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Speech
"Prudential Stress Testing in Theory and Practice: Comments on 'Stressed Out: Macroprudential Principles for Stress Testing'"
I am pleased to have this opportunity to be with you today to discuss stress testing. In the wake of the housing bust and subsequent financial turmoil, the regulation and supervision of financial institutions and markets has been the subject of intense scrutiny. The 2009 U.S. stress tests appeared to play a critical role in the resolution of the crisis, which has led to recommendations that such tests, with appropriate refinements, be made a routine component of the supervisory regime for large financial institutions. Indeed, as the authors note, the Dodd-Frank Act mandates annual stress ...
Speech
Ending 'Too Big to Fail' Is Going to Be Hard Work
Ending the treatment of certain firms as “too big to fail” requires addressing two mutually reinforcing issues: first, the expectation that creditors of some financial institutions are protected by implicit government support, should those institutions become troubled; and second, the obligation many policymakers feel to support certain institutions to protect creditors from losses.The current system encourages fragility, which induces interventions.The Dodd-Frank Act attempts to deal with “too big to fail” through the establishment of the Federal Deposit Insurance Corp.’s Orderly ...
Briefing
How Secondary Trade Affects Social Welfare in an Over-the-Counter Market
Over-the-counter markets with secondary trade and an unfixed quantity of assets suffer from inefficiency stemming from a double-sided hold-up problem between consumers and intermediaries.The inefficiency cannot be resolved through bargaining power alone, since efficiency would require both intermediaries and consumers to have full bargaining power.A budget neutral tax/subsidy scheme could resolve this inefficiency and increase social welfare by up to 13.3 percent.
Discussion Paper
Early Results: The Federal Reserve's 2025 CDFI Survey
This spring, we fielded the 2025 Community Development Financial Institution (CDFI) Survey. The survey provides policymakers and community development stakeholders with information about how CDFIs are faring as they work to close gaps in credit and capital access. We heard from 448 institutions during the survey fielding period from April 10 to June 13, which accounts for nearly 30 percent of all certified CDFIs in the country. CDFIs shared their experiences in the following areas:Goals for scaling their operationsDemand for productsChallenges in meeting demandPublic programs that have ...
Discussion Paper
Taking Stock of Community Development Financial Institutions
Community development financial institutions (CDFIs) are mission-driven organizations that expand financial product and service options to lower-income households, small businesses, and communities. The Community Reinvestment Act of 1977 created the Federal Reserve's community development function, which is tasked with promoting economic growth and financial stability for low- to moderate-income communities. Because CDFIs support access to credit in low- and moderate-income areas, the Federal Reserve has a direct interest in understanding CDFIs' role in capital access and the landscape of the ...
Journal Article
Federal Reserve: Reserve Bank Boards of Directors
The boards of directors of the 12 Federal Reserve Banks are not typical boards. To be sure, they carry out many of the usual responsibilities of corporate governance, such as approving a strategic plan and monitoring operations, auditing and risk, human resources, executive compensation, and the like. But unlike private sector boards that are primarily concerned with firms' financial health and growth projections, Fed directors are also charged with a much broader task that makes them not just unique among institutional boards, but within American society at large: assisting in the ...
Speech
Economic Outlook, October 2011
Thank you for inviting me to speak with you tonight. I will be discussing the economy — both current economic conditions and what the future might hold. Before I begin, I would like to emphasize that these remarks are my own and the views expressed are not necessarily shared by my colleagues on the Federal Open Market Committee (FOMC).1My views about the economy are shaped by the ongoing analysis of national and regional data by staff in the Federal Reserve System, particularly at the Federal Reserve Bank of Richmond. But they are also influenced importantly by the wealth of information ...
Speech
Competition in Banking: Achieving the Right Balance
It is a pleasure to be with you this morning. The theme of this session is “How Banks Compete.” I want to develop a variation on this theme and consider how the intensity of competition in banking has increased over the years, and some of the challenges this change presents.In the 33 years I have worked at the Richmond Fed banking has changed immensely. A salient feature of this change — perhaps the single most important feature — has been expanded competition. Today Chicago banks, for example, can own branches in any state, pay market-determined interest rates on deposits and charge ...
Speech
Lacker Testifies on Bankruptcy and Financial Institution Insolvency
Good morning. I am honored to speak to the Subcommittee about the bankruptcy code and financial institution insolvency. In my remarks, I will discuss why I believe it’s so important to improve our bankruptcy code to make it feasible to resolve failing financial firms in bankruptcy. At the outset, I should say that my comments today are my own views and do not necessarily reflect those of the Board of Governors of the Federal Reserve or my colleagues at other Federal Reserve Banks. My views have been informed by both my experience leading the Fifth Federal Reserve District over the last ...
Discussion Paper
2025 CDFI Survey: Does Older Mean Wiser for Mission-Driven Lenders?
For over a century, community development financial institutions (CDFIs) have played a role in expanding credit access to consumers, small businesses, and communities that are underserved by traditional financial institutions. Every two years, the Federal Reserve conducts a survey of CDFIs to keep a pulse on the industry. The most recent survey was in 2025.The purpose of this post is to understand if and how CDFIs differ based on how long they have provided mission-driven lending. Here are a few interesting takeaways when comparing CDFIs by age:1Older CDFI loan funds are generally larger by ...