US financial sector risks on the rise: Treasury

US Secret Service Uniform Division officers walk in the door near a seal on the US Treasury building on August 9, 2011, in Washington, DCLow interest rates are feeding a surge in excessive risk-taking in more murky corners of the finance industry and leaving markets increasingly on edge, the US Treasury said Tuesday. With investors pushing ever-harder for better returns through increased leveraging, a new report from the Treasury’s Office of Financial Research said money is increasingly flowing into areas with less oversight, raising the dangers to financial stability. “We see material evidence of excessive risk-taking during the extended period of low interest rates and low volatility,” the OFR’s annual report to Congress said. “Compared with the period just before the financial crisis, threats to financial stability are moderate.

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