Magazine article The RMA Journal

Comptroller Curry Speaks on Banking Industry's Condition

Magazine article The RMA Journal

Comptroller Curry Speaks on Banking Industry's Condition

Article excerpt

IN A SPEECH delivered on March 9, 2017, Comptroller of the Currency Thomas Curry discussed some of the things regulators have done since the financial crisis to make the U.S. banking system more resilient. His remarks focused on the value of strong capital, the need for ample liquidity, and the importance of effective supervision.

Curry said the U.S. banking system is as well capitalized as any in the world. The level and quality of capital have improved through the concerted efforts of regulators and bankers who recognize that stronger capital means stronger and more competitive banks. The comptroller said common equity is more than double that of the first quarter of 2009, an increase of $700 billion. At this level, Curry observed, even under the most severe scenario of the Federal Reserve's stress tests, the largest bank holding companies would continue to be well capitalized and capable of lending in a recession.

The comptroller acknowledged some critics' suggestions that capital requirements restrict lending and hold back the economy. While saying he believes this to be a legitimate policy question, he noted that the crisis provided the troubling answer of what happens when banks fail to hold capital levels commensurate with their risks. He stated that, in an economic downturn, undercapitalized banks are simply incapable of lending and restabilizing the economy.

Curry recalled that lack of liquidity was as much a factor in 2008 as capital. …

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