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Category Archives: Financial System

GAO – Bank and Other Depository Regulators Need Better Data Analytics

Cybersecurity: Bank and Other Depository Regulators Need Better Data Analytics and Depository Institutions Want More Usable Threat Information, GAO-15-509: Published: Jul 2, 2015. Publicly Released: Jul 2, 2015.

“Regulators use a risk-based examination approach to oversee the adequacy of information security at depository institutions—banks, thrifts, and credit unions—but could better target future examinations by analyzing deficiencies across institutions. For information technology (IT) examinations, regulators adjust the level of scrutiny at each institution depending on the information they review, past examination results, and any IT changes. GAO reviewed 15 IT examinations and found that regulators generally reviewed institutions’ policies, interviewed staff, and examined audits of information security practices. While the largest institutions were generally examined by IT experts, medium and smaller institutions were sometimes reviewed by examiners with little or no IT training. The regulators recognized that some IT training is necessary for all examiners, so each regulator had efforts under way to increase the number of their staff with IT expertise and conduct more training. GAO identified two areas for improvement:

  • Data analytics. Regulators generally focused on IT systems at individual institutions but most lacked readily available information on deficiencies across the banking system. Although federal internal control standards call for organizations to have relevant, reliable, and timely information on activities, regulators were not routinely collecting IT security incident reports and examination deficiencies and classifying them by category of deficiency. Having such data would better enable regulators to identify and analyze trends across institutions and use that analysis to better target areas for review at institutions.
  • Oversight authority. Bank regulators directly address the risks posed to their regulated institutions from third-party technology service providers, but the National Credit Union Administration (NCUA) lacks this authority. Cyber risks affecting a depository institution can arise from weaknesses in the security practices of third parties that process information or provide other IT services to the institution. Bank regulators routinely conduct examinations of service providers’ information security. Authorizing NCUA to routinely conduct such examinations could help it better ensure that the service providers for credit unions also follow sound information security practices.
  • Depository institutions obtain cyber threat information from multiple sources, including federal entities such as the Department of the Treasury (Treasury). Representatives from more than 50 financial institutions told GAO that obtaining adequate information on cyber threats from federal sources was challenging. Information viewed as most helpful for assessing threats and protecting systems included details on attacks other institutions experienced. To help address these needs, Treasury has various efforts under way to obtain such information and confidentially share it with other institutions. The department formed a special group that works with other law enforcement and intelligence agencies to obtain declassified information and share it with financial institutions in a series of circulars. Treasury staff also participate in Department of Homeland Security groups that monitor cyber incidents and work with a center that provides cyber threat information to thousands of financial institutions.”

Federal Reserve Board releases first determination of aggregate consolidated liabilities of all financial companies

“The Federal Reserve Board on [July 1, 2015] released its first determination of the aggregate consolidated liabilities of all financial companies in accordance with section 622 of the Dodd-Frank Act, which prohibits any financial company from combining with another company if the resulting company’s liabilities exceed 10 percent of the aggregate consolidated liabilities of allContinue Reading

Paper – Major Defects of the Market Economy

Kakarot-Handtke, Egmont, Major Defects of the Market Economy (June 28, 2015). Available for download at SSRN: http://ssrn.com/abstract=2624350 “When we characterize an argument that has no sound theoretical foundation as political, then what has been produced by economists so far is political economics. However, since the Classics and Marx all major economic schools have defended theContinue Reading

Paper – China’s Growing Energy Demand: Implications for the US

Working Paper Series – Congressional Budget Office Washington, DC. China’s Growing Energy Demand: Implications for the United States. Andrew Stocking Formerly an employee of the Congressional Budget Office; Terry Dinan, Congressional Budget Office. June 2015. Working Paper 2015-05. “Growing rapidly in recent decades, China’s demand for energy has nearly doubled since 2005—making China the world’sContinue Reading

OCC’s Quarterly Report on Bank Trading and Derivatives Activities

OCC’s Quarterly Report on Bank Trading and Derivatives Activities: First Quarter 2015 (PDF) –  From the Executive Summary Insured U.S. commercial banks and savings associations reported trading revenue of $7.7 billion in the first quarter, $3.2 billion higher (71.6%) than the fourth quarter, and $1.5 billion higher ( 23.9%) than the first quarter of 2014.Continue Reading

What Do Rating Agencies Think about “Too-Big-to-Fail” Since Dodd-Frank?

Liberty Street Economics – New York Fed – First in a two-part series, Gara Afonso and João Santos: “Did the Dodd-Frank Act end ‘‘too-big-to-fail’’ (TBTF)? In this series of two posts, we look at this question through the lens of rating agencies and financial markets. Today we begin by discussing rating agencies’ views on thisContinue Reading

85th BIS Annual Report

85th Annual Report, Bank for International Settlements 2014/15 28 June 2015 “In its main economic review of the year, the BIS calls for a shift to a longer-term focus in policymaking, with the aim of restoring sustainable and balanced growth.”  PDF (125 pages)

EIU – Long-term macroeconomic forecasts

Long-term macroeconomic forecasts. Key trends to 2050. A special report from The Economist Intelligence Unit. June 2015. “China is expected to overtake the United States in 2026 in nominal GDP in US dollar terms and maintain its position as the largest economy to 2050. India is expected to move up the rankings to third place,Continue Reading

The Board’s Responsibility for Crisis Governance

Trautman, Lawrence J., The Board’s Responsibility for Crisis Governance (June 26, 2015). Available for download at SSRN: http://ssrn.com/abstract=2623219 “A clear strategy and implementation plan for reasonably foreseeable industry disasters — before they take place, helps to prevent mistakes made under conditions of severe stress. Low probability but survival-threatening disasters such as the BP Gulf ofContinue Reading

Unlocking the potential of the Internet of Things

McKinsey – The Internet of Things – sensors and actuators connected by networks to computing systems—has received enormous attention over the past five years. A new McKinsey Global Institute report, The Internet of Things: Mapping the value beyond the hype, attempts to determine exactly how IoT technology can create real economic value. Our central findingContinue Reading

GAO Reports – Accessible Communications, Bank Regulation, Chemical and Biological Defense, Combating Terrorism, DHS IT Contracting

Accessible Communications: FCC Should Evaluate the Effectiveness of Its Public Outreach Efforts, GAO-15-574: Published: Jun 25, 2015. Publicly Released: Jun 25, 2015. Bank Regulation: Lessons Learned and a Framework for Monitoring Emerging Risks and Regulatory Response, GAO-15-365: Published: Jun 25, 2015. Publicly Released: Jun 25, 2015. Chemical and Biological Defense: Designated Entity Needed to Identify,Continue Reading

CFPB consumer complaint database

“[June 25, 2015] the Consumer Financial Protection Bureau (CFPB) [went] live with an enhanced public-facing consumer complaint database. It includes for the first time over 7,700 consumer accounts of problems they are facing with financial companies concerning mortgages, bank accounts, credit cards, debt collection, and more. The CFPB is also publishing a Request for InformationContinue Reading