The spate of bank failures this past spring has triggered more interest in how the bank supervisory process works.  The Supervisory Letter (SL) is usually the most critical document coming out of the supervision of large banks.  I’ve written quite a few SLs in my time and can share how the letter writing process works…

As I observed in an earlier post, large banks tended to respond to rising interest rates not by hedging or rebalancing their portfolios but by classifying more securities at held-to-maturity.  This is one of many instances over the years where banks (and often their regulators) chose accounting form over economic substance.  Supervisory goodwill, trust preferred…

U.S. banking regulators recently released a Notice of Proposed Rulemaking (NPR) that would make changes to regulatory capital requirements.  The proposed changes, known as the Basel III Endgame, are expected to increase capital requirements for large banks.  The proposal runs 1,087 pages and covers multiple areas.  One proposed change would revise the capital treatment of…