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Regulators Intensifying Scrutiny of Banks

A recent Wall Street Journal article looked into how U.S. regulators, in recent weeks, have been focusing in on Wall Street boardrooms as the U.S. government has continued to intensify oversight of financial markets. The Federal Reserve Bank and other bank regulators are holding more frequent meetings with individual directors at some of the largest banks in the country. In these meetings, regulators have demanded detailed minutes as well as other official documents from board meetings in order to better oversee and regulate commercial bank operations. In some instances, it has been reported that some bank directors have met more with regulators in 2015 than with their own full boards. However, different banks have different processes. At Goldman Sachs Group Inc., the bank’s lead independent director meets monthly with its primary Fed supervisor. Morgan Stanley allows Fed supervisors to sit in on a portion of each board meeting, where they can listen and ask questions.

In addition, Washington has honed in more on regulators and review information that directors get from bank management. They have been asking about succession planning and inquiring about directors, as well the potential downsides of certain transactions. The Fed and OCC were quoted recently as saying that board oversight helps make the financial system safer, but directors have complained that they are being asked to take too much responsibility.

What do we make of this growing emphasis on bank regulation following the financial crisis? Is it making a difference?


  1. Stephen Moore Stephen Moore

    This seems consistent with the story we often see in the news. The government increases regulations for the sake of making financial markets safer and banks continue to get caught breaking the rules.

  2. moorem15 moorem15

    I see this growing government oversight as a positive development. Many of these Wall Street financial institutions were considered too big to fail back in 2008, and they have only grown larger as a result of the crisis. Anything that can be done to prevent another situation is a positive development in my mind.

  3. maguirem15 maguirem15

    I agree with both Stephen and Matt, because of the too big to fail issue pre-recession there was a lack of oversight over the banking system. When the banks almost did fail, the government needed to step and they deemed it was better to over regulate than under regulate and allow another recession to happen right under their noses.

  4. grieve grieve

    As these stringent measures trickle down to commercial banks, however, it becomes increasingly harder for new banks to form and subsequently turn a profit.

    • That’s not what I hear from our local, recent startup, Cornerstone Bank. I made a presentation to their Board a few weeks ago, and have known the current president for many, many years.

      But why do we need more banks???

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