The Committee certainly cannot claim to be prophetic in stressing these fundamentals – failure to adhere to the basics is often at the core of banking problems in most crises. Let me give you a few examples of the Core Principles’ relevance in light of lessons learned from the crisis.
One of the revised Core Principles stresses the importance of sound corporate governance and the essential need for strong risk management processes. The guidance states that a bank’s board must have, collectively, a sound knowledge of the activities undertaken by the firm. This collective familiarity among the boards of some of the largest banks was strikingly absent.