In anticipation of such discussions, I would like to conclude by focusing on what I believe should be several core principles underlying any proposed changes to our current system of prudential regulation and supervision. First, a reasonable principle for setting regulatory soundness standards is to act much as the market would if there were no safety net and all market participants were fully informed.
For example, requiring all of our regulated financial institutions to maintain insolvency probabilities that are equivalent to a triple-A rating standard would be demonstrably too stringent, because there are very few such entities among unregulated financial institutions not subject to the safety net.