2.2: Supervision
Provide a safe, sound, competitive, and accessible banking system through comprehensive and effective supervision of U.S.
banks, bank and financial holding companies, foreign banking organizations, and related entities. At the same time, remain
sensitive to the burden on supervised institutions.
Other Information:
This objective will be pursued in part through the following actions: • Refine System processes designed to identify and assess
risks within financial institutions and across portfolios of supervised institutions to respond to changes in the planning
environment. • In the face of increasingly complex risks, enhance the supervision function’s ability to adapt supervision
programs to respond to shifting priorities and issues in the most timely, consistent, and effective manner. Discussion: A
sound process for managing risk on an ongoing basis is critical to an institution’s safety and stability. It is particularly
important for institutions that are actively introducing new products and engaging in new activities. The supervision function
must promote sound practices for managing risk that provide for strong internal controls, active boards of directors, and
senior management oversight and accountability. Over the past decade, the supervision function has shifted to a risk-focused
approach. Under this approach, we develop individualized supervisory programs that expend our resources in a manner reflective
of the structure, business mix, and risks inherent in each institution. During this planning period, the supervision function
will seek to enhance the risk-focused approach by ensuring that banks focus on maintaining sound risk management practices
and internal controls that encompass changes in risk profiles as institutions expand into nontraditional business lines. The
supervision function will continue its efforts to work as a national, seamless, consistent operation while taking full advantage
of the varying perspectives and opportunities for innovation presented by the Federal Reserve’s structure. The supervision
function will also continue to cooperate closely with state banking departments, foreign supervisors, and other federal bank
and nonbank regulatory authorities to avoid duplication and inconsistency.
Indicator(s):
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