Even among the largest banks, no two institutions have exactly the same risk profiles, risk controls, or organizational and management structure. Accordingly, prudential policies need to be customized for each institution: the more complex an institution’s business activities, the more sophisticated must be our approach to prudential oversight.
The need for a multi-track approach to prudential oversight is particularly evident as we face the reality that the megabanks being formed by growth and consolidation are increasingly complex entities that create the potential for unusually large systemic risks in the national and international economy should they fail.