, as was seen with recent corporate failures. Regulators still have “no credible means of resolving a systemically important financial institution,” he pointed out. “We just need to have the courage to do as the late Bill Seidmann would say, to ‘take the punchbowl away at the height of the party.’”
