Due to the importance of large banks to the overall economy, regulatory agencies should prod disclosures of certain supervisory information by the large financial institutions they oversee, FDIC Vice Chairman Thomas Hoenig said in a speech in New York. “Regulators also should consider requiring banks to disclose significant or material findings, which could include examiner concerns about weak control systems or credit review programs,” he remarked.
These disclosures would be a “natural outgrowth” of the exam process “that would help provide greater consistency to the balance-sheet, income statement, and related information publicly traded banks already disclose under SEC regulations,” Hoenig added. “Such disclosure could be made by bank management with their explanations and plans to address such findings, after the examining agency reviewed the disclosure for accuracy.”
Although he acknowledged that such disclosures could be “destabilizing for banks experiencing difficulty,” Hoenig said that he expected such disclosures would be “the best cure for unanticipated crises.” He also said that bank ratings should not be disclosed.
Read the speech.