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Strengths And Weaknesses Of The American Banking System

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The American System The American Banking system has always focused on order, resiliency and the ability to withstand the storm. When comparing banking systems, it is required analyze both the strengths and the weaknesses of each system. While examining the American banking system, a key strength that is presented is the pride if its resiliency, “these improvements in the resiliency of the banking system have been reinforced by a series of key capital and liquidity rules that have been enacted in the United States, including the Basel III capital and liquidity frameworks as adopted in more stringent form” (The State of American Banking).
This focus on resiliency also included stress tests that the American banks undergo to determine their ability to deal with things such as, “a sudden jump in the unemployment rate of 4 percentage points, or, a sudden decrease in GDP of more than 6 percentage points, and an abrupt rise in the BBB corporate bond spread” (The State of American Banking). Through these stress tests, it can be concluded whether or not the individual banks are making the correct decisions in the challenging financial circumstances, or whether the government needs to step in and alter legislations or practices.
To examine how the stress tests are regulated the process has remained largely unchanged since the 1930’s. As still, “in the United States, depending on the charter type, four federal agencies, as well as state agencies, oversee banking and thrift
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