That is, compared with individual investors - especially those with large holdings - are institutional investors more likely to actively monitor and influence both management actions and corporate governance mechanisms at the firms in which they invest? Shareholder activism may provide market discipline directly by preventing management from pursuing its own interests at the expense of shareholders.
Thus, it will always be important for the Federal Reserve to maintain its integral role in the regulation of the financial system not only for the visibility this provides into the economy, but precisely in order to calibrate the sorts of relationships we have been talking about today.