Fed’s Barr says regulators more aggressive with banks, focused on interest rate risk

The Fed’s top regulator said this on Friday. banking regulator Over the past year, the rate of problems pointed out by banks has increased, and additional checks are being conducted on companies with large unrealized losses.

Federal Reserve Vice Chairman Michael Barr said the commercial real estate sector, facing post-pandemic pressures, is paying “close attention to how companies manage risk.” “We are paying attention,” he added.

“This past year has been busy. Federal Reserve System Supervisor,” Barr said in prepared remarks, nearly a year after Silicon Valley Bank collapsed due to huge unrealized losses.

Following the failures of SVB and other large local banks such as First Republic Bank and Signature Bank, the Fed has focused on quickly identifying problems at banks.

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Reuters reported in December that federal banking regulators were tightening oversight of companies and tightening financial products trading in the wake of last spring’s bank failures. disciplinary action For companies, it also includes a downgrade of confidential bank health ratings.

Barr said the increased activity was not due to policy changes, but reflected changes in the economic and interest rate environment and the strain on banks’ balance sheets.

“We want and expect supervisors to help banks focus their appropriate attention on the areas that matter most to a particular bank,” he said.

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The Fed is increasing its oversight of banks facing potential balance sheet vulnerabilities. (Photographer: Nathan Howard/Bloomberg/Getty Images)

In addition to requiring additional inspections for companies with unrealized losses, Barr said inspectors are also requiring companies to take steps to address weaknesses and recapitalize. He added that a small number of companies “with risk profiles that could trigger funding pressures” are being monitored on an ongoing basis.

Barr said various supervisory teams are working more closely together, especially for local banks, which are approaching the $100 billion threshold that would trigger increased supervision. Fast-growing companies are being forced to evaluate their health and policies more frequently in an effort to ensure they can meet more stringent requirements.

“The goal is for the transition to stronger supervision of fast-growing banks to be a gradual slope rather than a cliff,” Barr said.

Shares of New York Community Bank fell after disappointing quarterly results amid continued concerns about its exposure to commercial real estate. (Photographer: Bing Guan/Bloomberg via Getty Images / Getty Images)

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His comments came after New York Community Bank’s stock price fell sharply after it announced an unexpected quarterly loss in January. NYCB leaders said the tensions were caused in part by: More stringent regulatory requirements The move comes after the bank recently crossed the $100 billion threshold.

Barr said the Fed is still considering whether to impose temporary measures. Higher capital and liquidity requirements About banks facing risk management issues.

Reuters contributed to this report.