A Special Focus on Safe and Sound Banking: Past, Present, and Future

In August 2006 the Federal Reserve Bank of San Francisco hosted a conference, cosponsored with the Federal Reserve Bank of Atlanta and the founding editors of the Journal of Financial Services Research, to assess the state of the banking industry. The conference title, "Safe and Sound Banking: Past, Present, and Future," pays homage to the book Perspectives on Safe and Sound Banking: Past, Present, and Future, written twenty years earlier, when the U.S. economy was suffering some turbulence and the banking system's regulatory framework was showing signs of strain. The book was the final report of a task force commissioned by the American Bankers Association. It presented five academic consultants' analysis of the bank regulatory system as well as their consensus options and recommendations for changing the structure of the deposit insurance system and the bank regulatory and supervisory process.

The purpose of the August 2006 conference was to evaluate whether—and how—the recommendations made in Perspectives on Safe and Sound Banking have been implemented, to assess the current state of the banking industry, and to update the menu of recommendations to address the challenges confronting banking during the coming years.

This issue of the Economic Review presents the conference papers, commentaries, and discussions. Representing the views of experts, including the five eminent economists who wrote the 1986 report, this collection provides a valuable assessment of the legislative and regulatory changes that reshaped the banking system during the past two decades and a discussion of issues that must be addressed to ensure the system's continued safety and soundness.

April 2007