WASHINGTON (Reuters) – The new chief of a U.S. banking regulator is cautioning banks to avoid “overconfidence” after weathering the global pandemic, and also flagged climate change as a new risk for the sector.
Michael Hsu, the acting comptroller of the currency, said Tuesday banks deserved credit for navigating a tumultuous period while still working with struggling borrowers. But he added firms should not get lax as they eye an economic rebound, specifically citing heavy losses by some large banks amid the collapse of Archegos Capital as what to avoid.
“There is a risk of a bit of overconfidence…to think that because everyone has done so well that they’re going to do well at everything as we enter a growth phase,” he told reporters. “Archegos I think is a bit of a flag, because I think that is reflective of at least some banks and firms having gotten complacent.”
Hsu’s comments are an indication that the Office of the Comptroller of the Currency, which oversees national banks, may be sharpening its oversight under his leadership.
Hsu was tapped by Treasury Secretary Janet Yellen to lead the OCC as acting chief earlier this month. He previously was a top bank supervisor at the Federal Reserve.
His comments came as the OCC released its semiannual risk report, which found that banks had withstood the economic impact of the pandemic fairly well, but needed to be prepared with the risks that come with government support programs expiring and long-running low interest rates.
For the first time, the OCC flagged climate change in the report as a risk banks must monitor. The regulator said it was honing its understanding on how climate change could impact lenders.
Hsu said climate change would be a “priority issue” for the regulator going forward.
Source: Economy - investing.com
