The United States has seemed to have forgotten the economic collapse and the financial crisis that engulfed Wall Street and the big banks. This is a mistake, warns the International Monetary Fund (IMF) in a new report urging the U.S. to still hone in on a high-risk financial system.
In its first check-up on the U.S. financial system since 2010, the IMF believes it’s safer than prior to the economic collapse. But there are new threats that pose risks to the system, which have been created in the last couple of years. One of those threats is that the big banks have gotten even bigger.
“Before the memory of the crisis begins to fade, it will be important to complete the reform agenda and resist attempts to overturn previously agreed measures,” the IMF’s executive summary states. “New pockets of vulnerabilities have emerged, partly in response to the continuing search for yield.”
The IMF issued 31 recommendations to safeguard the finance system. Here are some of the organization’s concerns:
– Big Wall Street banks, such as JP Morgan & Chase and Wells Fargo, have gotten bigger since the financial downturn.
– There is a substantial amount of risk in the bond and stock market; low interest rates have produced high risks.
– Financial reforms, like Dodd-Frank, have not been fully implemented.
– Regulators have not instituted new standards for the too-big-too-fail problem for asset managers and insurers, like Fannie & Freddie.
This isn’t the first time that the IMF has criticized financial and monetary policy in the U.S. In the spring, the IMF head Christine Lagarde warned the Federal Reserve’s Janet Yellen to delay any interest rate hike until at least the first half of 2016.
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