Setting the Record Straight on Bank Supervision

Yesterday, Better Markets said the FDIC and OCC proposals on confidential supervisory information would "further undermine bank supervision."

But that's not what the proposals do.

When regulators identify a problem at a bank, the goal should be simple: fix it quickly. The FDIC and OCC proposals would make it easier for banks to share supervisory findings with the people who may need that information to address problems—while keeping safeguards around how that information is used.

Here's what Better Markets gets wrong.

The proposals do not allow unrestricted sharing

Better Markets suggests banks would be free to circulate supervisory information as they see fit. The proposals say otherwise.

• The OCC would only allow this information to be shared in certain situations where it would help the supervisory process, and the information would still be protected by safeguards.
• The FDIC similarly would allow sharing with certain parties for legitimate business reasons, while keeping confidentiality protections in place.

The agencies considered the risks

Better Markets points to concerns that broader sharing could make examiners less candid. The OCC considered that risk in writing the proposal, and built in protections meant to address it.

• The OCC itself warns against "unfettered or inadequately controlled disclosure." That is not what it is proposing. The proposal allows limited sharing under defined circumstances while keeping confidential information protected.

Good supervision is about getting problems fixed

The lesson from Silicon Valley Bank was not that regulators needed more paperwork. It was that known risks were not addressed quickly enough. An independent review found that supervisors "did not take prompt and decisive action" despite knowing, or having reason to know, about SVB's vulnerabilities.

That is why strong supervision is ultimately about protecting people, not preserving process. It helps protect depositors, borrowers, small businesses, and communities on Main Street that depend on a safe and resilient banking system.

• "Better Markets gets the lesson of Silicon Valley Bank right and the solution backwards," said Mattie Duppler, spokesperson for The Ledger Project. "Strong supervision means finding problems and fixing them before they put customers or the financial system at risk. Updating outdated rules so the right people can act faster—with clear safeguards in place—can make supervision stronger, not weaker."

The bottom line: Effective supervision is not about preserving process for process's sake. It is about identifying real risks and acting on them quickly. These proposals are aimed at helping that happen.

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