Guess who needs to finish Financial Reforms? US!!

IMF has released its usual country specific report. It is amazing how these reports are worked upon by IMF along with each country’s elite  policymakers. Still they miss the bus most of the times and worse make things even more pathetic via their interventions.

The recent report is on US and it says somethings on US financial sector. Asks US to complete its financial reform:

Banks in the United States appear healthier and stronger than five years ago, but they are also bigger and more interconnected, and new risks have emerged in financial institutions like mutual funds and insurance companies, according to the IMF’s latest in-depth assessment of the world’s largest financial system. “U.S. officials have taken major strides to implement the post-crisis reform agenda and move towards a safer financial system, but this work is not yet complete,” said Aditya Narain, deputy director in the Monetary and Capital Markets Department who led the IMF team of experts conducting the review.

As the epicenter of the global financial crisis that began in 2008, the United States passed a major law in 2010, the Dodd-Frank Act, to reform its financial system. Officials need to complete the rulemaking under the law, while parts of reform agenda face legislative proposals to water them down. Key fault lines that remain unaddressed include money market funds, securities lending, and the triparty repo markets—where securities dealers find short-term funding for their own and their clients’ assets—and housing finance.

At the same time, years of low interest rates have sent investors looking for higher returns on their investments, which lead to a build-up of risks, particularly in less regulated areas of the financial system. Given its importance to global finance, the U.S. financial system is one of 29 thatmust undergo this kind of in-depth assessment every 5 years. The IMF’s last review of the U.S. financial sector was in 2010.

The IMF also released its annual check-up of the U.S. economy, known as an Article IV consultation. Despite a slowdown in growth during the first few months of 2015, the U.S. economy is strengthening and there are steady gains in job creation.

Key reforms

The IMF said the United States should strengthen its ability to keep the overall financial system safe, which includes:

• Collecting more comprehensive data to build a clear view of risks and connections in the financial system

• Creating an independent national regulator for the insurance industry

• Giving an explicit mandate to oversee financial stability to the agencies that regulate and supervise the financial system and that belong to the Financial Stability Oversight Council. The Council, under Treasury Secretary chairmanship, was created after the global crisis

• Adding tools to strengthen market resilience to run-risks and fire-sales

• Strengthening oversight of the asset management industry, including mutual funds

• Updating risk guidance for banks in operational, interest-rate and concentration risk

• Clarifying who is responsible to prepare for and manage financial system-wide crises.

Annual check up! lol! That too by a doctor who goofs up more often than not..

A full circle for US finance policymakers. After lecturing the world for many years, they get a taste for their own medicine. But considering how much IMF is influenced by them, one wonders how much importance US policymakers give to these reports.

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