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Bank
Supervision
 Subprime mortgage lending and mitigating foreclosures.
Remarks by Mr. Ben S Bernanke, Chairman of the Board of Governors of the US Federal Reserve System, before the Committee on Financial Services, US House of Representatives, Washington DC , 20 September 2007.
Mr. Bernanke discusses the origins of the problems in the subprime-mortgage market and the response of the Federal Reserve to these developments. He also discusses some possible legislative options for addressing these concerns.
 Recent Events in the Credit and Mortgage Markets and Possible Implications for U.S. Consumers and the Global Economy
Statement of Sheila C. Bair, Chairman, Federal Deposit Insurance Corporation on before the Financial Services Committee. U.S. House of Representatives. September 5, 2007
Events in the financial markets over this summer present all of us here today - regulators, policymakers, and industry - with serious challenges. In my testimony today, I will discuss the developments that led to the current market disruptions, report on the condition of the banking industry, and describe ways to address some of the lessons we have learned from the events of recent months.
As the integration of financial markets has picked up speed in recent years the subjects of supervision and crisis management of internationally active banks have gained in importance. Mr. Ingves elaborates on the creation of a special body for supervision of the major cross-border banks in Europe .
Bank of Spain publishes validation criteria to define some of the minimum requisites for the estimation of the DLGD of mortgage credits, with the goal of harmonizing frameworks used by different entities and to offer references that can be introduced in the internal estimation processes.
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Bank of Spain publishes validation criteria to define the internal validation function, its objective and the scope of the work that has to be done for its development; to establish the need of a specific unit responsible of the development of the internal validation function, complying with a series of requisites of competence and independence; and to define which schemes are admissible in the design and execution of the internal validation tests.
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The groups of financial consolidated entities that want to use advanced methodologies for the calculation of the minimum capital requirements for operational risk, given the entrance of the new solvency rules (Basel II), should participate in validation processes. This document tries to help with this. In order to participate in these processes, the parent unit should submit the information requested in this report to the Bank of Spain. The information specified in this report has the goal of evaluating the grade of compliance of the minimum requisites established by Basel II for the utilization of the AMA approaches and to evaluate if the entities have the will to comply with these requirements.
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The Federal Deposit Insurance Corporation (FDIC) presents a study that analyzes the feasibility and consequences of privatizing deposit insurance
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In a speech given in March 2005 (Bernanke, 2005), I discussed a number of important and interrelated developments in the global economy, including the substantial expansion of the current account deficit in the United States, the equally impressive rise in the current account surpluses of many emerging-market economies, and a worldwide decline in long-term real interest rates. A principal theme of my earlier remarks was that a satisfying explanation of the developments in the U.S. current account cannot focus on developments within the United States alone. Rather, understanding these developments and evaluating potential policy responses require a global perspective. I will continue to take that perspective in my remarks today and will emphasize in particular how changes in desired saving and investment in any given region, through their effects on global capital flows, may affect saving, investment, and the external balances of other countries around the world.
 No moral hazard – the banks are doing their job.
Remarks by Mr. Christian Noyer, Governor of the Bank of France , in the Financial Times, 18 September 2007.
In recent weeks, Central Banks in Europe and the US have acted repeatedly to provide liquidity to interbank money markets. These interventions have raised some questions. Concerns were expressed that monetary authorities were bailing out speculators, thus creating the same kind of moral hazard that may have led to excesses in the past. There were also concerns as to whether the integrity of monetary policy would be compromised. However, the logic behind recent interventions is different.
 Global Banking: Paradigm Shift – Managing Transition.
Speech by Malcolm D Knight, General Manager of the BIS, at the Federation of Indian Chambers of Commerce and Industry (FICCI) – Indian Banks' Association (IBA) Conference, Mumbai, 12 September 2007.
There are three important issues in the context of globalisation and the move towards global banking. First, market participants need to understand the changing nature of risk in the context of the increasing use of innovative and complex instruments that can be traded across markets and borders. In particular, credit risk transfer and liquidity risk management need to be looked at from a fresh perspective. Second, disclosures need to keep pace with market developments. The enhanced disclosures under international financial reporting standards (IFRS) and Basel II will strengthen market discipline and contribute to the soundness of the international financial system. Third, good governance is important for supervisory agencies and central banks. It lends credibility to their actions and enhances their legitimacy as public policy institutions.
This article highlights the results of an FDIC study of the effectiveness of the Money Smart financial education program.
Over
the past three decades, the financial system has been going through a historical phase of major structural change. This paper traces the implications of this financial revolution for the dynamics of financial distress and for policy. It argues that, despite this revolution, some fundamental characteristics of the financial system have not changed and that these hold the key to the dynamics of financial instability. These characteristics relate to imperfect information in financial contracts, to risk perceptions and incentives, and to powerful feedback mechanisms operating both within the financial system and between that system and the macro-economy.
I would like to talk about the importance for emerging economies of developing solid and deep financial markets. At first glance, it can look strange to stress the importance of the development of financial markets at this precise moment when the concerns are focused in the recent turbulence in the credit markets. In the last weeks we have seen how the problems in the sub-prime mortgage market in the United States have affected the international capital markets and how it have obliged the central banks of the United States, Europe and Asia to inject exceptional amounts to maintain liquidity. This episode of turbulence is the first real test of the structured finance and derivatives markets and of the complex financial instruments that are traded in those markets.
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