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Supervisory Insights

Winter 2005 Vol. 2, Issue 2 - Table of Contents

Last Updated: July 26, 2023

Supervisory Insights - Winter 2005 - PDF

Letter from the Director


Model Governance

Financial modeling represents an increasingly important management tool for the banking industry; however, the models themselves introduce a new source of risk — the potential to inform management decisions incorrectly. Strong governance procedures can help minimize model risk. This article suggests areas of examiner review when evaluating the adequacy of a bank's oversight, control, and validation of models.

Online Delivery of Banking Services: Making Consumers Feel Secure

Strengthening security for Internet-based financial transactions has become a priority for banks, regulators, and consumers. This article reviews key findings of an FDIC study that evaluates a variety of identity authentication technologies. The article also focuses on interagency guidance requiring insured financial institutions and service providers to address the protection of sensitive customer data and assets as part of the development of Internet banking products and services.

Enforcement Actions Against Individuals: Case Studies

Second in a series about the enforcement action process as it applies to individuals, this article discusses two cases of insider misconduct — one of embezzlement and the other of loan fraud. The article highlights internal control weaknesses that facilitated the misconduct and presents an overview of the elements of an effective internal audit program.

Regular Features

From the Examiner’s Desk . . . The FDIC's Relationship Manager Program: A Win/Win Situation

Relationships between banks and their regulators have evolved into an alliance. This article describes the FDIC's Relationship Manager Program, an initiative that will further strengthen relationships between the FDIC and bank management while continuing to improve the supervision process.

Capital and Accounting News . . . Basel II and the Potential Effect on Insured Institutions in the United States: Results of the Fourth Quantitative Impact Study

The Federal banking agencies have focused on the implementation of the Basel II Capital Accord since 1998. Before the United States implements significant changes to capital policy, the proposed rules must be evaluated. This article reviews the Basel II framework and highlights the results of the most recent quantitative impact study.

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.

Donald E. Powell
Chairman, FDIC

Christopher J. Spoth
Acting Director, Division of Supervision and Consumer Protection

Steven D. Fritts
Executive Editor

Journal Executive Board

Donna J. Gambrell, Deputy Director
John M. Lane, Deputy Director
William A. Stark, Acting Deputy Director
John F. Carter, Regional Director
Doreen R. Eberley, Acting Regional Director
Stan R. Ivie, Regional Director
James D. LaPierre, Regional Director
Scott M. Polakoff, Regional Director
Mark S. Schmidt, Regional Director

Journal Staff

Kim E. Lowry
Managing Editor

Brett A. McCallister
Financial Writer

April G. Schwab
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.