Interest rate risk

The banking sector has stabilized significantly since the spring of 2023, but elevated interest rates have created lingering issues on bank balance sheets.

Industry Bancshares has been bogged down for years with unrealized losses. The Federal Reserve issued a cease-and-desist order against the firm, following similar actions by other agencies.

The top risk executives at U.S. banks are still weighing the fallout from the failures earlier this year and are considering ways they can better handle risks tied to their treasury and asset-liability management.

Banking crises always recur. But time and again, bankers have been shown to operate on the assumption that good times are permanent.

Regulators had their priorities backward when it came to overseeing SVB and allowed an obvious danger to go unmitigated.

Klarna Bank, which advertises itself as a way to spread the cost of the latest brands and smartphones, is shelling out loans for milk and gas with cash-strapped customers looking for ways to cover basic necessities.

In its semiannual risk report, the Office of the Comptroller of the Currency said it was working to provide clarity on the legality and soundness related to digital assets.

Under a proposed rule change, credit unions would no longer need to seek pre-approval from the regulator before entering into interest rate swaps, speeding up transactions for some of the industry’s biggest institutions that already hold over 80% of total assets.

The credit union regulator has held back in allowing the use of derivatives but has released a proposal that would remove red tape for some larger institutions.

The industry will have to grapple with pressure on net interest margins, interchange income and credit quality, said CUNA Mutual's Steve Rick during a virtual conference.