The Board of Governors of the Federal Reserve System is pleased to present the inaugural Supervision and Regulation Report.1 The report summarizes banking conditions and the Federal Reserve's supervisory and regulatory activities, in conjunction with semiannual testimony before Congress by the Vice Chairman for Supervision. While this inaugural report looks at trends going back to the financial crisis, future reports will focus primarily on developments in the period since the previous report. All financial and table data presented in this report are as of June 30, 2018, unless specified otherwise.
The report does not reflect the full extent of tailoring of regulations and supervision--required by the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA)--which is in varying stages of implementation. Supervisory portfolios are described in their pre-EGRRCPA form. Changes to regulatory thresholds adopted to reflect EGRRCPA are underway and will be reflected in the next report.
In addition, this report focuses on the Federal Reserve's prudential supervisory responsibilities rather than consumer compliance supervision, which is addressed briefly in the Supervisory Developments section of this report.
This report consists of three main sections, in addition to a Summary of key developments and trends:
- The Banking System Conditions section provides an overview of trends in the banking sector based on data collected by the Federal Reserve and other federal financial regulatory agencies as well as market indicators of industry conditions.
- The Regulatory Developments section provides an overview of the current areas of focus of the Federal Reserve's regulatory policy framework, including pending rules.
- The Supervisory Developments section provides background information on supervisory programs and approaches, as well as an overview of key themes and trends, supervisory findings, and supervisory priorities. The report distinguishes between large financial institutions and regional and community banking organizations because supervisory approaches and priorities for these institutions frequently differ.
1. For more information about the Federal Reserve's supervisory and regulatory responsibilities and activities, see section 4, "Supervision and Regulation," of the Federal Reserve Board's 104th Annual Report 2017 at www.federalreserve.gov/publications/annual-report.htm. In addition, the Federal Reserve System Purposes & Functions publication provides an overview of these responsibilities and activities and clarifies the distinction between supervision and regulation: "Regulation and supervision are distinct, but complementary, activities. Regulation entails establishing the rules within which financial institutions must operate--in other words, issuing specific regulations and guidelines governing the formation, operations, activities, and acquisitions of financial institutions. Once the rules and regulations are established, supervision--which involves monitoring, inspecting, and examining financial institutions--seeks to ensure that an institution complies with those rules and regulations, and that it operates in a safe and sound manner." See www.federalreserve.gov/aboutthefed/pf.htm.
For summary information regarding the Federal Reserve's review of banking applications activity, please see the Semiannual Report on Banking Applications Activity at www.federalreserve.gov/publications/semiannual-report-on-banking-applications-activity.htm. Return to text