suggested by the diversity of laws and regulations that span business lines, legal entities, and geographic boundaries - - for example, in the areas of bank secrecy act compliance and anti - money laundering controls, fair lending, information security, privacy, transactions with affiliates ( regulation w ), and conflicts of interest. a more - integrated approach may be warranted for other matters, as well, because similar laws and regulations exist across the various jurisdictions in which the organization operates, both in the united states and overseas. because of the nature and levels of risks inherent to their business activities, complex banking organizations should have in place a compliance - risk management framework that makes it possible to identify, monitor, and effectively control the compliance risks facing their entire organization. of course, such a framework needs to be commensurate with the nature and level of the organization's compliance risk. it should evolve with the ever - changing product lines and business activities of any growth - oriented organization. and, of course, it needs to stay on top of regulatory developments. setting the tone at the top - - the role of the board of directors a successful compliance - risk management program starts at the top of the organization. it is essential that the board of directors take the lead by requiring a top - to - bottom compliance culture that is wellcommunicated and incorporated into the organization's day - to - day operations by senior management, in order to ensure that all staff members understand their compliance responsibilities and their roles in implementing the enterprise - wide program. a strong compliance culture is evidenced by the extent to which employees work together both to raise concerns about compliance risks and to design and establish effective controls. a sound and effective enterprise - wide compliance - risk management program has strong board and senior management oversight. however, it is important to note that the board of directors and senior management have distinct, though complementary, roles in ensuring the program's success. as i mentioned, the board of directors is responsible for requiring a strong compliance culture. this environment should assure that compliance is an integral part of day - to - day operations. to this end, the board should approve the key elements of the program and then entrust responsibility for embedding the culture and implementing the program to managers and staff at all levels of the organization. periodically, the board should be apprised of the extent to which predetermined benchmarks are being met. many of the largest and most complex banking organizations have established a corporate - level function to

needs of creditworthy borrowers, in a manner consistent with safety and soundness, and to take a balanced approach in assessing borrowers'ability to repay and making realistic assessments of collateral valuations. 6 in addition, the federal reserve has directed examiners to be mindful of the effects of excessive credit tightening in the broader economy and we have implemented training for examiners and outreach to the banking industry to underscore these intentions. we are aware that bankers may become overly conservative in an attempt to ameliorate past weaknesses in lending practices, and are working to emphasize that it is in all parties'best interests to continue making loans to creditworthy borrowers. strengthening the supervisory process the recently completed scap of the 19 largest u. s. bank holding companies demonstrates the effectiveness of forward - looking horizontal reviews and marked an important evolutionary step in the ability of such reviews to enhance supervision. clearly, horizontal reviews – see board of governors of the federal reserve system, division of banking supervision and regulation ( 1991 ), " interagency examination guidance on commercial real estate loans, " supervision and regulation letter sr 91 - 24 ( november 7 ) ; and office of the comptroller of the currency, federal deposit insurance corporation, federal reserve board, and office of thrift supervision ( 1991 ), " interagency policy statement on the review and classification of commercial real estate loans ( 814 kb pdf ), " joint policy statement, november 7. see board of governors of the federal reserve system, division of banking supervision and regulation ( 2007 ), " interagency guidance on concentrations in commercial real estate, " supervision and regulation letter sr 07 1 ( january 4 ). see board of governors of the federal reserve system, fdic, office of the comptroller of the currency, and office of thrift supervision ( 2008 ), " interagency statement on meeting the needs of creditworthy borrowers, " joint press release, november 12. reviews of risks, risk - management practices and other issues across multiple financial firms – are very effective vehicles for identifying both common trends and institution - specific weaknesses. the scap expanded the scope of horizontal reviews and included the use of a uniform set of stress parameters to apply consistently across firms. an outgrowth of the scap was a renewed focus by supervisors on institutions'own ability to assess their capital adequacy – specifically their ability to estimate capital needs and determine available capital resources during very stressful periods. a number of firms have learned