But there should be ways to provide some further explanation of our modeling approach without leading to this outcome, particularly in the aftermath – rather than in the middle – of the supervisory exercise itself.
As a first step along these lines, we hope the symposium and other channels for discussing good modeling practices will reduce the “black box” feeling of some of the firms. Of course, good modeling – whether at a firm or at the Federal Reserve – should be adapted to take advantage of improved data and advances in risk management.