The supervisory oversight of capital adequacy, to be sure, is more intense and continuous in the case of large, complex institutions, but what is now being called pillar 2 has long been, and will continue to be, an integral part of the framework for community banks.
Market discipline (pillar 3), however, may be particularly problematic for community banks, since such institutions are often closely held and not rigorously and continuously evaluated by market analysts and investors. Even if they are traded on a regional basis, the depth of the trading is likely to be inadequate to provide timely signals to supervisors and discipline to management.