Supervisory oversight of bank risk management practices, including the issuance of guidance on sound practices, reinforces the market discipline entailed in banks’ assessment and surveillance of the risks taken by their counterparties.
The recent guidance on sound risk management practices issued by the Basle Committee on Banking Supervision, the Federal Reserve, and the Office of the Comptroller of the Currency (OCC) represent significant steps toward achieving the goal of enhancing market discipline. I commend the Subcommittee’s efforts to advance public awareness of these efforts by holding today’s hearings on this recent supervisory guidance.