D R A F T Please do not quote without permission Supervising Bank Safety and Soundness: Some Open Issues Prepared for the Conference on Safe and Sound Banking: Past, Present, and Future Federal Reserve Bank of San Francisco August 17-18, 2006 Mark J. Flannery University of Florida flannery@ufl.edu ABSTRACT Twenty years ago, Safe and Soundness Banking studied how the supervisory environment could be improved to enhance financial stability, primarily in the U.S. context. Some of the Report’s recommendations were adopted, but not all. This paper identifies some topics that should be studied in a 21 st -century version of Safe and Soundness Banking. August 24, 2006 Thanks to Paul Kupiec for information about the credit rating agencies, and to Dwight Jaffee and Harvey Rosenblum for comments of a previous draft. Remaining errors and omissions are my own.