direct or indirect effects of a disorderly bankruptcy. the enormous concerns with this moral hazard effect explain the focus in current reform proposals on a special resolution procedure that raises the real prospect of losses for shareholders and creditors of even the largest financial firms. the fourth item on the current reform agenda is to increase the effectiveness of the consolidated supervisory process, particularly for the largest institutions. in the years preceding the crisis, bank holding company supervision was principally focused on protecting the commercial banks within a holding company. too little attention was paid to the risks faced, and created, by the entire holding company, including affiliates principally involved in trading and other capital market activities. this weakness may be partially explained by the supervisory approach embedded in the gramm - leach - bliley act, with its emphasis on the functional supervision of affiliates in a holding company. but it was also the case that not enough supervisory scrutiny was given to the risks associated with securitization, the common exposures of different affiliates, and the implications of the explosion of off - balancesheet assets. this is an especially appropriate moment to describe what the federal reserve is doing to reorient the supervision of large institutions, since today we announced results of the implementation of the capital plans formulated last spring as part of the special supervisory capital assessment program ( scap ). as you will recall, the unprecedented scap process was begun last february, during one of the darkest periods of the financial crisis. led by the federal reserve, a multidisciplinary team from the bank regulatory agencies assessed the amount of capital that would be needed by the 19 largest bank holding companies to withstand losses in an adverse stress scenario through 2010, and still remain sufficiently capitalized to meet the needs of their creditworthy borrowers. in may we publicly released the results of that assessment. ten of the firms needed additional capital. by early june they had each submitted plans for realizing the specified capital buffers. today was the deadline for implementing these plans. as we announced earlier in the day, nine of the 10 bank holding companies that were determined to need the raise, or improve the quality of, their capital have met or exceeded their required capital buffers. the tenth firm, gmac, is expected to meet its buffer by accessing the tarp automotive industry financing program administered by the u. s. treasury. these institutions have increased common equity by more than $ 75 billion, mostly through issuance of new shares, conversions of preferred to common stock, and sales of businesses

protection against loss through theft could be developed in the future. there is some risk of insolvency by the issuer, but at least for financial institutions that risk is very low statistically. a greater problem is that until the stored - value system becomes universal, there is a risk that the sellers will not accept the card. payment systems involve a network – money is not truly money unless it becomes nearly universally acceptable – and network problems have been a big impediment to the development of any currency system. this is one reason that electronic money systems may be more likely to develop in natural closed systems or in small countries. one apparent cost of electronic money for consumers, at least in comparison with credit cards, is that of float. in benefit - cost parlance, float is an internal redistribution – a cost of electronic money felt by consumers offset by gains to other sectors. float then should not affect the overall social interest in electronic money. moreover, in the long run we might expect the competitive market to offer electronic money products that compensate consumers for their loss of float. electronic money systems might raise a potential trade - off between protection and privacy. consumer protection could be enhanced by stored - value systems because there could be a record of all transactions, and this record could be used to resolve disputes or to deal with losses due to theft, in much the same way that consumers ’ credit cards are now protected. at the same time, this record could also be misused to defraud consumers or infringe on their financial privacy, by irresponsible action on the part of the issuing institution or in some other way. consumers could sacrifice their protection but retain their privacy by purchasing cards without this extensive record - keeping or by signing “ opt out ” forms to prevent the disclosure of confidential information. consumers could also limit invasions of privacy by keeping low balances on their card or restricting its use, but this limits the utility of electronic money in the first place. from the standpoint of merchants, electronic money systems raise orthodox benefit - cost questions. it is costly for merchants to invest in the infrastructure to process the stored - value cards, much more so than for credit cards because of the encryption technology or the difficulty of verifying electronic tokens. but once merchants have made the investment, costs of handling at least some types of payments should go down. compared with credit and debit cards, there may be little cost reduction. compared with checks, there is less risk of default because the