The supervision of community banks Unlike most other businesses, banks are subject to rigorous examination and supervision to assess their safety and soundness, their ability to withstand risks, and their compliance with a variety of laws.7 At community banks, these examinations involve off-site analyses and on-site visits by teams of examiners, exit meetings between examiners and senior bank managers to discuss examination results, and written reports with narratives and metrics describing the examiners’ findings.
If necessary, of course, examiners may require actions by the bank to remedy specific problems. These examinations, in combination with work we undertake between examinations, are critical for promoting safety and soundness while enhancing our understanding of the condition of individual banks and the banking system as a whole. We know, however, that supervision imposes costs on institutions.