The Federal Reserve has urged US lenders to do more to manage their counterparty risks as the central bank says it plans to increase its oversight and conduct an analysis on how systemically important banks could cope with the default of their largest hedge fund counterparties.
Speaking at a credit risk conference in New York City, Fed vice chairman for supervision Michael Barr cited the 2022 collapse of Archegos Capital Management, resulting in more than $10bn in losses across several banks, which he said revealed gaps in how banks manage their exposure to investment funds.
