Legally blind: Huge settlements overwhelm op risk models

Legally blind


By any standards, a loss of $10.3 billion – the amount Bank of America Merrill Lynch (BAML) agreed to pay Fannie Mae on January 7 to settle mortgage-related claims – is big. But in the world of operational risk – where it belongs, according to bank regulators – it is unprecedented, and that is a problem. According to one consultant who has worked on operational risk measurement with a number of large institutions, the BAML settlement is big enough to wipe out the capital set aside for op risk at

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