The Federal Reserve Board on Thursday explained how it is changing its supervision practices to keep pace with the world's most sophisticated banking companies.
Special teams of supervisors have been assigned to the 20 U.S. and 10 foreign banking companies that are heavily involved in nontraditional businesses, including securities underwriting and dealing, derivatives trading, and loan securitization.
"The rapid evolution and growing complexity of banking and financial markets calls for continuing refinement of the Federal Reserve System's supervisory approach to ensure the oversight ... is effective, comprehensive," and nonintrusive, according to a letter sent to examiners and select bankers.
The Fed also wants its supervision of these "large, complex banking organizations" to be consistent. So these special teams of examiners will compare a bank's operations to a group with similar business lines, characteristics, and risk profiles.
The Fed said this "portfolio approach" will help identify outliers and industry trends.
"Ongoing advances in information technology have increased the speed, complexity, and volume of financial transactions, and thus have heightened the potential for swift changes in the risks confronting these institutions," the Fed said in a release.
The Fed also said its new information system, the Banking Organization National Desktop, will be introduced next year to let supervisors easily swap information electronically.