According to the Federal Financial Institutions Examination Council, almost all U.S. exposure to peripheral European sovereigns is held by 10 large U.S. bank holding companies, whose balance sheet exposure of $ billion represents only 9 percent of their Tier 1 capital.
In my experience, the information, expertise, credibility, and powers that the Federal Reserve derives from its supervisory activities are extraordinarily helpful in our efforts to maintain economic and financial stability. Perhaps we could be successful, as central banks in a number of countries are trying to be, without supervisory authority. But I, for one, would not want to take that risk.