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Editorial Rating

7

Qualities

  • Innovative

Recommendation

Regulators around the globe are responsible for monitoring the banking industry to ensure its “safety and soundness.” In the United States, the Federal Reserve executes these duties. In an exhaustive study of official documents, Paul Goldsmith-Pinkham, Beverly Hirtle and David Lucca of the Federal Reserve Bank of New York examine the scale, scope and consistency of the US supervisory environment and its overlap with market discipline. getAbstract suggests this scholarly report, dense with models and statistics, to policy makers and financial executives engaged in the intricacies of the US bank regulatory apparatus.

Summary

Federal Reserve regulators inspect and supervise banks and their holding companies to preserve their “safety and soundness.” The Fed’s efforts are part of the global Basel banking framework, which focuses on three basic elements: “regulatory capital, market discipline and supervisory review.” The Fed issues official regulatory notices to banks for corrective actions known as “matters requiring attention (MRAs) and immediate attention (MRIAs),” designed to bring organizations into compliance with the rules before the Fed takes “formal enforcement action.” MRA and MRIA transmittals...

About the Authors

Paul Goldsmith-Pinkham is an economist at the Federal Reserve Bank of New York, where Beverly Hirtle is the director of research and David Lucca is a research officer.