The SSRI is a leading indicator of national economic trends in GDP & unemployment.
The Sustainability and Systemic Risk Index™ (SSRI) measures ongoing sustainability and systemic risk in the U.S. financial sector, including historical data back to 2001.
With a database of all U.S. banks with assets of over $1 billion, the SSRI is based on those banks’ actual, and not fully disclosed, compliance with federal safety and soundness regulations. The SSRI is an independent and objective analysis of the effectiveness of federal banking regulators at ensuring safe, sound and sustainable banking performance as well as the effect of systemic risk on economic growth, employment, monetary policy and moral hazard.
The SSRI is an accurate measure of the safety and soundness of the US banking industry.
The SSRI, when compared with historical CAMELS Ratings from failed banks, is a leading indicator of undisclosed violations that include the troubled condition (CAMELS Ratings 4 and 5) that leads to systemic risk. The SSRI also measures the lag between breaches of fiduciary duties and securities law violations and litigation.
Since 2001, the Federal Reserve Board has not issued any public enforcement actions against 17 leading U.S. financial holding companies (FHCs) for violations of federal safety and soundness standards (well-managed and well-capitalized standards), including reaching a troubled condition, despite several FHCs’ reaching a troubled condition and contributing materially to the systemic risk determination on October 13, 2008 by the U.S. government.
By measuring the true financial condition of FHCs, the SSRI is a leading indicator of moral hazard, regulatory capture and too-big-to-fail.
High SSRI levels indicate that the banking industry is reaching a troubled condition overall that can trigger cascading banking and economic risks for investors in the capital markets. After a four-year climb, the SSRI reached a peak at the time of the systemic risk determination in October 2008 followed by the unprecedented federal financial support of the troubled banking industry.
The SSRI is a leading indicator of financial distress in the U.S. banking industry, substantiated by the Russell 3000, the VIX Volatility Index and credit default swap prices.