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"Stroke-of-the-Pen" Risks are a Potential Concern for Banks:
FDIC Report Examines Implications of Policy Changes Outside of Bank Regulation
Policy changes that originate outside of bank regulation represent a special class of risks to depository institutions, according to the Fall 2005 edition of FDIC Outlook.
In a series of reports on what the agency is calling "stroke-of-the-pen" risks, FDIC analysts examined changes in monetary, tax, agricultural and other policies that have led to or may lead to significant and unintended negative consequences for banks. The latest FDIC Outlook features:
"Bank managers need to ensure that they watch for and respond to policy changes that arise from outside their industry," said FDIC Chief Economist Richard A. Brown. "Although the effects of such policy changes are often difficult to fully anticipate, they can lead to significant adverse consequences for financial institutions."
The articles in this edition of FDIC Outlook were completed before Hurricanes Katrina and Rita struck the Gulf Coast states. Future editions will include implications of the hurricanes for FDIC-insured institutions.
The Fall 2005 edition of FDIC Outlook is available on the Web at: www.fdic.gov/bank/analytical/regional/index.html.
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Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's 8,868 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars – insured financial institutions fund its operations.
FDIC press releases and other information are available on the Internet at www.fdic.gov, by subscription electronically (go to www.fdic.gov/about/subscriptions/index.html) and may also be obtained through the FDIC’s Public Information Center (877-275-3342 or (703) 562-2200). PR-97-2005
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