1930s, in the tumult of government expansion that was the new deal, when congress began a decade - long debate over how to manage the new regulatory state. the result was the administrative procedure act ( apa ). the apa continues to serve as the basis for the public disclosure and participation required for agency rule - writing and for the judicial review affected parties are guaranteed to challenge rules. this transparency is intended to prevent arbitrary, capricious, and thus ineffective regulation by inviting broad public participation and mandating a deliberate public debate over the content of proposed rules. one obvious purpose of this transparency is to provide clarity and predictability : it helps make clear how agencies are considering exercising their discretion. the significant 2 / 4 bis central bankers'speeches process protections in laws such as the apa are also meant to ensure fairness. the wisdom behind this approach is that fairness both helps bring forth more considered and effective regulations and builds respect for and adherence to the law, which is essential for enforcement. transparency is central to our ability to assert that our rules are fair. not everything that government does, however, can be accomplished in exactly the same way that regulations are written. one of these things is bank supervision. bank supervision banks are subjected to supervision, in addition to regulation, as an additional form of government oversight because of their complexity, opacity, vulnerability to runs, and indispensable role in the economy, enabling payments, transmitting monetary policy, and providing credit. the government provides a safety net to banks in the form of deposit insurance, and in return, banks are subject to government oversight that mimics some of the monitoring that the private sector would provide, absent the government safety net. the bank regulatory framework sets the core architectural requirements for the banking system, but it isn ’ t enough to set the rules and walk away like voltaire ’ s god. the potential consequences of disruption in the financial system are so far - reaching, and the erosion of market discipline resulting from the government safety net sufficiently material, that it is neither safe nor reasonable to rely entirely on after - the - fact enforcement to ensure regulatory compliance. supervisors are in a good position to monitor individual firms ’ idiosyncratic risks. and in addition to what they do at individual banks, supervisors monitor for risk that may be building among clusters of banks or across the banking system. these “ horizontal ” exams across multiple banks help highlight new or emerging risks and help examiners understand how banks are managing these risks. through

to carry forward this work aligning supervision with the regulatory tailoring rules, i believe there is a compelling justification to make changes today to the composition of foreign banks in our portfolio of the largest banks, known as liscc. second, as i have discussed throughout my time at the board, i continue to look for ways to make our stress tests more transparent without making them game - able and without diluting their potency as a supervisory tool. i expect that we will continue to provide more transparency on the models we use for the stress tests, and on the hypothetical scenarios. additionally, i am advocating changes to our capital plan rule that will allow banks to receive and study their supervisory stress testing results prior to submitting their capital plans. currently, banks have a very limited time to adjust their capital distribution plans and only under limited circumstance. third, and principally as a transparency endeavor, i would endorse creating a word - searchable database on the board ’ s website with the historical interpretations by the board and its staff of all significant rules. regulatory interpretations by board staff have grown piecemeal over the decades and haven ’ t consistently been treated as the valuable resource they are. the board ’ s website has select interpretations of many laws but does not provide a comprehensive, userfriendly collection of regulatory interpretations, faqs, and commentary. fourth, i endorse putting significant supervisory guidance out for public comment. the board already invites comments on its regulations, as required under the apa, and regularly invites comment on some supervisory guidance and statements of policy. this practice of seeking comment on significant guidance leads to better, more informed supervision and better engagement by banks. and fifth, the board should adopt a rule on how we use guidance in the supervisory process. i would expect the rule to state that the board will follow and respect the limits of administrative law in carrying out its supervisory responsibilities. in particular, consistent with the september 2018 interagency statement on guidance, we would affirm the sensible principles that guidance is not binding and “ non - compliance ” with guidance may not form the basis for an enforcement action ( such as a cease - and - desist order ) or supervisory criticism ( such as a matter requiring attention ( mra ) ). this rule would be binding on the board and on all staff of the federal reserve system, including bank examiners. there are of course other ideas i have mentioned and will be pursuing, but this partial list should be informative and helpful