Thrifts Cautioned on Concentration Policies

This story appeared in Bank Digest.

Noting that recent examinations have revealed possible problems with asset and liability concentrations and associated risk management policies, the OTS has issued guidance on the risk management framework it expects thrifts to have. Higher levels of concentration and risk require that more capital must be held, the agency said, and rapid growth in concentration should be monitored carefully. The OTS warned that reliance on volatile funding sources often leads to higher risk lending activities.