Quarles continues argument for multi-faceted approach to supervision

Pushing forward his campaign for the Federal Reserve to communicate more clearly with the banks it supervises, the agency’s top supervisor reiterated Tuesday his plan for doing so.

In comments to the Yale University Law School, Federal Reserve Board Vice Chair for Supervision Randal Quarles said the supervisory reforms he outlined last week will provide “more transparency and more clarity about what we want to achieve as supervisors and how we approach our work.”

In a speech last month, Quarles outlined a multi-faceted approach to improving communication, he said, outlining actions in three categories: large-bank supervision; transparency improvements; and overall supervisory process improvements.

In his remarks Tuesday, Quarles said changes to financial institution supervision since the financial crisis of a dozen years ago “have made the financial system stronger and more resilient than it was before.”

“The incremental changes I am considering, to increase transparency, accountability, and fairness, would make supervision more efficient and effective, and our financial system stronger and more stable,” he said.

Quarles noted that the changes he is proposing do not completely answer the question of how regulators can square the public interest in agile supervision with the public interest in transparency and accountability.

“This should be an ongoing question of high priority, both at the Fed and more broadly among those who care about our system of financial regulation,” he said. “Equally obviously, however, these suggestions would strengthen our practice of supervision and increase the vigor and credibility of our supervisors.”

Quarles remarks: Spontaneity and Order: Transparency, Accountability, and Fairness in Bank Supervision