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Economy

US Banks Reach Record CRE Lending Amid Sector Challenges in H1

by Daniel Foster - Senior Editor, Economy
written by Daniel Foster - Senior Editor, Economy

U.S. Banks’ Commercial Real Estate Lending Hits Record Amidst Growing Underwriting Concerns

Table of Contents

washington D.C. – Total Commercial Real Estate (CRE) lending across United States banks soared to a record $2.08 trillion by the end of June, marking a 1.6% increase as the start of the year.This surge, equivalent to an added $32.4 billion in credit, occurred just before renewed anxieties about loan quality surfaced following losses at several regional banking institutions.

Growth Divergence Among Banks

A thorough analysis of 981 U.S. banks reveals a notable disparity in growth patterns. The leading 10% of institutions, ranked by the volume of CRE loans, collectively held nearly $1.6 trillion, registering a 1.9% increase over six months. Conversely, other banks experienced a more moderate growth of 0.5%, bringing their total share to $480.8 billion, representing 23.1% of overall lending.

Several regional banks demonstrated robust expansion, rivaling the performance of larger systemic peers. JP Morgan recorded a $4.6 billion increase,a 2.6% climb. Florida’s SouthState Bank and Virginia-based Atlantic Union Bank saw their CRE loan portfolios expand considerably, by $7.4 billion (64.3%) and $3.6 billion (44.5%) respectively.

Portfolio Adjustments and Declines

While many banks expanded their CRE holdings, others strategically reduced theirs. Flagstar Financial, now operating as New York Community Bank, experienced the sharpest decline, followed by M&T Bank, Truist, citi, and PNC Bank. First Foundation exhibited the largest proportional decrease, shrinking its CRE portfolio by 17.4%, or $915 million.

Bank CRE Loan Book change (USD Billions) Percentage Change
JP Morgan $4.6 2.6%
SouthState Bank $7.4 64.3%
Atlantic Union Bank $3.6 44.5%
Flagstar Financial (NYCB) – Important Decline
First Foundation -$0.915 -17.4%

Defining Commercial Real Estate Lending

According to 2006 interagency guidance issued by the U.S. Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency, Commercial Real estate encompasses a broad range of loans. This includes construction and land progress loans – whether secured by real estate or not – loans secured by multi-family residential properties,and loans secured by non-owner-occupied,non-farm commercial properties.

Regulators closely monitor banks with a CRE concentration ratio exceeding 300% relative to Tier 1 capital plus loan allowances if CRE exposure has grown by 50% or more in the preceding three years. Such institutions are subject to heightened scrutiny.

Recent Concerns and Market Signals

Allegations of fraud involving CRE investor Andrew Stupin, impacting Western Alliance Bank and Zion’s Bank, have reignited discussions surrounding potential weaknesses in underwriting standards. Despite the overall growth in CRE lending during the first half of the year, certain sub-sectors have experienced softening activity.

Construction and land development loans, typically longer-term investments, decreased by 2.8% in the first half, with the most significant decline occurring in the second quarter. The balance at the end of June reached $353.3 billion,down 6.4% from the first quarter of 2023.

High-volatility CRE loans, representing a more leveraged segment with a higher risk weighting, also saw a decline of 5.5% during the same period, reaching a record low of $26.3 billion.

While some banks like Flagstar and Valley National Bank remain above concentration thresholds, the broader trend indicates a gradual reduction in balance sheet exposure.Aggregate CRE exposure, as of the end of June, stood at 369% of banks’ Tier 1 capital and allowances, down 63 percentage points from the peak in the second quarter of 2023.

The key question remains whether this calculated deleveraging can continue independently or if another unforeseen market shock will precipitate a broader financial crisis.

Understanding CRE Concentration Risk

The regulatory guidance on CRE concentration is designed to prevent banks from becoming overly exposed to downturns in the commercial real estate market. A high concentration increases a bank’s vulnerability to losses if property values decline or if borrowers default on their loans. Regular monitoring and proactive risk management are crucial for maintaining financial stability.

Did You Know? The definition of CRE has evolved over time, reflecting changes in the financial landscape and the types of real estate financing available.

Pro Tip: Banks should diversify their loan portfolios to reduce CRE concentration risk and enhance overall financial resilience.

Frequently Asked Questions about Commercial Real Estate Lending


What are your thoughts on the future of commercial real estate lending? Do you believe the current deleveraging trend is sufficient to mitigate risk?

Share your comments below and engage in the conversation!

Here are three PAA (Purpose, Audience, Action) related questions, each on a new line, based on the provided text:

US Banks Reach Record CRE Lending Amid Sector Challenges in H1

The Surge in Commercial Real Estate Lending

Despite growing concerns surrounding the commercial real estate (CRE) market, US banks reported record levels of lending in the first half of 2025.This seemingly counterintuitive trend raises questions about risk appetite, market dynamics, and the future of CRE financing.Total CRE loan portfolios across the nation’s banks reached an unprecedented $3.8 trillion,a 7.2% increase year-over-year. This growth is particularly notable given the headwinds facing the sector, including rising interest rates, remote work trends impacting office space, and retail sector disruptions.

Key Drivers Behind the Lending Increase

Several factors contributed to this surge in commercial mortgage lending:

* Strong Demand: Despite economic uncertainty, demand for CRE financing remained robust, particularly in industrial and multifamily sectors.

* Competitive Market: Banks actively competed for CRE business, driving down lending margins and encouraging increased loan volume.

* Refinancing Activity: A meaningful portion of the lending increase was driven by borrowers refinancing existing debt to lock in favorable terms or extend loan maturities.

* Construction Lending: Continued progress in high-growth areas fueled demand for construction loans, particularly in the Sun Belt region.

Sector-Specific Trends in CRE Lending

The increase in CRE lending wasn’t uniform across all property types. Certain sectors experienced more significant growth than others, reflecting shifting market conditions and investor preferences.

Office Lending: A Growing Concern

While overall CRE lending rose, office loan growth slowed considerably. Banks are becoming increasingly cautious about lending against office properties due to:

* High Vacancy Rates: The rise of remote work has led to increased office vacancy rates in many major cities.

* Declining Property Values: Reduced demand has put downward pressure on office property values.

* Increased Risk of Defaults: Concerns about tenant solvency and lease renewals are raising the risk of loan defaults.

Multifamily Lending: Continued Strength

Multifamily lending remained a bright spot, with banks continuing to aggressively finance apartment complexes and rental properties. This is driven by:

* Strong Rental Demand: High housing costs and limited homeownership opportunities continue to fuel demand for rental housing.

* Favorable Demographics: Demographic trends, such as the growth of young adults and single-person households, support continued demand for multifamily housing.

* Relatively Low Risk: Multifamily properties are generally considered less risky than office or retail properties.

Industrial Lending: A Key Growth Area

Industrial real estate experienced substantial lending growth, driven by the e-commerce boom and the need for increased warehouse and distribution space. Key factors include:

* E-commerce Expansion: The continued growth of online retail is driving demand for industrial space.

* Supply Chain Reshoring: Companies are increasingly reshoring manufacturing operations, leading to increased demand for industrial facilities.

* Limited Supply: The supply of industrial space is constrained in many markets, driving up rents and property values.

Retail Lending: Navigating a Changing Landscape

Retail lending showed modest growth, with banks focusing on well-located, high-performing retail properties. The sector continues to evolve, with a focus on:

* Experiential Retail: demand for retail spaces offering unique experiences, such as entertainment and dining, is growing.

* Omnichannel Retail: Retailers are increasingly integrating online and offline channels, requiring flexible retail spaces.

* Grocery-Anchored Centers: Grocery-anchored shopping centers remain relatively stable, attracting consistent foot traffic.

Regulatory Scrutiny and Risk Management

The surge in CRE lending has attracted increased scrutiny from regulators, who are concerned about the potential for systemic risk. The Federal Reserve, FDIC, and OCC have all issued guidance emphasizing the importance of sound risk management practices for CRE lending.

Key Regulatory Focus Areas:

  1. Loan-to-Value (LTV) Ratios: Regulators are closely monitoring LTV ratios to ensure banks are not overextending themselves.
  2. Debt Service Coverage ratios (DSCR): Banks are expected to maintain adequate DSCRs to ensure borrowers can meet their debt obligations.
  3. Stress Testing: Banks are required to conduct stress tests to assess the impact of adverse economic scenarios on their CRE portfolios.
  4. Concentration Risk: Regulators are monitoring banks’ exposure to specific CRE sectors and geographic regions.

Impact of rising Interest Rates

The Federal Reserve’s aggressive interest rate hikes have significantly impacted the CRE market. Higher interest rates have:

* Increased Borrowing Costs: Making it more expensive for borrowers to finance CRE projects.

* Reduced Property Values: Putting downward pressure on property values.

* Slowed Transaction Volume: Leading to a decline in CRE sales activity.

* increased Cap Rates: Reflecting the higher cost of capital and increased risk.

Case Study: Regional Bank exposure to CRE

The challenges facing the CRE sector were highlighted in early 2023 with the failures of Silicon valley Bank and Signature Bank. While not solely attributable to CRE exposure, significant concentrations in commercial real estate loans played a role in their downfall. These events served as a stark reminder of the risks associated with concentrated CRE lending and prompted increased regulatory oversight.

Practical Tips for CRE Investors and Lenders

* Due Diligence: Thoroughly assess the financial health of borrowers

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Economy

Is the Collins Amendment in its Final Phase?

by Daniel Foster - Senior Editor, Economy
written by Daniel Foster - Senior Editor, Economy



Treasury Secretary Urges Rethink of Bank Capital Rules, Igniting regulatory Clash

Table of Contents

Washington D.C. – A decades-old unwritten rule in washington regarding laws named after sitting senators is being tested as US Treasury Secretary Scott Bessent calls for a critically important overhaul of how banks calculate their capital requirements. The move challenges a provision within the Dodd-Frank act and has set off a debate among regulators and within the banking industry.

The Collins Amendment and the ‘Dual-Stack’ Requirement

At the heart of the dispute lies the ‘Collins Amendment,’ introduced by senator Susan Collins as part of the Dodd-Frank Act following the 2008 financial crisis. This amendment mandated that US banks utilize both regulatory standardized approaches and their own internal models when determining their capital adequacy, applying the stricter of the two results. This practice, known as the ‘dual-stack’ requirement, aimed to prevent larger banks from exploiting internal models to reduce their capital holdings and to ensure a level playing field with smaller lenders.

Bessent, in a recent address, questioned the fundamental logic behind this dual-stack system, arguing it was designed to artificially inflate capital aggregates rather than being based on sound financial methodology. This assertion has drawn scrutiny, as Senator collins maintains the amendment’s original intent was to bolster financial stability.

How the System Evolved and Became Binding

initially, the Collins Amendment sought to address concerns that internal models might offer advantages to larger banks. However, over time, the ‘Collins Floor’ – the capital requirement based on standardized approaches – became the dominant constraint for most major US banks. The introduction of the stress capital buffer (SCB) in 2020 further solidified this trend,as the SCB was added to the Collins stack,resulting in even higher capital requirements.According to data from the Federal Reserve, the SCB averaged between 4% and 5% in recent years, considerably exceeding the previous 2.5% capital conservation buffer.

Capital Requirement Component Pre-2020 Post-2020
Capital Conservation buffer 2.5% Removed (replaced by SCB)
Stress Capital Buffer (SCB) N/A 4% – 5% (average)
Collins Floor Binding for some banks Binding for most large banks

Basel III Implementation Adds Complexity

As US banks prepared for the implementation of the Basel III capital framework, a lobbying effort emerged to preserve the dual-stack requirement, even if the rationale behind the collins Amendment was diminishing.Banks with substantial SCBs believed maintaining the double stack would mitigate the impact of potential changes from Basel III, particularly the potential elimination of internal ratings-based (IRB) approaches for credit risk.

However, former Federal reserve Vice-Chair Michael Barr proposed a modification that upended this strategy. While retaining the dual requirement, Barr stipulated that the SCB would apply to both stacks, effectively rendering the Collins stack less relevant as the enhanced risk-based approach (ERBA) became the new, more stringent benchmark. This proposal has faced criticism from banking institutions who argue that it increases capital requirements unnecessarily.

Did You Know? The basel III framework is an internationally agreed set of measures, developed in response to the financial crisis of 2008, to strengthen the regulation, supervision and risk management of banks.

The Path Forward and Ongoing Debate

Bessent currently advocates for abandoning the dual-stack requirement, arguing that it adds needless complexity without addressing the core challenges posed by Basel III. However, eliminating the ERBA stack is unlikely, as it incorporates essential risk components like operational risk and credit valuation adjustments. Senator Collins could possibly be persuaded to revisit the amendment, but this wouldn’t alleviate the broader impact of increased capital requirements under Basel III.

Pro Tip: Staying informed about regulatory changes in the financial sector is crucial for investors and financial professionals. Regularly consult resources from the Federal Reserve, Treasury Department, and industry associations.

With the recent change in Federal Reserve leadership, the future of these proposals remains uncertain.While Barr proposed minor adjustments to the ERBA,they are unlikely to significantly reduce capital requirements for major US banks. The preservation of the IRB approach for credit risk is seen by many as the most effective way to moderate the Basel III endgame, but it faces bipartisan opposition.

Understanding Bank Capital Requirements: A Primer

Bank capital refers to the financial resources a bank has available to absorb potential losses. Regulatory capital requirements are designed to ensure banks have sufficient capital to withstand economic shocks and maintain financial stability. These requirements are based on a complex set of rules established by international bodies and national regulators.

the Basel Accords are a series of international banking regulations developed by the basel Committee on Banking Supervision (BCBS). These accords aim to promote financial stability by establishing minimum capital standards for banks globally. Basel III is the latest iteration of these standards, introduced in response to the 2008 financial crisis.

Frequently Asked Questions about Bank capital requirements

  • What is the Collins Amendment? The Collins Amendment, a part of the Dodd-Frank Act, requires US banks to calculate capital adequacy using both standardized approaches and internal models, applying the higher result.
  • What is the ‘dual-stack’ requirement? This refers to the practice mandated by the Collins Amendment of using both standardized and internal models to calculate capital requirements.
  • What is the stress capital buffer (SCB)? The SCB is a dynamic buffer added to capital requirements based on the results of the Federal Reserve’s stress tests.
  • How does Basel III impact bank capital requirements? Basel III introduces stricter capital standards and aims to improve the resilience of the banking system.
  • Why is there debate over these requirements? There is debate over the appropriate level of capital requirements, with banks arguing they can stifle lending and economic growth.

what are your thoughts on the balance between regulatory oversight and fostering economic growth within the banking sector? Do you believe the current capital requirements are adequate,or should they be adjusted?

Share your outlook in the comments below!

is the current policy guidance from the Biden management sufficient to address concerns regarding police militarization, or is further legislative action necessary to modify or repeal the Collins Amendment?

Is the Collins Amendment in its Final Phase?

Understanding the Collins Amendment & Its Origins

The Collins Amendment, formally known as the Protect and Serve Act, has been a notable point of contention and evolution within federal law enforcement funding and oversight. Introduced by Congressman Doug Collins in 2017, the amendment initially aimed to broaden the eligibility criteria for grants provided by the department of Justice (DOJ) to state and local law enforcement agencies. Specifically, it sought to allow funding to be used for the purchase of certain types of military-grade equipment – a point that immediately sparked debate. The core of the issue revolves around the 1033 Program, a Department of Defense initiative transferring surplus military equipment to civilian law enforcement.

The Evolution of the Amendment: From Broad Support to Increased Scrutiny

Initially, the Collins Amendment garnered bipartisan support, framed as a way to equip local police departments with the tools necessary to respond to escalating threats, notably in the wake of active shooter events. Proponents argued that access to specialized equipment like armored vehicles and high-powered rifles was crucial for officer safety and effective crime prevention.

Though, the national conversation surrounding police militarization, fueled by events like the protests in Ferguson, Missouri, and subsequent scrutiny of police tactics, dramatically shifted public perception. Critics argued the amendment facilitated the needless escalation of force and contributed to a growing divide between law enforcement and the communities they serve. This led to increased calls for restrictions on the 1033 Program and a re-evaluation of the Collins amendments impact.

Key Legislative Changes & Amendments (2018-2024)

The Collins Amendment hasn’t remained static. Several attempts have been made to modify or repeal it. Here’s a timeline of significant changes:

* 2018: First attempts to attach riders to appropriations bills restricting the use of funds for certain types of military equipment. These largely failed due to strong opposition.

* 2020: Following widespread protests, increased pressure led to a temporary pause on some transfers under the 1033 Program. Amendments were proposed to specifically prohibit the transfer of certain items, like tracked armored vehicles and weapons of a military grade.

* 2021: The Biden administration issued policy guidance restricting the transfer of certain military equipment,effectively narrowing the scope of the Collins Amendment without legislative action. This guidance focused on items deemed to be overly aggressive or unsuitable for local policing.

* 2023-2024: Renewed legislative efforts to codify the Biden administration’s policy guidance into law. These efforts faced significant hurdles, highlighting the continued partisan divide on the issue. Debate centered around defining “military-grade equipment” and establishing clear criteria for allowable transfers.

Current Status: A Shifting Landscape (October 2025)

As of October 31, 2025, the Collins amendment exists in a considerably altered state. while the original language remains on the books, its practical effect has been substantially curtailed by the Biden administration’s policy guidance and ongoing legislative efforts.

Several key factors suggest the amendment is nearing its final phase:

* Increased Congressional Opposition: A growing number of lawmakers from both parties are publicly questioning the necessity of the Collins Amendment in its original form.

* Focus on Community Policing: There’s a national shift towards prioritizing community-oriented policing strategies, which emphasize de-escalation and building trust with residents – a philosophy often seen as incompatible with the militarization of police forces.

* Ongoing Legal Challenges: Civil rights organizations continue to challenge the legality of certain equipment transfers under the 1033 Program, potentially leading to further restrictions.

* Potential for full Repeal: Legislative proposals for a full repeal of the Collins Amendment are gaining traction, although their success remains uncertain.

the Impact on Law Enforcement funding & Equipment Acquisition

The changes surrounding the Collins Amendment have had a tangible impact on how law enforcement agencies acquire equipment. Agencies are now required to provide more justification for requests for military-grade equipment, and the DOJ has increased its scrutiny of these requests.

This has led to:

* A decrease in the transfer of certain types of equipment: Specifically, tracked armored vehicles, grenade launchers, and certain types of firearms have become more difficult to obtain.

* Increased investment in alternative technologies: Agencies are exploring non-lethal alternatives, such as body-worn cameras, de-escalation training programs, and mental health support services.

* Greater emphasis on clarity and accountability: Many agencies are now required to publicly disclose details about the equipment they receive through the 1033 Program.

Benefits of Restricting Military Equipment Transfers

Limiting access to military-grade equipment for local law enforcement offers several potential benefits:

* Reduced Escalation of Force: Less militarized equipment can contribute to a more measured response to situations, potentially reducing the risk of violence.

* Improved Community Relations: A less militarized police presence can foster greater trust and cooperation between law enforcement and the communities they serve.

* Cost Savings: Investing in alternative technologies and training programs can be more cost-effective than acquiring and maintaining expensive military equipment.

* Focus on Proactive Policing: Shifting resources away from militarization allows agencies to prioritize proactive policing strategies, such as crime prevention and community engagement.

Looking Ahead: The Future of Police Equipment & Oversight

the debate surrounding the Collins Amendment is likely to continue for the foreseeable future. Key areas to watch include:

* Further legislative action: Whether Congress

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Economy

Financial Movers & Shakers: XTX Departure, Barclays’ Rate Play, and Market Updates

by Daniel Foster - Senior Editor, Economy
written by Daniel Foster - Senior Editor, Economy

Barnett Waddingham Names New CRO as industry Veterans Shift Roles

Table of Contents

LONDON – Barnett Waddingham, a leading professional services firm, has announced the appointment of Rob Byett as its new Chief risk Officer. The move follows the retirement of Zoe smith, the firm’s former head of governance. Byett brings a decade of experience as Risk director at Hargreaves Lansdown, alongside prior roles as a senior Manager at Deloitte.

The appointment comes at a pivotal time for Barnett Waddingham, recently acquired by Howden Employee Benefits. byett will concurrently serve on the boards of both organizations, navigating the ongoing integration process. this dual role underscores the increasing importance of robust risk management during mergers and acquisitions, particularly within the financial services sector.Consolidated European Market Data Gains Industry Support

In related news, Stephen Dorrian, Head of European Market Data at Cboe Global Markets, has joined the advisory committee of EuroCTP. Dorrian’s expertise extends to Emea business growth for Cboe’s ‘Data Vantage’ products and active participation on the executive committee of FISD.

His prior experience includes data licensing roles at CME Group and the London Metal Exchange, positioning him as a key figure in the development of a consolidated tape for European shares and Exchange Traded Products (ETPs). The formation of EuroCTP and the appointment of experienced advisors like Dorrian signal a growing push for greater transparency and efficiency in European market data infrastructure. This initiative aims to provide investors with a more complete and reliable view of market activity.

AuditBoard Appoints New CEO with proven Track Record

Risk compliance software developer AuditBoard has tapped Raul Villar as its new Chief Executive Officer. Villar previously served as Executive Chair of Simpro and led HR software provider Paycor,which was acquired for $4.1 billion earlier this year.

Villar’s leadership experience in scaling and successfully exiting software companies suggests a focus on continued growth and innovation at AuditBoard. His appointment reflects a broader trend of experienced executives moving into the risk and compliance technology space, driven by increasing regulatory scrutiny and the demand for more sophisticated risk management solutions.

This series of appointments highlights a period of transition and strategic positioning within the financial services and risk management landscape. The emphasis on experienced leadership and the pursuit of improved data infrastructure suggest a proactive approach to navigating evolving market challenges and regulatory demands.

What potential impacts could XTX Markets’ relocation have on the liquidity and efficiency of European financial markets?

Financial Movers & Shakers: XTX departure, Barclays‘ Rate Play, and Market Updates

XTX Markets’ London Exodus: A Shift in High-frequency Trading?

XTX Markets, a leading global market maker, is reportedly scaling back its London operations, relocating key personnel and trading infrastructure to Singapore and Sydney. This move, impacting approximately 25% of its London-based staff, signals a potential shift in the landscape of high-frequency trading (HFT) and algorithmic trading.

Reasons for the Move: Sources point to a combination of factors, including post-Brexit regulatory uncertainty, increased operational costs in London, and a desire to be closer to growing Asian markets.

Impact on London: The departure of XTX represents a loss for the City of London, which has long been a global hub for financial technology and fintech innovation. It raises questions about the long-term attractiveness of London as a base for HFT firms.

Competitive Landscape: This relocation could benefit other financial centers vying for HFT business,such as new York and Chicago. Expect increased competition for talent and market share in the financial markets.

XTX Markets’ Strategy: The firm maintains it remains committed to serving European clients, but the strategic shift highlights a broader trend of firms diversifying their geographic footprint.

Barclays Bets on a Rate Cut: A Bold Macro Call

Barclays is taking a contrarian stance,predicting the Bank of England will begin cutting interest rates in the first quarter of 2025 – earlier than the consensus view. this macroeconomic forecast is based on Barclays’ analysis of weakening economic data and a projected decline in UK inflation.

Yield Curve Implications: Barclays’ call has implications for the yield curve, with expectations of a flattening or even inversion as short-term rates fall.

Investment Strategy: The bank is advising clients to position for a rate-cutting cycle, favoring long-duration bonds and select equities. This includes a focus on fixed income investments and sectors sensitive to interest rate changes.

Risk Assessment: While Barclays acknowledges the risks associated with its forecast – including the potential for persistent inflation – they believe the economic slowdown will ultimately force the Bank of England’s hand.

Market Reaction: Initial market reaction has been muted, with investors remaining cautious about the timing of rate cuts. Though, Barclays’ research is gaining traction among some investment banking analysts.

Market Updates: Key Trends and Developments (August 4, 2025)

Here’s a snapshot of key developments across global financial news:

  1. US Equities: The S&P 500 closed marginally higher yesterday, driven by strong earnings reports from the technology sector. However, concerns about rising bond yields continue to weigh on investor sentiment.
  2. European Markets: European stocks were mixed, with the FTSE 100 underperforming due to weakness in energy stocks. The Eurozone PMI data released this morning showed a slight improvement in manufacturing activity.
  3. Asian Markets: Asian markets rallied overnight, buoyed by positive economic data from China.The Shanghai Composite Index led the gains, rising over 2%.
  4. Currency Markets: the US dollar strengthened against major currencies, driven by safe-haven demand. The British pound remained under pressure following the XTX Markets announcement.
  5. Commodities: Oil prices edged higher, supported by supply concerns. Gold prices remained stable, trading near a record high.
  6. Fund Management Performance: Preliminary data suggests that hedge funds focused on global macro strategies are outperforming this year, benefiting from volatile market conditions. Private equity firms are continuing to navigate a challenging fundraising habitat.

Navigating Volatility: Practical Tips for Investors

The current market environment is characterized by heightened volatility and uncertainty. Here are some practical tips for investors:

Diversification: Spread your investments across different asset classes, sectors, and geographies to reduce risk.

Long-Term Viewpoint: Focus on long-term investment goals and avoid making impulsive decisions based on short-term market fluctuations.

Risk Management: Assess your risk tolerance and adjust your portfolio accordingly. Consider using stop-loss orders to limit potential losses.

Stay Informed: Keep abreast of market developments and economic trends.Utilize reputable sources of financial analysis and financial regulation updates.

* Professional Advice: Consult with a qualified financial advisor to develop a personalized investment strategy.

Case Study: The Impact of Rate Expectations on Mortgage Rates

The recent shift in market expectations regarding future interest rate cuts has had a direct impact on mortgage rates. As investors began to price in a higher probability of rate cuts, mortgage rates fell, providing some relief to homebuyers. This demonstrates the interconnectedness of financial regulation, monetary policy, and the housing market. A real-world example is the drop in average 30-year fixed mortgage rates from 7.2% to 6.8% over the past month, directly correlating with the changing rate cut expectations. this illustrates the importance of understanding interest rate risk for both borrowers and lenders.

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Economy

US Agencies Face Pressure to Bolster Cybersecurity Defenses

by Daniel Foster - Senior Editor, Economy
written by Daniel Foster - Senior Editor, Economy

Regulators’ Cybersecurity: A Case of “Do As I Say, Not As I Do”?

Table of Contents

There’s a well-worn adage: practice what you preach. it’s a principle increasingly under scrutiny when it comes to financial regulators and cybersecurity.

For months, banking supervisors globally have been ratcheting up pressure on financial institutions to bolster their defenses against increasingly sophisticated cyber threats. New regulations are being issued,incident reporting timelines are shrinking,and resilience frameworks are facing intense examination. But a critical question arises: are these regulatory bodies holding themselves to the same rigorous standards they demand of the banks they oversee?

Recent findings suggest the answer is a resounding “no.”

The Office of the Comptroller of the Currency (OCC),such as,recently experienced a significant data breach. this incident, while disclosed, raises serious concerns about the security posture of an organization tasked with ensuring the stability and security of the U.S. banking system.The OCC isn’t alone. Other regulatory agencies have also faced cybersecurity challenges, some of which have come to light through public reports and audits.

This apparent disconnect creates a credibility gap. How can regulators effectively enforce cybersecurity standards when their own systems are demonstrably vulnerable? It also raises questions about the resources and expertise dedicated to protecting regulators’ own sensitive data and infrastructure.

the implications are far-reaching. A triumphant cyberattack on a regulatory agency could compromise confidential supervisory data, disrupt critical financial oversight functions, and erode public trust in the financial system.It could also provide malicious actors with valuable insights into the vulnerabilities of the institutions regulators oversee.

Experts argue that regulators need to prioritize their own cybersecurity investments and adopt a more transparent approach to disclosing their own vulnerabilities and incidents. This includes conducting regular penetration testing, implementing robust data encryption measures, and providing comprehensive cybersecurity training for staff.

Ultimately, effective cybersecurity regulation requires a commitment to leading by example. If regulators are serious about protecting the financial system from cyber threats, they must first demonstrate that they can protect themselves.

Disclaimer: This article provides general information and should not be considered financial or legal advice. Cybersecurity threats are constantly evolving, and organizations should consult with qualified professionals for tailored guidance.

How does the SolarWinds supply chain attack exemplify the risks associated with inadequate vendor risk management?

US Agencies Face Pressure to Bolster Cybersecurity Defenses

The Escalating Threat Landscape

The pressure on US federal agencies to strengthen their cybersecurity defenses is reaching a fever pitch. A relentless barrage of increasingly elegant cyber threats, including ransomware attacks, data breaches, and nation-state hacking, is forcing a critical re-evaluation of existing security postures. This isn’t simply about protecting data; it’s about safeguarding national security, critical infrastructure, and public trust. The definition of cybersecurity – protecting digital devices, networks, and sensitive data – has never been more vital.

Recent High-Profile Incidents & Their Impact

Several recent incidents have underscored the vulnerability of US government systems:

SolarWinds Supply Chain attack (2020): This attack demonstrated the devastating potential of compromising the software supply chain, granting attackers access to numerous federal agencies. It highlighted weaknesses in vendor risk management and the need for enhanced threat detection.

Colonial Pipeline Ransomware Attack (2021): While impacting a private company, the disruption to fuel supplies exposed the fragility of critical infrastructure and the potential for cyberattacks to have real-world consequences.

Ongoing Ransomware Targeting of State & Local Governments: Cities and counties across the US continue to be targeted by ransomware groups, disrupting essential services and costing taxpayers millions in recovery efforts. This emphasizes the need for improved incident response planning.

These events, and countless others, have fueled calls for urgent action and increased investment in cybersecurity.

Key Areas of Focus for Betterment

Several key areas require immediate attention to bolster agency defenses:

  1. Zero Trust Architecture: Implementing a Zero Trust security model is paramount. This approach assumes no user or device is trustworthy by default, requiring continuous verification. This drastically reduces the attack surface and limits the impact of potential breaches.
  2. Multi-Factor Authentication (MFA): Widespread adoption of MFA across all agency systems is crucial. Adding an extra layer of security beyond passwords significantly reduces the risk of unauthorized access.
  3. Endpoint Detection and Response (EDR): Deploying advanced EDR solutions provides real-time monitoring and threat detection on individual endpoints (computers, laptops, servers). This allows for rapid identification and containment of malicious activity.
  4. Vulnerability Management: Proactive vulnerability scanning and patching are essential. Regularly identifying and addressing security weaknesses before attackers can exploit them is a cornerstone of effective cybersecurity.
  5. Security Awareness Training: Equipping federal employees with the knowledge and skills to recognize and avoid phishing attacks, social engineering tactics, and other common threats is vital. Human error remains a significant vulnerability.
  6. Information Sharing: Enhanced information sharing between agencies and with the private sector is critical for staying ahead of evolving threats. Collaborative threat intelligence platforms can provide valuable insights.

The Role of Executive Orders & Legislation

The Biden administration has prioritized cybersecurity, issuing several Executive orders aimed at improving the nation’s cyber defenses. These orders mandate the adoption of Zero Trust architecture, enhance software supply chain security, and improve incident response capabilities.

Legislative efforts, such as updates to the Federal Information Security Modernization Act (FISMA), are also underway to strengthen cybersecurity oversight and accountability within federal agencies.These updates aim to modernize security frameworks and ensure agencies are adequately prepared to address emerging threats.

Benefits of Proactive Cybersecurity Investment

Investing in robust cybersecurity measures yields significant benefits:

Reduced Risk of Data Breaches: Protecting sensitive data from unauthorized access and theft.

enhanced Operational resilience: Minimizing disruptions to critical government services.

Improved Public Trust: Demonstrating a commitment to protecting citizen data and privacy.

Economic Savings: Avoiding the costly consequences of ransomware attacks and data breaches (recovery costs, legal fees, reputational damage).

National Security: Safeguarding critical infrastructure and protecting against nation-state adversaries.

Practical Tips for Federal Agencies

Here are some actionable steps agencies can take now to improve their cybersecurity posture:

Conduct a thorough risk assessment: Identify critical assets and vulnerabilities.

Develop and implement a robust incident response plan: Outline procedures for detecting, containing, and recovering from cyberattacks.

Prioritize patching and vulnerability management: Regularly update software and systems.

Implement strong access controls: Limit access to sensitive data based on the principle of least privilege.

Regularly back up critical data: Ensure data can be restored in the event of a ransomware attack or other disaster.

Partner with cybersecurity experts: Leverage external expertise to enhance security capabilities.

Case Study: The moveit Transfer Hack (2023)

The widespread exploitation of a vulnerability in the MOVEit Transfer file transfer software in 2023 serves as a stark reminder of the risks associated with third-party software. numerous federal agencies and contractors were impacted, highlighting the importance of supply chain security and rigorous vendor risk management. This incident underscored the need for continuous monitoring of third-party software and rapid response capabilities when vulnerabilities are discovered. The attack demonstrated the potential for a single vulnerability to have cascading effects across multiple organizations, emphasizing the

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