Their growth rates have subsided more recently in light of recent accounting, regulatory, and governance problems, but without significant improvements in market discipline, it is likely that the rapid growth of GSE portfolios will resume. Market information is not a panacea in the formulation of monetary policy and, likewise, it is not one in the context of supervision and regulation.
First, market information is unavailable for many banks, often because they issue public debt only infrequently. Second, market discipline for banks is somewhat dependent on the Federal Reserve's policies and actions, and thus it has a "mirror problem" of its own.