Supervisors on Supervision

“Historically, the Federal Reserve’s independence in bank regulation and supervision has also provided stability and consistency to regulated institutions. This is not to suggest that bank regulation should remain static in the face of change.

To the contrary, the Federal Reserve’s regulatory approach must be capable of addressing and adapting to new banking activities and new risks but also must be aligned with furthering our statutory objectives.

Of course, this independence in bank regulation must be accompanied by accountability, to both Congress and the American public. Accountability is no less important for bank regulators than it is for banks. We should embrace holding ourselves to high standards — just as we hold banks to high standards — and do so in a way that promotes public accountability.

Accountability also requires transparent policies and procedures and conducting supervision in a way that is predictable and fair. These actions demonstrate to the public and regulated institutions that the agencies hold not only those institutions but also themselves to high standards. 

Transparency builds legitimacy by demonstrating that the Federal Reserve executes its responsibilities fairly across all regulated institutions. Transparency assists in ensuring accountability, in addition to building legitimacy and public trust. 

That same transparency helps show that we regulators are holding ourselves to high standards — that we are appropriately exercising the power granted to us by Congress and have done so in a way that supports due process and fairness. We should not be afraid to show our work in the execution of our regulatory or supervisory responsibilities. 

Accountability promotes healthy bank regulation and supervision, just as accountability promotes a healthy banking system. We should embrace holding ourselves to high standards — just as we hold banks to high standards — and do so in a way that promotes public accountability”