Although it is still too early to say for sure, I am optimistic that the recommendations in this report will lead to improved disclosure practices at our largest and most complex financial institutions, and perhaps others. I would also note that the Federal Reserve staff is developing recommendations for how reviews of disclosure practices could be included in the supervisory process.
On a slightly different front, bank supervisors have substantially stepped-up their efforts to use market information in supervisory surveillance of the LCBOs. For example, last summer, Fed staff began providing regular reports to supervisory personnel on the subordinated debt spreads and expected default frequencies derived from stock prices for selected LCBOs.