Skip Header
U.S. flag

An official website of the United States government

Supervisory Insights

Summer 2006 Vol. 3, Issue 1 - Table of Contents

Last Updated: July 10, 2023

Supervisory Insights - Summer 2006 - PDF

Letter from the Director


Operational Risk Management: An Evolving Discipline

Growing complexity in the banking industry, several large and widely publicized operational losses in recent years, and a changing regulatory capital regime have prompted both banks and banking supervisors to view operational risk management (ORM) increasingly as a distinct discipline, just like management of credit risk and market risk. This article provides an introduction to operational risk, outlines the current state of ORM, and describes different quantification approaches in this emerging field.

Banks and Hurricanes: A Look Back at the Storms of 2004 – 2005

As the hurricane season of 2006 approaches, we look back at some of the challenges bankers faced during the storms of the 2004-2005 seasons, which may provide context for bankers when they review plans for maintaining operations in the event of a disaster. This article is an informal compilation of experiences and thoughts about the challenges and planning options illustrated by those experiences.

Enforcement Actions Against Individuals: 2005 – A Year in Review

Third in a series about the enforcement action process as it applies to individuals, this article summarizes enforcement actions brought against individuals during 2005, with a particular focus on losses to banks resulting from insider misconduct or fraud. The article highlights the importance of strong oversight of operating management and reemphasizes the need for strong internal control and audit programs.

Regular Features

From the Examiner’s Desk...Two Years After: Assessing the Impact of the New HMDA Reporting Requirements

The Federal Reserve Board's latest revisions to data collection and reporting requirements for Regulation C, the implementing regulation for the Home Mortgage Disclosure Act (HMDA), allow examiners to conduct more precise analyses than in the past. This article focuses on how the changes to Regulation C have affected fair lending examinations and the HMDA examination process. It also explores the most common HMDA violations cited since the changes were implemented.

Capital and Accounting News: Accounting for Employee Stock Options

On January 1, 2006, the accounting rules for employee stock options changed. On that date, Statement of Financial Accounting Standards No. 123 (Revised), Share-Based Payment, took effect for entities with a calendar year fiscal year and eliminated an entity's choice between two significantly different methods of accounting for employee stock options. This article discusses the key provisions of this new accounting standard and its effect on banks' reported earnings and capital levels.

Regulatory and Supervisory Roundup

This feature provides an overview of recently released regulations and supervisory guidance.

Supervisory Insights

Supervisory Insights is published by the Division of Supervision and Consumer Protection of the Federal Deposit Insurance Corporation to promote sound principles and best practices for bank supervision.

Martin J. Gruenberg
Acting Chairman

Sandra L. Thompson
Acting Director, Division of Supervision and Consumer Protection

George French
Executive Editor

Journal Executive Board

John M. Lane, Deputy Director
Robert W. Mooney, Acting Deputy Director
William A. Stark, Deputy Director
John F. Carter, Regional Director
Stan R. Ivie, Regional Director
James D. LaPierre, Regional Director
Sylvia H. Plunkett, Regional Director
Mark S. Schmidt, Regional Director
Christopher J. Spoth, Regional Director

Journal Staff

Bobbie Jean Norris
Managing Editor

Christy C. Jacobs
Financial Writer

Eloy A. Villafranca
Financial Writer

Supervisory Insights is available online by visiting the FDIC’s website at To provide comments or suggestions for future articles, request permission to reprint individual articles, or to request print copies, send an e-mail to

The views expressed in Supervisory Insights are those of the authors and do not necessarily reflect official positions of the Federal Deposit Insurance Corporation. In particular, articles should not be construed as definitive regulatory or supervisory guidance. Some of the information used in the preparation of this publication was obtained from publicly available sources that are considered reliable. However, the use of this information does not constitute an endorsement of its accuracy by the Federal Deposit Insurance Corporation.