Ax the Ops?

As Karen Petrou’s memo today suggests, there are many reasons the new operational-risk framework proposed in the capital rewrite will not only be costly for covered banks, but also counterproductive for financial resilience. That said, the agencies are unlikely to rewrite it much unless the politics of the overall proposal takes the course many banks seek to the agencies’ detriment. In this report, we build on our in-depth analysis of the operational risk-based capital (ORBC) proposal to go in-depth on its significant implications for mortgage origination.