Y2K (Year 2000): Is Wall Street & Banking Vulnerable? Message Board

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Technology Stocks : Y2K (Year 2000): Is Wall Street & Banking Vulnerable?

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To: C.K. Houston who wrote (54)	6/25/1999 1:38:00 PM
From: C.K. Houston	Read Replies (1) of 158

FED WANTS BETTER RISK MONITORING AT BIG BANKS WASHINGTON, June 24 (Reuters) - The Federal Reserve said on Thursday it has asked banking supervisors to improve their monitoring of risk-taking by big, complex banks that account for a growing share of U.S. banking assets. In a statement, the Fed said it was felt a letter of guidance to supervisory staff and to bankers was needed ''during a time of dramatic change in the financial system'' as a small number of banks assume a growing role in the nation's banking system. Fed officials have said recently that they were putting increasing importance on supervison of the activities of a small number of big banks to ensure the safety and soundness of the banking system. Fed Governor Laurence Meyer mentioned it earlier this month at a conference of state banking supervisors in Williamsburg, Va. The Fed said its latest supervisory letter ''builds upon the Federal Reserve's existing risk-focused supervision program by providing more specific guidance on the applicability of this program to LCBOs (Large Complex Banking Organizations).'' The letter said a central component of supervision should be ''assignment to each LCBO of a dedicated supervisory team comprising individuals with specialized skills'' to judge a particular bank's business lines and risk profile. It called for ''a full-time deicated cadre'' of experts for each bank that could also do examinations and targeted reviews as necessary. The Fed said this type of supervisory expertise is needed as big banks move into nontraditional areas like securities underwriting and dealing, derivatives trading and the packaging of loans as securities for sale. As banks expand across state and international borders and use increasingly sophisticated information technology, it has ''heightened the potential for swift changes in the risks confronting these institutions,'' the Fed cautioned. biz.yahoo.com

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