ABSTRACT
Evidently, these provisions have not prevented banks from failing with sub stantial losses since 2007. The chapter asks why bank regulation and supervision failed to prevent these unfortunate events. The first section examines PCA’s capital provisions and its non capital requirements. It also describes FDICIA’s mandate that the inspectors general (IGs) of each federal banking agency conduct in depth reviews of bank and thrift failures that cause material losses to the Deposit Insurance Fund (DIF ). The next section analyses the material loss reviews (MLRs) that IGs have released for banks that failed in 2007, 2008, and 2009. Then, after observing that prompt corrective action has not achieved the lawmakers’ ‘never-again’ intentions, the following section debates what went wrong. The chapter concludes by offering some suggestions to allow PCA to achieve the goals that were set out for it in 1991 and, in doing so, it examines recent proposals to initiate macro prudential oversight.
