Bank Risk Hardly Changed Since Before Crisis by Some Measures

(Bloomberg) -- By several measures, the biggest U.S. banks are just as risky today as they were before the last financial crisis.

That’s the conclusion of a study by the Federal Reserve Bank of New York published Monday. While idiosyncratic risk -- a measure based partly on return on assets -- is much lower now, systemic risk measured in two different ways is pretty much unchanged. Liquidity risk, meanwhile, was slightly higher than before 2008, according to the study, which defined big banks as those with more than $250 billion in assets and examined a period starting in 2000.

Regulators have tightened capital and liquidity requirements to reduce the risk big banks pose to the rest of the financial system after several collapsed in 2008 and others were rescued with the help of government subsidies. New rules also require the biggest banks to have resolution plans, forcing them to simplify their structures.

Midsize banks, with assets ranging from $25 billion to $250 billion, saw their risk scores rise on two of the four measures from the pre-crisis period. The New York Fed also looked at the risk scores for the largest banks during the crisis and now, concluding they’re less risky based on three of the four measures.

Banks continue to be sensitive to “liquidity risks triggered by general stress in funding markets,” the New York Fed researchers wrote.

To contact the reporter on this story: Yalman Onaran in New York at yonaran@bloomberg.net

To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Daniel Taub, Steve Dickson

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