Banking and Finance Law Daily Wrap Up, FINANCIAL STABILITY—Fed’s Cook discusses lessons learned on financial stability committee, (Mar 27, 2026)

By Nora Macaluso

Maintaining quality data, balancing the financial “ecosystem,” monitoring new technology, and scenario analysis are key to maintaining stability, the Fed governor said.

The Federal Reserve’s work on financial stability is key to stability of the overall system and Americans’ ability to support families, buy homes, start businesses, and pay for education, said Federal Reserve Governor Lisa Cook. In a speech at Yale University, Cook reflected on her experience on the Fed’s Committee on Financial Stability, which she joined in 2022 and has chaired since 2023.

“If I could send a message to myself four years ago, here is what I would say,” Cook said. “First, I cannot underscore enough how important it is to remain vigilant about obtaining high-quality data to guide financial stability analysis.”

“Data permit us to answer key questions” about the “evolving nature” of the financial system, she said. “I have observed a synergy between scenario analysis and data collection. Sometimes when we run a scenario, the most important lesson we take away is the data we need to identify to truly understand how the system might evolve.”

“Second, the policy landscape reflects a long history of decisions that multiple state and federal agencies made in response to a complex mix of mandates and considerations,” she said, yet policymakers concerned with financial stability need to look at hits “web of markets and institutions as an ecosystem ultimately designed to support the needs of businesses and households.”

Global systemically important banks (G-SIBs) are part of that ecosystem, Cook said. Their resilience is necessary for the resilience of the overall system, so “vigilance in ensuring their continued resilience is critical,” she said.

“Third, we should embrace responsible changes that strengthen our financial system, not hinder them,” Cook said. Fed policymakers monitor early-stage technologies including digital assets and artificial intelligence to understand “the system’s trajectory,” she said. “We have also observed innovations that have brought unintended consequences, and we need to stay abreast of potential risks in order to better understand where guardrails and industry engagement might be helpful,” she added.

Finally, said Cook, “the tradeoffs between acting to prevent the worst near-term effects at the cost of a larger Fed footprint and moral hazard are real.”

“We know that making policy during a stress event presents the highest degree of difficulty,” she said. “The stakes are high, with significant real-world losses looming. Time and information are often in short supply. The available options are almost always suboptimal. That is why properly undertaking scenario analysis in advance is a high priority.”

“The credibility that supports effective financial stability policy interventions is the product of careful, deliberate work,” such as that detailed in the Fed’s Financial Stability Report (FSR), the “analytical workhorse of financial stability analysis,” Cook said. The next FSR will be released later this spring, she said.

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