to own and operate an fdic - insured bank without abiding by the capital, managerial, and cra standards established in the glb act. h. r. 698 does not address this significant regulatory disparity. the glb act did provide certain nonbanking firms that became a financial holding company after november 1999, up to ten years to divest their impermissible commercial holdings if the firm was and remained " predominantly financial. " see 12 u. s. c. § 1843 ( n ). all commercial investments held under this authority must be divested no later than november 12, 2009. consolidated supervision the ilc exception also undermines the supervisory framework that congress has established for the corporate owners of insured banks. ilcs are regulated and supervised by the fdic and their chartering state in the same manner as other types of state - chartered, nonmember insured banks and the board has no concerns about the adequacy of this existing supervisory framework for ilcs themselves. however, due to the special exception in current law, the parent company of an ilc is not considered a bank holding company. this creates special supervisory risks because the ilc's parent company and nonbank affiliates may not be subject to supervision on a consolidated basis by a federal agency. history demonstrates that financial trouble in one part of a business organization can spread, and spread rapidly, to other parts of the organization. large organizations also increasingly operate and manage their businesses on an integrated basis with little regard for the corporate boundaries that typically define the jurisdictions of supervisors. risks that cross legal entities and that are managed on a consolidated basis cannot be monitored properly through supervision directed at any one, or even several, of the legal entity subdivisions within the overall organization. it was precisely to deal with these risks to safety and soundness that congress established a consolidated supervisory framework for bank holding companies that includes the federal reserve as supervisor of the parent holding company and its nonbank subsidiaries in addition to having a federal supervisor for the insured depository institution itself. this framework allows the federal reserve to understand the financial and managerial strengths and risks within the consolidated organization as a whole and gives the supervisor the authority and ability to identify and resolve significant management, operational, capital or other deficiencies within the overall organization before they pose a danger to the organization's subsidiary insured banks. these benefits help explain why many developed countries, including those of the european union, have adopted consolidated supervision frameworks and why

market participants in their efforts to meet increasing demands for collateral assets. in line with its mandate, the eurosystem strives to reduce and resolve inefficiencies at market level, including at the level of repo market infrastructures, and therefore promotes initiatives such as t2s which maximise the liquidity of market participants ’ overall collateral pools. tsi can be seen as another such initiative. six months ago1, in a snowy luxembourg setting, i underlined that the ecb is fully behind this market - led “ tsi initiative ” because of its collateral pooling benefits and the efficiencies it generates for the repo market. in this regard, the euro area landscape is characterised, on the one hand, by ( increasing ) integration between the clearing, settlement and collateral management layers ; but on the other hand, there is fragmentation based on the location of collateral in different market infrastructures. a lot of progress has been made since the beginning of the year – and not only on the weather front. the efforts that have gone on behind the scenes over the past months by the see http : / / www. ecb. europa. eu / press / key / date / 2013 / html / sp130116. en. html. bis central bankers ’ speeches tsi participants can be measured in relation to the memorandum of understanding which is on the table for signing today and this represents a major step forward towards an integrated market for clearing and settlement ( in euro ). regarding the next steps, it is important to maintain the current positive momentum as we move into the phase of implementing tsi. i see this signing ceremony more as a start of some important work in the field of financial integration than as the end of about 3 years of discussions and negotiations among the parties. the ecb has a full appreciation and understanding for the extensive technical changes that have to be undertaken by the different parties in order to reach a tsi go - live scenario and stands ready to support and facilitate the coordination so that go - live can be achieved by the end of 2015 if possible, and at the latest in september - 2016. let me conclude by expressing my appreciation to all tsi participants for today ’ s milestone achievement and i will continue to follow with great interest, the further progress on this important initiative. thank you very much for your attention! bis central bankers ’ speeches