This assessment might involve analysis of public financial statements, rating agencies and Wall Street analyst reports, internal management reports, internal and external audit reports, meetings with management, and only limited, if any, on-site inspections of nonbank affiliates. Any visits that are made could be limited to testing the adequacy of management and operating systems, to protect the insured depository institution.
While various approaches could be taken to address capital adequacy and to avoid the unnecessary or inappropriate use of double leverage, I believe such approaches should be measured against the goal of assuring the safety and soundness of the affiliated banks. And finally, the umbrella supervisor should have appropriate enforcement authority, including the authority to require the sale of the bank in extreme situations.