Supervising Large, Complex Financial Institutions: What Do Supervisors Do?

40 Pages Posted: 31 May 2015

See all articles by Thomas M. Eisenbach

Thomas M. Eisenbach

Federal Reserve Banks - Federal Reserve Bank of New York

Andrew Haughwout

Federal Reserve Bank of New York

Beverly Hirtle

Federal Reserve Bank of New York - Banking Studies Department

Anna Kovner

Federal Reserve Bank of New York

David O. Lucca

Federal Reserve Banks - Federal Reserve Bank of New York

Matthew C. Plosser

Federal Reserve Banks - Federal Reserve Bank of New York

Multiple version iconThere are 2 versions of this paper

Date Written: May 1, 2015

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

JEL Classification: G21, G28

Suggested Citation

Eisenbach, Thomas M. and Haughwout, Andrew F. and Hirtle, Beverly and Kovner, Anna and Lucca, David O. and Plosser, Matthew C., Supervising Large, Complex Financial Institutions: What Do Supervisors Do? (May 1, 2015). FRB of New York Staff Report No. 729. Available at SSRN: https://ssrn.com/abstract=2612020 or http://dx.doi.org/10.2139/ssrn.2612020

Thomas M. Eisenbach (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States
212-720-6089 (Phone)

HOME PAGE: http://teisenbach.github.io/

Andrew F. Haughwout

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States
212-720-2685 (Phone)
212-720-1844 (Fax)

Beverly Hirtle

Federal Reserve Bank of New York - Banking Studies Department ( email )

33 Liberty Street
New York, NY 10045
United States
212-720-7544 (Phone)
212-720-8363 (Fax)

Anna Kovner

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

David O. Lucca

Federal Reserve Banks - Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

Matthew C. Plosser

Federal Reserve Banks - Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

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