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Inside Washington (05/17/2012)
  • WASHINGTON (5/18/12)--Operational risk is a supervisory priority for the Office of the Comptroller of Currency (OCC), Thomas Curry, the agency's head, said in a speech in Washington on Wednesday. "As regulators, one of our most important jobs is to identify risk trends and bring them to the industry's attention in a timely way," Curry said. "No issues loom larger today than operational risk in all its dimensions, the manner in which all risks interact, and the importance of managing those risks in an integrated fashion across the entire enterprise." Operational risk--generally defined as the risk of loss due to failures of people, processes, systems and external events--is embedded in every activity and product of a financial institution, Curry said. That risk is heightened when systems and procedures are complex, he added. "Given the complexity of today's banking markets and the sophistication of technology that underpins it, it is no surprise that the OCC deems operational risk to be high and increasing," Curry said. Inadequate systems and controls were key factors behind the recent problems in mortgage servicing and foreclosure documentation practices, he said. "Those banks did a poor job supervising both their own internal processes and the providers to which they outsourced some of these functions, and they are paying the price for their mistakes," Curry said …
  • WASHINGTON (5/18/12)--JPMorgan Chase presents no risk of loss to depositors or to taxpayers despite a $2 billion loss last week, House Financial Services Committee Chairman Spencer Bachus (R-Ala.) during a hearing of the House financial institutions subcommittee. Noting JPMorgan Chase's net worth of $189 billion and 2011 pre-tax profits $25 billion, Bachus said the loss represents about one month of earnings for the company (American Banker May 17). Laws should not prohibit financial services companies from taking risks, Bachus suggested. However, financial institutions deemed systemically important will be subject to stricter capital requirements than smaller institutions, said Lance Auer, the Treasury Department's deputy assistant secretary for financial institutions. Otherwise, firms will have incentive to become large so they can take more risk, he added …

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