Neil Irwin in The Washington Post
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When the Volcker rule gets real. "For the biggest banks compliance is especially important because the measure requires that chief executives attest in writing that their company has "reasonably designed" processes in place to achieve compliance...There are six parts to compliance, including writing policies and procedures to follow the rule, establishing internal controls, setting up management in a way that makes responsibility and accountability clear, independent testing and auditing, training and record keeping. Many of these factors contain the "reasonably designed" language." Gina Chon in The Financial Times.
Those Fed regulators are toughening up. "The Federal Reserve clamped down on bank moves to evade tougher capital rules on Friday, warning that transactions intended to reduce risk would be closely scrutinised during annual stress tests on bank balance sheets...Some of these regulatory capital trades, which typically involve insurance offered by a third-party, are legitimate while others are evasion, the Fed indicated. If the risks are shifted to a "thinly capitalised counterparty or affiliated entity of the firm, any residual risk is effectively captured in the firm's internal capital adequacy assessment", the agency said in its guidance note to large banks." Gina Chon and Tom Braithwaite in The Financial Times