for the product. efforts underway by both supervisors and the industry should encourage improvements in risk analysis and management and, thus, price discovery. we are hopeful that our efforts to increase the standardization of loan - modification options and processes for subprime loans will help to provide more information to lenders, investors, homeowners, and communities faced with potential mortgage loan defaults while at the same time helping to provide more timely relief for borrowers in distress.

on our experience with the recent capital assessment program, we have increased our emphasis on horizontal reviews, which focus on particular risks or activities across a group of banking organizations. although we have conducted horizontal reviews before, the supervisory capital assessment program of the past spring was both broader in scope and conducted differently than many previous horizontal reviews. it involved a broad simultaneous review of several types of risk exposures at the included banking organizations, covering a majority of the assets of the u. s. banking system. examiners applied the same stress parameters to each firm, highlighting the relative strengths and weaknesses among them. because we simultaneously evaluated potential credit exposures across all the firms, we were also better able to consider the systemic implications of financial stress under adverse economic scenarios. building on the success of this initiative, we will conduct more frequent, broader, and more comprehensive horizontal examinations, evaluating both the overall risk profiles of institutions as well as specific risks and riskmanagement issues. the increased complexity of the firms we supervise and the need to consider the systemic implications of problems at individual firms underscore the importance of increased collaboration within the federal reserve system itself among examiners and other specialists. the federal reserve's ability to draw on expertise from a range of disciplines see board of governors of the federal reserve system, division of banking supervision and regulation and division of consumer and community affairs ( 2008 ), " consolidated supervision of bank holding companies and the combined u. s. operations of foreign banking organizations, " supervision and regulation letter sr 08 - 9 / ca 08 - 12 ( october 16 ). see board of governors of the federal reserve system, division of consumer and community affairs ( 2009 ), " consumer compliance supervision policy for nonbank subsidiaries of bank holding companies and foreign banking organizations, " consumer affairs letter ca 09 - 8 ( september 14 ). was essential to the success of the supervisory capital assessment program, and it will be a central feature of our supervision in the future. for example, we are using a multidisciplinary approach to develop an enhanced quantitative surveillance program for systemically critical institutions. this program will incorporate supervisory information, firm - specific data analysis, and market - based indicators to identify developing strains and imbalances that may affect multiple institutions, as well as specific firms. our economic and market researchers will work in concert with examiners, market operations specialists, and other experts within the federal reserve system. their efforts will incorporate periodic scenario analysis so we can better understand the consequences of economic shocks for both individual