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Parsing the Content of Bank Supervision
Report

Parsing the Content of Bank Supervision

Paul Goldsmith-Pinkham, Beverly Hirtle and David Lucca
Federal Reserve Bank of New York, 2016
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Editorial Rating

7

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  • Innovative

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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.

Take-Aways

  • Federal Reserve regulators inspect and supervise banks and their holding companies to preserve their “safety and soundness.”
  • Before taking “formal enforcement action,” the Fed issues official notices designed to bring banks into regulatory compliance.
  • Of the 38,000 notices the Fed issued between 2009 and 2014, 19% were for compliance and regulation, and 17% were for capital and liquidity issues; “this implies that regulation relies on supervision for its enforcement.”

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.

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