Powell Doesn't See Fed as Responsible for Archegos Fallout

Q: On bank exposure to Archegos and whether the Fed should have seen it coming.

- A: We supervise banks to make sure that they have risk management systems in place so that they can spot these things. We don't manage their companies for them or try to manage individual risks.

• In the grand scheme of these large institutions those risks were not systematically important or not of the size that they would have created trouble for any of those institutions.
• What was troubling was that this could happen in a business for a number of firms that is thought to to carry relatively understood risks. The prime brokerage business is a well understood business, so it was surprising that a number of them would have had this. It was essentially the fact that they had the same big risk position with a number of firms.
• Some of the firms were not aware that there were other firms that had those things. I wouldn't say it's an indictment of our supervision of these firms. In some cases it seems as though there were risk management breakdowns in some of the firms, not all of them. That's what we're looking into.