BIS Review 1/1997  -2-  Essentially, the reform agenda had two main components: * First, expanded powers for depository institutions that would permit them to diversify in ways that might reduce risks and improve operating efficiency; * Second, improving the effectiveness of regulation and supervision by instructing regulators, in effect, to act more like the market itself when conducting prudential regulation.
FDICIA was a first step toward meeting the second challenge -- how to make regulators act more like the market. It called for a reduction in the potential for regulatory “forbearance” by laying down the conditions under which conservatorship and receivership should be initiated.