What is a National Bank Surveillance System?
The National Bank Surveillance System is a computer system that collects financial information about banks.
How Does a National Bank Surveillance System Work?
The U.S. Office of the Comptroller of the Currency established the NBSS in 1975. It produces a quarterly report that provides financial comparisons of different banks. The information typically comes from banks' Call Reports, which are periodic reports of financial performance.
Typically, the NBSS looks at and forecasts equity ratios, capitalization ratios and other mathematical quantities in an effort to predict which banks will fail and alert the OCC before that happens.
Why Does a National Bank Surveillance System Matter?
The goal of the NBSS is to detect which banks are in financial trouble. Banks that show signs of distress in the NBSS system can have their on-site examinations moved up, for example.
The implementation of the NBSS dramatically decreased the number and intensity of on-site bank examinations, because the computerized system was able to detect failing banks faster and more accurately. The bank failures of the 1980s, however, demonstrated that there is still a need for on-site examinations. After all, computers are not very good at scrutinizing managers.
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