The 2023 failures of Silicon Valley, Signature, and First Republic Banks provoked widespread criticism of bank supervision – a distinctive administrative function that goes beyond rule enforcement to identify, and seek correction of, practices that threaten bank safety and soundness. But the effectiveness of supervision cannot be evaluated without specifying more precisely the role it is supposed to play in today’s bank regulatory system, which rests on an extensive body of statutory and regulatory rules that reflect policymakers’ views of the best balance between credit creation and financial stability. This article first proposes that the contemporary purpose of supervision should not be an open-ended effort to make banks safer than required by regulation, but one to ensure that regulations are not undermined by regulatory arbitrage, imperfect risk measurement, or poor risk management by banks. The article then examines whether the current supervisory function is capable of performing this role. Using the 2023 bank failures as a starting point, the article proceeds with a broader institutional analysis, concluding that recurring supervisory shortcomings reflect structural rather than idiosyncratic problems. Political pressures, resource and expertise constraints, the opacity of supervisory activity, and organizational incentives that favor compliance with centrally prescribed priorities over independent judgment all undermine supervisory effectiveness. While supervision remains essential in a rule-based regulatory system, it will not be fit for purpose unless these structural impediments are addressed with a reform program that goes beyond the incremental steps that have been offered in the wake of the 2023 failures.