In particular, the information, expertise, and powers that the Fed derives from its supervisory authority enhance its ability to contribute to efforts to  8  In both the Drexel and LTCM episodes, the Federal Reserve initially detected the firms’ problems through either market surveillance or its interactions with primary dealers, rather than through banking supervision.
Once the problems were known, considerable information came from the troubled firms themselves (Breeden, 1990; McDonough, 1998). However, that information was supplemented, and to an extent validated, with information received from banking institutions under the Federal Reserve’s supervisory authority.