Fed Stability Report Highlights Large Drop in Assets if Risks Materialize

Tensions over trade, the turbulent Brexit discussions, and trouble in China and emerging markets could rock a U.S. financial system where asset prices are “elevated” and business credit quality may be “deteriorating,” the U.S. Federal Reserve said in a first-ever report devoted to financial stability.

The report noted several signs of resilience in the financial system to the sorts of unexpected shocks that might arise, including the strong capital position of banks, generally tempered borrowing by households, and a system less vulnerable to the sorts of runs or credit crunches that nearly shut down the global economy in the 2007 to 2009 financial crisis.

But the report highlighted stock prices that are high by some measures, commercial real estates values “growing faster than rents,” and the willingness of lenders to fund risky corporate loans.

via Reuters

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