holden and jack vanderhei ( 2004 ), “ 401 ( k ) plan asset allocation, account balances, and loan activity in 2003, ” ici perspective ( august ). brigitte madrian and dennis shea ( 2001 ), “ the power of suggestion : inertia in 401 ( k ) participation and savings behavior, ” quarterly journal of economics. james choi, david laibson, and brigitte madrian ( 2004 ), “ plan design and 401 ( k ) plan savings outcomes, ” nber working paper w10486. shlomo benartzi and richard thaler ( 2004 ), “ save more tomorrow : using behavioral economics to increase employee saving, ” journal of political economy. instituted to promote financial security. for their part, workers have a responsibility to improve their financial literacy and develop the skills and confidence to practice strategies for effective financial management. this improvement of financial literacy will become even more crucial if individual accounts are introduced as a modification to the current social security system, as proposed by the administration.

supervision that constitutes the bulk of our ongoing engagement with the industry and through which our policy objectives are given effect. this division of labor is important for lawyers and policymakers to think about deeply because the processes of regulation and supervision are necessarily different in crucial respects. regulation establishes a binding public framework implementing relevant statutory imperatives. because a rule is designed to apply generally, rules must be based on general principles intended to achieve general aims, rather than reverse - engineered to generate specific effects for specific institutions. given their general applicability, there must be a general process for all those with an interest — industry, academics, citizens, congress — to have notice of, and opportunity to comment on all rules, ensuring that all potential effects and points of view are taken into account in the rule ’ s crafting. and given their general function, rules must be clear and public : those affected must know what to expect and what is expected. supervision, by contrast, implements the regulatory framework through close engagement with the particular facts about particular firms : their individual capital and liquidity positions, the diverse composition of their distinct portfolios of assets, their business strategies, the nature of their operations, the strengths and weaknesses of their management. much of the granular information used by supervisors is, accordingly, proprietary and confidential, and many of their judgments and decisions are closely tailored to specific circumstances. given the strong public interest in the safe, sound, and efficient operation of the financial industry 1 / 7 bis central bankers'speeches and the potential for hair - raising and widespread adverse social consequences of private misjudgment or misconduct in that industry, close and regular supervision of this sort can help us all sleep restfully. yet, the confidential and tailored nature of supervision sits uncomfortably with the responsibilities of government in a democracy. in the united states, we have a longstanding, well - articulated framework for ensuring that regulations conform with the principles of generality, predictability, publicity, and consultation described above. supervision — for good reason, in my view — is not subject to this formal framework. but it is currently not subject to any specific process constraint promoting publicity or universality. this leaves it open to the charge, and sometimes to the fact, of capriciousness, unaccountability, unequal application, and excessive burden. here, then, is a conundrum. we have a public interest in a confidential, tailored, rapid - acting and closely informed system of bank supervision. and we have a