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Editorial Rating

8

Qualities

  • Analytical
  • For Experts
  • Insider's Take

Recommendation

Financial regulators believe a stable and sound banking architecture can mitigate shocks to the macroeconomy. Indeed, the credit contagion of 2008 and subsequent calamitous recession proved the need for a robust financial ecosystem. Professionals at the Board of Governors of the Federal Reserve System examine “vulnerabilities” in the current financial environment and their implications for the overall economy. Financial executives will appreciate this valuable report on the health of the US financial sector.

Take-Aways

  • To prevent another credit crisis, the Federal Reserve Board tracks four “vulnerabilities” that could stress the financial architecture of the US economy.
  • “Elevated valuation pressures” occur when investors take on greater risk and pump up asset prices.
  • Loan defaults that reduce future spending and expose lenders to losses arise from “excessive borrowing by businesses and households.”

About the Author

The Board of Governors of the Federal Reserve oversees the US Federal Reserve System.