growth of total factor productivity above the long - term trend leads to an upward shift in the real return to capital from 6. 0 % initially to 6. 2 % ( 1. 031x6 ) after one year, 7. 0 % ( 1. 035x6 ) after five years and 8. 1 % ( 1. 0310x6 ) after ten years, that is, an increase of about 2 percentage points after ten years.

firms and the financial system. off - site quantitative analysis will complement our traditional on - site supervision, but will be independently conducted to provide an alternative perspective to traditional examination findings. to support and complement these initiatives, we are working with the other federal banking agencies to develop more - comprehensive information - reporting requirements for the largest firms. traditional bank regulatory reports have not been sufficiently complete or timely to support continuous monitoring and analysis of the dynamic and diverse business activities of the largest, most complex organizations. these firms should report systematic, frequent, and consistent information on material firm - wide exposures, funding and liquidity profiles, and operating performance. enhanced reporting requirements should not only help supervisors identify potential vulnerabilities at individual institutions and in the banking sector more broadly, but should also prompt institutions to better track their own risks. when risk - management shortcomings are identified, even if losses have not yet materialized, supervisors must hold management accountable and make sure that weaknesses receive proper attention at senior levels and are resolved promptly. we will ensure that important supervisory concerns are communicated promptly and at a high level, with more frequent involvement of senior bank management and boards of directors and senior federal reserve officials. this approach proved especially effective during the recent supervisory capital assessment program and in other circumstances where clear expectations for prompt remediation were forcefully communicated to large banking organizations. of course, we will use the full range of enforcement tools at our disposal as necessary to achieve important supervisory objectives. need for legislative action though the federal reserve and other supervisors in the united states and abroad are strengthening the existing regulatory and supervisory framework, it remains critical for the congress to close regulatory gaps and provide supervisors with additional tools for anticipating and managing systemic risks. the recent financial crisis clearly demonstrated that risks to the financial system can arise not only from banks, but also from other financial firms – such as investment banks or insurance companies – that traditionally have not been subject to the type of regulation and consolidated supervision applied to bank holding companies. to close this gap, the congress should ensure that all systemically important financial institutions are subject to a robust regime for consolidated prudential supervision. large, complex financial firms that do not own a bank, but that nonetheless pose risks to the overall financial system, must not be permitted to avoid comprehensive and effective supervisory oversight. consolidated supervision of systemically important institutions, together with tougher capital, liquidity, and risk - management requirements for those firms, is needed not only to protect the firms'stability and the stability of the financial