banks. we recognize that for some institutions, this asset growth has caused many banks to exceed or nearly exceed certain asset - based thresholds contained in statutes, regulations, and reporting requirements. we are currently exploring how to address regulatory and supervisory challenges caused by this temporary asset growth. supervisors encourage banks to adopt best practices, and i believe that we should also seek to achieve the highest supervisory standards. first, we should clearly communicate our expectations. it is wasteful, costly, and unnecessary when compliance activity occurs because expectations have not been clearly articulated or understood. examiners should always be able and available to explain written guidance. a second consideration is that communication must also be timely. supervisors should promptly board of governors of the federal reserve system, “ update on the economic well - being of u. s. households : july 2020 appendixes, ” ( september 2020 ), https : / / www. federalreserve. gov / publications / files / 2019 - supplement - economic - well - being - us - householdsupdate - 202009. pdf. - 9communicate the findings of off - and on - site analyses, which will further improve the process of answering questions and addressing issues thereby improving compliance. a third principle is transparency. the key goal here is to promote a clear and transparent supervisory process so bankers know and understand how we form our expectations and judgments, and that they will receive this information in a timely manner. overall, i think it is entirely appropriate to regularly ask whether our approaches to supervision are consistent with the stated policy objectives of efficiency, safety and soundness, and financial stability. one of those objectives is a healthy community banking sector that can continue to serve its customers. the pandemic has emphasized just how important that is. the leading challenge for community banks another theme i have heard repeatedly from ceos is the strong message that they are struggling with the cost and burdens of regulatory compliance. many bankers have said they consider this the most significant threat to their existence. according to the csbs national survey, relative compliance costs actually decreased modestly in 2019, which may be a sign that some of the steps we are taking are helping. this is consistent with what i heard from one oklahoma banker, who said the biggest threat to his longterm survival was regulatory burden — but “ not so much in the last few years. ” we know examinations are top of mind for every community banker, and we are aware some bankers are also concerned with the length of time associated

as well as the safety and soundness of each individual institution and system. indeed, the crisis has demonstrated that a too - narrow focus on the safety and soundness of individual institutions or systems can result in a failure to detect and thwart emerging threats to financial stability that cut across many firms or markets. a critical building block of a successful systemic, or macroprudential, approach to supervision is a requirement that all systemically important financial firms be subject to consolidated supervision. that is, one regulator must be responsible and able to review the full range of activities of such firms. before the recent financial crisis, many major financial firms – including investment banks like bear stearns and lehman brothers and large insurance companies like american international group – were able to avoid robust comprehensive supervision. in the future, all firms that present systemic risks – regardless of whether they happen to own an insured depository institution – must be subject to a common, comprehensive framework of supervision and regulation. the financial reform bills that were passed in both the house and the senate would expand and strengthen consolidated supervision of firms whose failure would pose risks to the financial system. the report recommends that a single systemic regulator be assigned responsibility for overseeing the health of the overall financial system and, in particular, that this duty be assigned to the central bank. we agree that the central bank – in the united states, the federal reserve – should be extensively involved in the collective effort to promote financial stability. the reasons for this involvement include the central bank ’ s breadth of expertise and its traditional roles in promoting financial stability and serving as a backstop liquidity provider to the financial system. however, giving all macroprudential responsibilities to a single agency risks creating regulatory blind spots, as – in the united states, at least – the skills and experience needed to oversee the many parts of our complex financial system are distributed across a number of regulatory agencies. rather than concentrating all macroprudential authorities in a single agency, we prefer that all regulators be required to routinely factor macroprudential considerations into their supervision, thus helping ensure that risks to financial stability can be addressed wherever they arise. for similar reasons, we have supported the creation of a systemic risk council made up of the financial supervisors. such a council would provide a forum for agencies with differing responsibilities and perspectives to share information and approaches, and would facilitate identification and mitigation of emerging threats to financial stability. at the same time, consistent with the report ’ s recommendation that the lines of accountability for