Fed orders banks to break open black boxes

Banks struggling to prise information out of vendors after Fed clamps down

federal reserve
The Federal Reserve in Washington, DC

The Federal Reserve Board is pushing banks to address a traditional blind spot by properly validating third-party risk models ahead of the 2015 edition of the annual US stress tests. That is causing friction between banks and vendors, with banks complaining they are not being given the information they need - some fear they may end up using unvalidated models for the tests, which start in October this year. A validation expert at one of the big Wall Street dealers says none of his firm's roug