Federal Reserve 101: Supervision of Banks

Key takeaways

• The examination process ensures financial institutions operate in a safe and sound manner, provide fair access to credit, and comply with laws, regulations, and other mandates.
• When a bank does not manage its risk well or does not have sufficient financial resources, examiners require the bank to take corrective action.

Full text

Federal Reserve 101: Supervision of Banks

Examiners in Banking Supervision conduct exams and inspections at more than 200 financial institutions in our district.

The examination process ensures financial institutions operate in a safe and sound manner, provide fair access to credit, and comply with laws, regulations, and other mandates.

The Federal Reserve supervises banks of all sizes, including:

• Community banks (banks with less than $10 billion in assets)
• Regional banks (banks with total assets between $10 billion and $100 billion)
• Large banks (banks with total assets greater than $100 billion)

Bank supervisors at the regional Federal Reserve Banks work to understand banks' operations, major risks, how well banks manage those risks and whether banks have sufficient financial and managerial resources.

When a bank does not manage its risk well or have sufficient financial resources, examiners require the bank to take corrective action.

Supervision is one of the five key functions of the Federal Reserve.

A safe, sound, and efficient banking and financial system contributes to a strong economy. That's why the Federal Reserve works to ensure that financial institutions follow the laws and regulations that apply to them.