Umbrella Supervision and theRole of the Central Bank

Materials may be reprinted if the source is credited. Please send copies of reprinted materials to the editor. We invite questions, comments, and suggestions. Views stated in Policy Discussion Papers are those of the authors and not necessarily those of the Federal Reserve Bank of Cleveland or of the Board of Governors of the Federal Reserve System. Deregulation and financial consolidation have led to the development of financial holding companies— allowing commercial banking, insurance, investment banking, and other financial activities to be conducted under the same corporate umbrella—and the Federal Reserve has been named supervisor of the consolidated enterprise. This Policy Discussion Paper will show that there likely are economies of scope between the Fed' s inherent central-banking responsibilities and those of an umbrella supervisor and that these duel roles benefit both the Fed and functional regulators.