NY Fed Moves Closer to Adopting FDR Framework

Bloomberg published an article on the reorganization of the NY Fed's supervision area.  The bottom line to the reorganization is that it adopts two of the FDR Framework's insights:

• The useful, relevant information is current asset and liability level data; and 

• The more eyeballs looking at the data from different perspectives, the better.

However, the reorganization stops well short of actually adopting the FDR Framework.

The Federal Reserve Bank of New York, which oversees some of the largest U.S. financial firms, has reorganized its bank supervision group to strengthen its oversight capabilities.

...“Some of this is about changing a mindset internally, as well as reflecting externally that we have a broader mandate now under Dodd-Frank,” Sarah Dahlgren, who became head of the group on Jan. 1, told Bloomberg News on March 18 when asked about the changes. “We’re going to have to increase resources.” 

... The Fed bank has moved specialists from the supervision group’s risk management function to its relationship management teams, according to two people familiar with the reorganization who declined to be identified because the changes haven’t been made public officially. The relationship management teams are responsible for covering specific institutions, such as Citigroup Inc. (C), while the risk analysts provide “cross- institutional analyses,” according to the New York Fed’s website. 

The risk analysts will relocate from the New York Fed’s 33 Liberty Street headquarters in downtown Manhattan to on-site locations at the financial firms, increasing the number of on- site staff and giving the risk analysts better access to the institutions, according to the two people familiar. 

The New York Fed has also created a new senior supervisory officer role within the relationship management teams. The senior supervisory officers will act as a liaison between the regulators and senior management of the financial institutions, and will also focus on piecing together the firms’ business strategy, revenue sources and risk management. 

In addition, the New York Fed created new so-called business line specialists on the relationship management teams. 

... “This is really part of taking the lessons learned from the crisis and trying to fit those into what we need to do differently in light of the changes under Dodd-Frank,” said Dahlgren.