Why the Fed Is Reviewing Supervision of Largest Banks

The video discusses recent issues with US banks and the Federal Reserve's response, including a review of its supervision practices and an upcoming Senate testimony by New York Fed President William Dudley. It highlights the revolving door between Wall Street and federal regulators, the complexity of bank balance sheets, and the challenges in assessing them. The discussion also covers regulatory capture, the transformation of investment banks into commercial banks, and debates on capital rules and incentives.

What recent issue has been highlighted regarding the New York Fed's relationship with Goldman Sachs?

• A merger between the two entities

• A new partnership agreement

• A whistleblower's claims of excessive deference

• A lawsuit filed by the Fed

What transformation did Goldman Sachs and Morgan Stanley undergo to access the discount window?

• They became commercial banks

• They merged with each other

• They moved their headquarters

• They split into smaller entities

What challenge do regulators face with large banks' balance sheets?

• They are not regulated

• They are too complex to assess

• They are publicly available

• They are too simple to analyze

What is one proposed solution to align long-term incentives in banking?

• Simplifying capital requirements

• Increasing the number of offshore accounts

• Reducing the number of employees

• Merging with other banks

What practice did Citibank engage in during the financial crisis?

• Registering vehicles offshore

• Hiring more staff

• Reducing loan offerings

• Opening new branches