This creates special supervisory risks because the ILC's parent company and nonbank affiliates may not be subject to supervision on a consolidated basis by a federal agency. History demonstrates that financial trouble in one part of a business organization can spread, and spread rapidly, to other parts of the organization.
Large organizations also increasingly operate and manage their businesses on an integrated basis with little regard for the corporate boundaries that typically define the jurisdictions of supervisors. Risks that cross legal entities and that are managed on a consolidated basis cannot be monitored properly through supervision directed at any one, or even several, of the legal entity subdivisions within the overall organization.