In some financial markets, however, the price discovery process appears to have actually broken down. In particular, I am referring to markets for structured credit products (for example, collateralized loan obligations and collateralized debt obligations) that are often complex and opaque, as well as instruments that are linked to these structured products, such as asset-backed commercial paper.
This exercise is central to the goal of having each firm maintain adequate capital to provide a buffer against possible losses associated with its particular set of activities and exposures. Using findings from these reviews, we will work with firms over the next year to bring their processes into line with supervisory expectations.