Before sharing my views on the underlying principles that need to guide our thinking on our future supervisory approaches, I’ll first offer some thoughts on a few aspects of Federal Reserve supervision that I believe must be preserved even as we think expansively about the future: 1. The first being the Federal Reserve’s Supervisory structure.
In my remarks I will look at some recent cases in which we believe bankers and supervisors have learned some key lessons about enterprise risk management, or ERM. These lessons demonstrate how good risk management increases business efficiency and profitability. But before I start discussing particular examples, I want to take a step back and give you my thoughts on ERM generally.