In requiring certain kinds of prudential regulation, Congress was in effect protecting against memories of those problems fading and the consequent possibility of supervisory relaxation, which might allow for a recurrence of similar banking problems in the future. The creation of mandatory thresholds for certain enhanced prudential standards is an important advance in the traditional congressional role of specifying a set of mandatory regulations.
But to ascribe the relatively healthy state of affairs in the CMA only to lack of exposure to the structured asset markets would be unfair; the crucial role of CMA financial institutions’ sound internal risk management processes, robust levels of capital and solid supervision should be acknowledged.