Third, to the extent that comparisons across recessions are informative, asset-price-bust recessions do not appear to be necessarily more costly than other recession episodes. Specifically, at a macroeconomic level, recessions that follow swings in asset prices are not necessarily longer, deeper, and associated with a greater fall in output and investment than other recessions.
We will be evaluating the degree to which prices of market instruments track the changing risk profiles of banking organizations, assessing the usefulness of such market signals in the surveillance of the financial conditions of large, complex banking organizations, and evaluating the potential usefulness of such data in the supervisory process.