US Treasury Department Releases Strategy to Combat De-Risking by Financial Institutions

The US Treasury Department has released the 2023 De-Risking Strategy, which examines the issue of financial institutions indiscriminately terminating or restricting business relationships with certain categories of customers, and proposes policy options to combat it. The strategy found that profitability is the primary factor in these de-risking decisions, but highlights other factors such as reputational risk, regulatory burdens, and perceived lack of clarity regarding regulatory expectations. The policy recommendations in the strategy aim to promote consistent regulatory expectations and better incentives for banks to avoid de-risking, and advance public and private engagement and cooperation at home and abroad.