via email
State Street Corporation
November 3, 2003
Public
Information Room
Office of
the Comptroller of the Currency
2520 E Street, SW
Mailstop 1-5
Washington, D.C. 20219
|
Robert E. Feldman
Executive Secretary
Federal Deposit Insurance Corporation
550 17th Street, N.W.
Washington, D.C. 20429
Attention: Comments/OES |
Ms. Jennifer J. Johnson, Secretary
Board of Governors of the Federal Reserve
System
20th Street and Constitution Ave, NW
Washington, D.C. 20551 |
Regulation Comments
Chief Counsel's Office
Office of Thrift Supervision
1700 G. Street, N.W.
Washington, DC 20522 |
Dear Sir or Madam:
State Street Corporation is pleased to have the opportunity to
comment on the Advance Notice of Proposed Rulemaking (ANPR) and draft
supervisory guidance issued by the Office of the Comptroller of the
Currency, the Board of Governors of the Federal Reserve System, the
Federal Deposit Insurance Corporation, and the Office of Thrift
Supervision (the Agencies) in relation to implementation of the New
Basel Capital Accord (New Accord). As an internationally active bank,
State Street appears to meet the proposed criteria for "core bank," and,
under the ANPR, would be required to comply with both the Advanced
Measurement Approaches (AMA) for operational risk and the Advanced
Internal Ratings Based approach (A-IRB) for credit risk.
State Street remains very concerned by the proposal to create new
regulatory capital requirements for operational risk. While management
of operational risk is an important goal of both banks and their
regulators, the proposed Pillar I treatment of operational risk will
create unnecessary competitive disadvantages for U.S. banks compelled to
operate under the Accord, compared to non-banks, overseas competitors,
and U.S. "general" banks. We continue to urge the Agencies to eliminate
the proposed new Pillar 1 capital requirement for operational risk, and
create instead a rigorous Pillar 2 supervisory approach.
In addition, State Street is concerned that the mandatory application
of the A-IRB to all U.S. banks subject to the New Accord will be
unnecessarily burdensome and costly for some banks. We believe the goal
of creating a more risk sensitive credit risk regime could be better
achieved through a more flexible approach. The A-IRB may be suitable for
very large banks or banks focusing on traditional bank lending
activities. State Street, however, is a specialized bank, focused on
fee-based investment servicing and management, with relatively modest
exposure to traditional bank lending. For such specialized institutions,
the high cost and complexity of the A-IRB will create significant
compliance burdens, with little or no risk management benefit. We urge
the Agencies to provide for an alternative treatment for credit risk for
such institutions. Suggested parameters for such a proposal are detailed
below.
We appreciate the Agencies' interest in industry comments, and we
would be pleased to further discuss potential changes with the Agencies.
Specific comments on these and other issues raised by the ANPR and draft
supervisory guidance follow below.
Application of the Advanced Approaches in the United States
"Core Bank" Definition Lacks Risk Sensitivity
It is unclear how the definition of "core bank" based on the level of
foreign exposures relates to the mandatory imposition of the AMA and A-IRB.
While "core banks" meeting the ANPR's asset size criteria may be assumed to have
suitable exposures --- and resources --- for these approaches, the
existence of over $10 billion in foreign exposures does little to
distinguish the risk profile of banks such as State Street from their
peers and competitors that would not be subject to the New Accord. In
fact, for State Street, these foreign exposures are generally in the
form of low risk, short-term exposures to highly rated international
banks. Such exposures provide little rationale for triggering costly and
inappropriate compliance with only the most advanced approaches to
capital offered by the New Accord.
The Agencies should identify and clarify the risks raised by foreign
exposures, and offer an alternative approach to implementation of the
New Accord which more closely relates to these risks.
U.S. Implementation of New Accord Remains Overly Prescriptive
The Agencies should, to the greatest extent possible, adopt a
"principles-based" approach to implementing the New Accord. Unlike the
highly prescriptive requirements of the ANPR, a principles-based
approach would allow regulators the flexibility necessary to address the
wide variation in market position, management structure, and risk
profile of banks expected to be subject to the New Accord. In addition,
a principle-based approach would provide more suitable flexibility for
regulators and banks to adapt to changing circumstances over time,
including the introduction of new products, evolving client needs, and
changing economic conditions.
The U.S. Proposed Implementation Lacks Regulatory Incentives
We are concerned that the Agencies appear to have decided not to
adopt a key component of the Basel Committee's concept for the New
Accord --- the creation of regulatory incentives for the adoption of
more advanced approaches to regulatory capital.
As proposed by the Basel Committee, banks will be provided the option
of choosing the capital measurement approach most suited to their market
position, size, and corporate structure. The potential benefits of more
risk sensitive capital calculations are expected to function as
incentives for adoption of the more advanced approaches.
The Agencies have proposed a different approach. Instead of the
"incentives-based" approach offered by the Basel Committee, the Agencies
have chosen to impose a "sanctions-based" approach, which requires
adoption of the most advanced --- and expensive --- capital measurement
approaches by all banks subject to the new Accord, regardless of their
risk profile, corporate structure, or size. As a result, we are
concerned that "core" and "opt-in "banks will be forced to adopt
expensive systems which may not match their risk management needs, while
remaining "general" banks will face considerable disincentives to invest
in improved, more risk-sensitive, risk management techniques.
Timing and Transition Issues
The requirement to have in place both the AMA and the A-IRB by
year-end 2006 may be overly optimistic, and will create undue compliance
burdens for institutions designated as core banks. As noted in the ANPR,
compliance with the New Accord will require substantial and
time-consuming effort, and result in considerable costs. In fact, to
meet the compliance targets proposed by the ANPR, certain types of data
would need to be collected starting nearly immediately, long before the
New Accord is finalized, and well before the Agencies have defined
regulatory requirements and issued final implementation rules.
While it may be appropriate to offer the option of movement to the
New Accord for banks desiring to make immediate, expensive investments
in new systems and procedures, the Agencies should avoid compelling
banks to make such investments prior to the finalization of the new
capital regime. The Agencies should delay proposing a mandatory
compliance date for the New Accord until regulations are finalized. At
that point, regulators should ensure that any mandatory compliance date
allows ample time for the development of systems and collection of
appropriate data by core banks.
Leverage Ratio Requirements Unnecessary
While the goal of the New Accord is to create a more risk sensitive
regulatory capital regime, the ANPR retains numerous non-risk sensitive
features. The most restrictive of these non-risk sensitive elements is
the proposed retention in the U.S. of the leverage ratio requirements.
Even under Basel 1, the leverage ratio functioned as a non-risk
sensitive constraint above and beyond the risk-based capital
requirements. In many cases, despite the stated goal of creating
risk-based capital requirements, banks have been required to manage
balance sheets primarily with regard to the leverage ratio. The
Agencies, in the ANPR, concede that under the New Accord, in some cases,
the leverage ratio will remain "as the most binding regulatory capital
restraint."
This situation is particularly inappropriate under the system
proposed by the ANPR, which requires "core banks" to make extensive
investments in new systems for both credit and operational risk. In
addition to meeting difficult quantitative, data, and system
requirements, the capital requirements derived from these systems will
be subject to strict qualitative supervisory standards. Once a regulator
determines that all of these standards are met, a bank will then be
required to operate a "parallel-run year," where it calculates
regulatory capital under both the New Accord and existing general
risk-based capital rules. Finally, once a bank is permitted to use the
New Accord on a stand-alone basis, the Agencies will impose capital
floors based on the existing system for at least the first two years of
the New Accord --- and retain the ability to maintain these floors
indefinitely, on a bank-by-bank basis.
With all of these precautions in place, regulators will have more
than adequate resources at their disposal to address any perceived
capital deficiencies. Under such a system, it is difficult to envision
the value added by defaulting to the long outdated leverage ratio as a
binding regulatory capital restraint, and it should be abandoned.
Materiality of Exposures
We appreciate the Agencies' proposal to exempt from the advanced
approaches exposures in non-significant business units and immaterial
asset classes. Providing an exemption for non-significant business units
is appropriate, and any criteria for "nonsignificant" will necessarily
be related to the size of the business. In defining "immaterial asset
classes," however, we urge the Agencies to focus criteria primarily on
the level of risk associated with a given portfolio or type of exposure,
within the context of an institution's overall risk profile. The quality
of an asset is far more material to an institution's risk profile than
either its relative or absolute size. Banks should be provided the
option of deeming very high quality types of exposures "immaterial," and
thus subject to the general risk-based capital rules.
Home/Host Issues
We agree with the Agencies' comments identifying a "level playing
field" as an important consideration in implementing the New Accord. In
addition to requesting general comments on the competitive impacts of
the proposal, the Agencies specifically invite comment on the treatment
of U.S. banking subsidiaries of foreign banking organizations. This is
an important issue, but, for U.S. banks, the treatment of U.S. banks
operating overseas is also a critical aspect in the implementation of
the New Accord.
While not strictly under the domestic rulemaking authority of the
Agencies, it is essential that this issue be definitively resolved
between jurisdictions prior to implementation of the New Accord.
While the Basel Committee's publication in August 2003 of "High-level
principles for the cross-border implementation of the New Accord"
provided some insights into the nature of issues raised by cross-border
implementation, it is far from definitive on the subject. The decision
by the Agencies to limit U.S. implementation of the New Accord to only
the AMA and A-IRB raises additional issues related to the treatment of
U.S. core banks overseas, due to both the presumed need for overseas
regulators' acceptance of the supervisory requirements of these
approaches, and the competitive and other factors raised by U.S. banks
operating in jurisdictions where the full range of capital methodologies
offered by the New Accord are in use by domestic banks.
We urge the Agencies to aggressively seek resolution of the home/host
issue in Basel, and to defer any decisions on regulatory treatment of
U.S. subsidiaries of foreign banking organizations until the issue is
resolved on an international basis in a manner that provides reasonable
and fair treatment of U.S. banks operating abroad.
Boundary Issues
We appreciate the Agencies' explicit acknowledgement of the
importance of boundary issues. It is essential that regulators provide
simple, explicit guidance regarding the treatment of losses which may be
attributable to multiple risk factors, both to facilitate the
development of comprehensive risk management systems, and to avoid
potential "double-counting" of risk factors.
Cost and Complexity
The Agencies have requested comment on the potential implementation
cost of the New Accord for core and opt-in banks. Public estimates
suggest that implementation of the New Accord will be very costly. A
recent study by Oliver Wyman & Company, for example, estimated that
implementation of the New Accord will require investments approximating
5 basis points of assets, resulting in a global implementation cost of
$25 billion. The study estimates an individual cost of from $50 million
to $200 million for the largest banks. The Financial Service Roundtable
has reported that one of its member companies has estimated the
implementation cost at between $70 million to $100 million.
The complexity and lack of clarity regarding certain aspects of the
proposal, the numerous changes to the proposal in recent months, and the
decision by U.S. regulators to require use of only the most advanced
approaches for core banks have made it difficult to predict a specific
anticipated cost for State Street. However, it is clear that
implementing the New Accord will require substantial investment over the
next four years.
The Agencies also have requested comment on the balance achieved
between the objectives of simplicity and consistency across banks on one
hand, and risk sensitivity on the other. We appreciate the Agencies'
explicit acknowledgment of the importance of all three of these factors,
and recognize that an appropriate balance will be difficult to achieve.
As mentioned in other areas of these comments, for a specialized bank
such as State Street, we believe the proposed mandatory use of the A-IRB
is overly complex and expensive relative to our risk profile. In
addition, we believe that the AMA creates an overly complex system of
regulations, aimed at arriving at a capital requirement for risks that
could be better addressed through a Pillar 2 supervisory approach.
Advanced Internal Ratings-Based Approach (A-IRB)
Proposal for Hybrid Approach to Credit Risk
As mentioned above, State Street is concerned by the Agencies'
proposal to require all banks operating under the New Accord to use the
A-IRB for credit risk. While the AIRB may be appropriate for very large
banks, or banks focused on traditional bank lending activities, it
provides little risk management benefit to specialized banks focused on
fee-based business lines, such as State Street, and would require
unnecessary investment in highly complex risk management systems and
processes.
We believe that an alternative to the A-IRB could be made available
for both core and opt-in banks meeting certain criteria for asset size
and credit quality. For example, banks with assets below the proposed
$250 billion core bank asset size criteria, and with credit risk
profiles consisting of predominantly investment grade or equivalent
exposures, could be provided an alternative to the A-IRB In general, an
alternative credit risk treatment could follow the general risk-based
capital rules, with use of more advanced approaches reserved for
selected exposure types where the resultant increased risk sensitivity
is most relevant. Criteria for use of the advanced approaches could
include a variety of factors, including such elements as the
significance of a bank's business activity within an industry segment.
Such an approach would provide a more suitable regulatory capital
regime for banks with specialized credit portfolios, providing the
flexibility needed to develop a risk management approach with a level of
system sophistication, oversight, and governance commensurate with the
risk profile of an institution's underlying portfolios. Under such a
regime, unnecessary costs for core banks would be reduced, and general
banks specializing in non-credit business lines would be provided
greater incentive to opt-in to the New Accord.
Asset Securitizations
Asset securitizations are an important component of U.S. capital
markets, providing an important source of liquidity. While it is
important for regulators to address the risks associated with
securitizations, the proposal included in the ANPR is overly complex and
unworkable. As a result, the ANPR proposal would risk significant
disruptions to the financial markets.
As indicated in our comment letter on CP3, State Street is concerned
that the Basel Committee's proposal does not properly recognize all
types of asset securitization activity by banks. CP3, and the ANPR,
recognize only two types of asset securitization participants ---
investors and originators. As a sponsor of asset-backed commercial paper
conduits, State Street would be deemed an originator under the ANPR.
However, State Street does not directly or indirectly originate any of
the underlying exposures held by the conduits it sponsors, and does not
have access to the proprietary PD (probability of default) data required
under the Supervisory Formula Approach (SFA). Therefore, for State
Street, the Agencies' assumption that originators, as defined by ANPR,
"are presumed to have much greater access to information about the
credit quality of the underlying exposures" is incorrect, raising
significant challenges to meeting the requirements of the Agencies'
proposal.
We are encouraged by the recent announcement by the Basel Committee
that the securitization proposal will be simplified, and that the
"supervisory formula" will be replaced by a less complex approach. We
look forward to working with the Agencies on the development of a
simplified approach that recognizes the full range of banks' asset
securitization activity.
AMA Framework for Operational Risk
As we have commented in the past, State Street strongly opposes the
proposed new capital requirement for operational risk. We continue to
believe that the proposed treatment of operational risk will have
negative competitive effects for U.S. banks compelled to operate under
the Accord. The ANPR and associated draft supervisory guidance fail to
address these broad policy implications.
State Street is highly attentive to the issue of operational risk,
and effectively managing such risk is a key element of confidence in our
relationship with our clients. Our long record of extremely low
operational losses validates our ability to manage such risks. However,
we continue to believe that operational risk is first and foremost an
"earnings-at-risk," not a "capital-at-risk," issue. In our experience,
operational losses have been covered many times over by earnings.
Regardless of the outcome of the deliberations of the Basel
Committee, the Agencies should address operational risk under a rigorous
Pillar 2 supervisory system. Placing operational risk management under
Pillar 2 will allow the Agencies to impose strict operational risk
regulatory requirements, including requirements related to capital
adequacy, without creating the negative competitive and technical
impacts of a Pillar 1 regulatory requirement.
U.S. banks operate in a highly competitive environment, competing
directly with investment management firms, broker/dealers, insurance
companies, investment banks, mutual funds, leasing companies, and
business services and software companies. None of these non-bank
competitors are subjected to the proposed capital requirements. In
addition, under the ANPR, the great majority of U.S. banks will remain
under Basel 1, unless they choose to opt-in to the New Accord.
While the credit risk benefits of the New Accord may offset the
negative impact of the new operational risk requirement for banks
engaged in traditional lending activities, precisely the opposite is
true for banks providing fee-based services, such as investment
servicing and management. For banks engaged in these businesses, the New
Accord and the ANPR impose an additional capital requirement, largely
through the operational risk requirement, while leaving their
competitors with no capital requirement for operational risk at all. The
result is a marketplace distortion, creating a regulatory incentive for
banks to move activities outside of the reach of the New Accord.
We are also concerned that the operational risk components of the New
Accord may be applied inconsistently across national jurisdictions. As
has often been noted by the Comptroller of the Currency, U.S. banks
operate in a far different, in many ways stricter, regulatory
environment than our non-U.S. competitors. For example, the common use
by U.S. regulators of on-site examination teams is simply not the
practice in most other jurisdictions. In addition, the U.S. proposal to
retain both the Leverage Ratio and Prompt Corrective Action regime for
U.S. banks operating under the New Accord creates additional capital
demands on U.S. banks. As a result, any additional capital requirement
for U.S. banks, including the operational risk requirement, will have a
greater impact on U.S. banks than banks operating in other national
jurisdictions.
The ANPR, and CP3, attempt to treat operational risk under a model
more suited to credit risk. The proposal, by focusing primarily on
regulatory capital, shifts attention and resources away from critical
risk management efforts, and creates perverse incentives to avoid
investment in important operational risk infrastructure, processes, and
people.
We urge the Agencies to address these concerns by adopting a strong
Pillar 2 approach to operational risk.
We also remain concerned by more technical aspects of the operational
risk proposal. While these concerns are particularly acute under the
ANPR's proposed Pillar 1 treatment of operational risk, they would also
apply to a Pillar 2 supervisory system based on the AMA proposal as
well. These concerns include:
• Use of External Data: Under the ANPR, the AMA continues to
rely too heavily on the potential use of external data. External data
provides valuable information for qualitative reviews of an
institution's risk management systems and internal controls. It is
not, however, suitable as a basis for a quantitative capital
calculation.
Scaling external data to make it relevant to a bank's risk profile,
system of internal controls, and other risk management factors is a
difficult and uncertain process. Moreover, the integrity,
completeness, and general data quality of external database are often
questionable, and difficult to ascertain and control. Much publicly
available operational loss data is based on relatively extreme risk
management failures. Mandating the use of such data risks imposing
capital requirements based on the "lowest common denominator" of risk
management practices --- an approach that would penalize banks with
well-developed control systems, and low losses. Sharing such data
between institutions, or other third parties, will also raise serious
privacy, confidentiality, legal, and competitive issues.
• Operational Risk Measurement: We remain concerned that the
nascent state of operational risk measurement methodologies creates a
serious obstacle to identifying a precise, risk-sensitive regulatory
capital requirement for such risks. As a result, any capital adequacy
evaluation should take place in the more flexible Pillar 2 supervisory
element on the New Accord.
• Indirect Losses: The Agencies specifically solicit comment
regarding the possible inclusion of the risk of indirect losses, such
as opportunity cost, in the definition of operational risk. We urge
the Agencies not to add such risks to the operational risk definition.
First, quantifying the risk of such losses, and converting that risk
to a capital requirement, will be next to impossible. Second, such
indirect losses are far more related to a bank's business plan than
its risk management function, and should continue to be appropriately
accounted for in a bank's income statement, not its regulatory capital
requirements.
• Legal Risks: While legal risk is certainly a factor in an
institution's risk profile, we are concerned that such risks are among
the most difficult to quantify for purposes of a Pillar 1 capital
requirement. Litigation loss history provides limited insights into
future losses, creating significant challenges to modeling. Since
legal losses are typically closely linked to individual events and
circumstances, the use of external data is particularly inappropriate
for legal risk. Finally, U.S. securities law already addresses
litigation losses, requiring reserving for material legal risks.
• Insurance: Finally, the Agencies should eliminate the
proposed 20% cap on mitigants, such as insurance. This 20% cap does
not appear to have any analytical or statistical basis. In fact,
insurance can provide far more leverage than capital in addressing the
low frequency, high severity loss events which may exceed an
institution's ability to cover with earnings. It is appropriate for
regulators to retain the ability to impose conditions on the use of
insurance as a mitigant, and, perhaps, to limit credits against
capital on a case-by-case basis. However, imposing a specific
regulatory cap of 20%, or any other percentage, will create a
disincentive for banks to hold insurance, will stifle innovation in
new insurance-related (and other) risk management products, and will
greatly reduce the risk sensitivity of the proposed New Accord.
Disclosure
In general, we are concerned that the Agencies' Pillar 3 disclosure
proposals create significant comparability issues between banks within
the U.S., between U.S. and nonU.S. banks, and between banks and
non-banks.
First, core and opt-in banks will be required to make significantly
greater and different disclosures than general banks, greatly reducing
comparability between banks, and reducing the transparency for the
overall banking system.
Second, the use of internal modeling and other highly subjective
methodologies will result in significant inconsistency of disclosures
among core and opt-in banks. For example, for credit risk, the Agencies
propose to allow supervisors to exempt exposures in non-significant
business units and immaterial asset classes from the A-IRB. While this
may be a desirable option from a risk management perspective, the
subjective nature of determining factors such as materiality create
additional challenges to comparability.
Third, inconsistent application of the Pillar 3 requirements in other
regulatory jurisdictions will create further competitive disadvantage
for U.S. banks.
In addition:
• We note that the Agencies' proposal will require a summary table
on banks' public websites indicating where all required disclosures
may be found. This will create the need for users of financial data to
access several sources (even though directed by a single website) to
assemble a complete discussion of a bank's risk environment. An
alternative, and more desirable, solution would be to require all
required disclosures in Forms 10-Q and 10-K filed with the Securities
and Exchange Commission.
• Quarterly disclosure requirements, as proposed, will add a
significant burden to our reporting requirements, with little or no
added benefit. We believe annual disclosure for most of this
additional information is adequate.
• While there is no specific requirement to have this additional
information audited by external auditors, it is likely that these
disclosures will be subject to audit as part of our quarterly and
annual reports, increasing the scope and cost of our audits.
• In response to the specific request for comment on the Agencies'
description of the required formal disclosure policy, we believe
additional guidance in the form of a sample policy is necessary. We
recommend that the Agencies' guidance take into consideration the
requirements related to Sections 302 and 404 of the Sarbanes-Oxley Act,
and not create duplicative or conflicting requirements.
• For the operational risk-related disclosures, the requirement to
discuss relevant internal and external factors considered in the
Bank's measurement approach would require disclosure of operational
loss history. Such disclosures raise serious privacy and
competitiveness concerns. We believe this information should be
available to supervisors only and not to outside parties.
All of these factors contribute to a regulatory regime under which
the extensive and highly technical disclosures required by Pillar 3 will
provide little meaningful transparency or market discipline
improvements.
We urge the Agencies and the Basel Committee to work closely with the
Securities and Exchange Commission, the Financial Accounting Standards
Board, and the International Accounting Standards Board to develop
disclosure requirements consistent with existing standards and
practices.
Corporate Governance and Management Structure
The Agencies, in both the A-IRB and AMA, propose extensive new
requirements for banks' corporate structure and management. While we
appreciate the Agencies' assurances that they do not propose to dictate
management structure of banks, we are concerned that the highly
prescriptive structure of the Agencies' proposal provides little
flexibility in establishing an internal risk management structure best
suited to a bank's particular needs.
In particular, we are concerned that the Agencies' proposal places
inappropriate and unduly burdensome responsibilities on a bank's board
of directors, and does not clearly delineate the respective
responsibilities of the board and senior management.
As proposed by the Agencies, the responsibilities imposed on the
board of directors are excessively detailed, and go well beyond the
board's appropriate supervisory and strategic role. For example, the
ANPR requires the board to: maintain "effective internal controls over
the banking organization's information systems and processes for
assessing adequacy of regulatory capital and determining regulatory
capital charges," approve all "significant aspects of the rating and
estimation processes," and "ensure that appropriate resources have been
allocated to support the operational risk framework." The ANPR also
requires the board or a committee of the board to "oversee the
development of the firm wide operational risk framework."
The board of directors' role in the risk management process should be
supervisory, focusing on the oversight of management's activities and
broad supervision of the implementation of regulatory requirements. The
board should not be charged with the responsibility for the day-to-day
risk management function of a bank. The board of any banking
organization is unlikely to be comprised of directors with the time or
skill set required to carry out the highly technical and extensive
requirements proposed by the Agencies. The unintended consequence of
placing excessively detailed demands on the board will be less board
resources, time, and attention devoted to broader supervisory,
strategic, and risk management responsibilities.
In addition to these broader concerns related to the proper role of
the board of directors, the proposed rules do not sufficiently delineate
the separate responsibilities of the board of directors and senior
management. Many of the requirements proposed by the Agencies impose
duties on the board and management combined, but do not specifically
allow for division of responsibility between these two groups. These
requirements do not provide sufficient guidance for the board to
determine the extent to which it needs to be involved. For example, it
is unclear if the mere approval by the board of funding to support an
operational risk framework is sufficient to fulfill its
responsibilities, or if the board's responsibilities can only be met
through extensive development of detailed plans, policies, and budgets.
The Agencies should revise the ANPR to more closely align any new
board responsibilities with the board's strategic and oversight roles,
to avoid placing management functions on the board, to provide for
clearer delineation of board and management responsibilities, and, when
appropriate, to allow board delegation of its responsibilities to either
board committees or senior management.
Conclusion
Once again, State Street appreciates having the opportunity to
comment on this important issue. Despite our concerns, we are supportive
of the Agencies' efforts to reduce risk in the global financial system,
and remain willing to work with regulators on appropriate implementation
of a potential New Basel Capital Accord.
Sincerely,
David A. Spina
Chairman and Chief Executive Officer
State Street Corporation
Boston, MA
cc:
Catherine Minehan, President and CEO, Federal Reserve Bank of Boston |