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Supervising large, complex financial companies: what do supervisors do?

Thomas Eisenbach (), Andrew Haughwout, Beverly Hirtle, Anna Kovner, David Lucca and Matthew Plosser ()

No 729, Staff Reports from Federal Reserve Bank of New York

Abstract: The Federal Reserve is responsible for the prudential supervision of bank holding companies (BHCs) on a consolidated basis. Prudential supervision involves monitoring and oversight to assess whether these firms are engaged in unsafe or unsound practices, as well as ensuring that firms are taking corrective actions to address such practices. Prudential supervision is interlinked with, but distinct from, regulation, which involves the development and promulgation of the rules under which BHCs and other regulated financial intermediaries operate. This paper describes the Federal Reserve?s supervisory approach for large, complex financial companies and how prudential supervisory activities are structured, staffed, and implemented on a day?to?day basis at the Federal Reserve Bank of New York as part of the broader supervisory program of the Federal Reserve System. The goal of the paper is to generate insight for those not involved in supervision into what supervisors do and how they do it. Understanding how prudential supervision works is a critical precursor to determining how to measure its impact and effectiveness.

Keywords: bank supervision; large and complex financial companies (search for similar items in EconPapers)
JEL-codes: G21 G28 (search for similar items in EconPapers)
Date: 2015-05-01
New Economics Papers: this item is included in nep-cba
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