May 12, 2022

Federal Reserve Board Highlights Recent Supervisory Developments

In its semi-annual Supervision and Regulation Report, the Federal Reserve Board summarized current banking conditions and recent supervisory and regulatory activities.

The FRB highlighted, among others, the following the regulatory actions:

  • improving cybersecurity and the related incident notification system;
  • policy research on cryptocurrencies and other digital assets, and the role they play in the modern banking system;
  • modifying small loan, consumer credit and lease threshold requirements; and
  • streamlining the capital stock reporting requirements and regulatory oversight of banks.

The FRB stated that it supports innovation, but cautioned against irresponsible innovation that could lead to unnecessary risk exposure and ensuing consequences.

The FRB also emphasized that it has increased its focus on monitoring prime brokerage activity and related counterparty risks in light of the Archegos event. Going forward, the FRB plans to focus on (i) reviewing controls in place to manage access to a firm's systems and information, (ii) reviewing a firm's processes and tools used to detect and respond to ransomware attacks, and (iii) continuing to monitor firms' cybersecurity protocols, especially while geopolitical tensions are heightened by the Russian invasion of Ukraine.

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