FedFin Assessment:  FRB Tries to Link Stability Conclusions to Regulatory Objectives

As promised, this in-depth report assesses Friday’s semiannual financial-stability report from the Federal Reserve.  As in its most recent reports, the Fed again eschews any clear conclusion about financial stability even as it observes that some risks are hard to quantify and thus may be overlooked.  Prior reports of “moderate” risk were shortly followed as in 2020 with considerable systemic challenge, leading the Fed thereafter and in this report to limit itself principally to quantification of emerging issues with few conclusions and, other than with regard to banks, no direct regulatory recommendations.   Where the Fed points to significant systemic challenges, it does so only by citing third-party survey results.