U.S. banks’ ability to manage risk and their operations is an increasing concern for regulators, the main supervisor of national banks said on Wednesday.
Comptroller of the Currency Thomas Curry said banks looking to cut costs should not target the systems they have in place to fine-tune risk models, to prevent money laundering and to ensure they are following the law in their dealings with troubled homeowners.
“Some of our most seasoned supervisors, people with 30 or more years of experience in some cases, tell me that this is the first time they have seen operational risk eclipse credit risk as a safety and soundness challenge,” Curry said in a speech to the Exchequer Club. “Rising operational risk concerns them, it concerns me, and it should concern you.”
Curry’s remarks come as regulators are sifting through what mistakes may have led to JPMorgan Chase & Co’s announcement last week that it has suffered at least $2 billion in losses due to trades that went bad.
Curry made no mention of JPMorgan in his speech.
However, he touched on an issue surrounding the losses: The validity of models used to gauge the risk of trades and other investments.
On Wednesday, Reuters reported that the JPMorgan unit that controlled the trades, the Chief Investment Office, had looser risk controls than other parts of the bank.
Detailed news link from (© Reuters): here