Treasury Department Publishes Financial Stability Analysis

On December 1, the Treasury Department’s Office of Financial Research published its third Annual Report to Congress analyzing threats to U.S. financial stability. The report notes three specific risks: evidence of excessive risk-taking during the extended period of low interest rates and low volatility; brittle markets because liquidity may be less available in a downturn and the risk of asset fire sales and runs in short-term wholesale funding markets remains unresolved; and the migration of financial activity toward areas of the financial system where threats are more difficult to assess because information is not available. See also Reuters.