Daniel K Tarullo: Financial stability regulation
Speech by Mr Daniel K Tarullo, Member of the Board of Governors of the Federal Reserve
System, at the Distinguished Jurist Lecture, University of Pennsylvania Law School,
Philadelphia, Pennsylvania, 10 October 2012.
* * *
As one would expect of a piece of legislation that has sixteen titles and runs 849 pages in the
Statutes at Large, the Dodd-Frank Wall Street Reform and Consumer Protection Act ranges
widely in addressing problems both directly and indirectly associated with the financial crisis.
Taken as a whole, though, the primary aim of those 849 pages can fairly be read as a
reorientation of financial regulation towards safeguarding "financial stability" through the
containment of "systemic risk," phrases that both recur dozens of times throughout the
statute. The law, explicitly in many provisions and implicitly in many others, directs the bank
regulatory agencies to broaden their focus beyond the soundness of individual banking
institutions, and the market regulatory agencies to move beyond their traditional focus on
transaction-based investor protection.
This emphasis on financial stability and systemic risk is hardly surprising in light of the
damage done by the financial crisis and the ensuing Great Recession, from which we
continue to recover only slowly. Indeed, concern about financial stability and systemic risk
has at times been a crucial impetus for financial reform in the United States. Much of the
New Deal legislation that defined the financial regulatory structure for more than 40 years
was in direct response to what we would today call systemic concerns, including banking
panics and excessive leverage in equity markets. Twenty years before the New Deal, the
creation of the Federal Reserve had been intended at least as much as a financial stability
measure as an instrument of monetary policy.
But seen in the light of more recent history, Dodd-Frank represents something of an
about-face for financial regulation, which had largely neglected systemic concerns in the
decades preceding the crisis. Even the Sarbanes-Oxley Act of 2002, while far-reaching in
many respects, was very much a traditional piece of securities legislation insofar as it
focused on investor protection. Banking law reforms enacted after the 1980s savings and
loan debacle had traces of concern with financial stability, but the emphasis was still on the
regulation of individual depository institutions. Most other banking law changes of the 1980s
and 1990s, culminating in the Gramm-Leach-Bliley Act in 1999, were essentially
deregulatory.1 These laws, along with the administrative actions that both preceded and
implemented them, removed many restrictions on activities, affiliations, and the geographic
reach of commercial banks without substituting new regulatory mechanisms to control the
institution-specific risks that could arise from the growth of financial services conglomerates,
much less the systemic risks created by the rapid integration of capital markets and
traditional lending activities.2 The major regulatory initiative of this period was the Basel II
package of changes to capital requirements, an exercise whose shortcomings included an
enhancement, rather than diminution, of regulatory incentive for procyclicality in bank
increase
lending, and thus could arguably systemic risk.
By the time financial stress began rising rapidly in the second half of 2007, systemic risk and
financial instability had come to seem more theoretical than real to many regulators,
academics, and financial market participants. There had been little in the way of
Congressional discussion of systemic risk issues, and little in the way of well-developed
recommendations. To be sure, some academics - mostly finance professors - and a few
intrepid, heterodox voices among central bank research staffs identified risks that might be
building and, in general terms, the need for macroprudential regulation to complement
traditional microprudential oversight. But even they tended more to diagnosis and warning
than to prescription. Thus, although major regulatory legislation is often preceded by long
periods during which key ideas and proposals are circulated and discussed, Congress was
writing on a mostly blank slate in crafting an immediate legislative response to the financial
crisis.
The necessarily somewhat extemporized character of Dodd-Frank has had several
consequences for the development of financial stability regulation. First, many of the new
authorities and requirements of Dodd-Frank require extensive elaboration through
administrative rulemaking, often coordinated or agreed among three or more agencies.
Second, as I will explain in a moment, the provisions of the law that use the concept of risk to
financial stability as a directly applicable legal standard provide only general guidance for
regulators in applying that standard. This is not unusual for statutes in new areas of
regulation, but it still poses a challenge for regulators, particularly in the early stages of
implementation or enforcement. Third, broad as Dodd-Frank is in some respects, it does not
grant direct regulatory authority in some areas that academic and agency analysis suggests
may pose systemic risk. Finally, the law made important institutional changes, creating novel
governmental entities specifically designed to address financial stability, and binding existing
agencies more closely together in their rulemaking and supervisory activities. The
relationships among existing agencies and the evolving practice of these new entities may in
turn pose some novel practical and administrative law issues.
My remarks this afternoon address some aspects of the job of creating a financial stability
regulatory system in light of these features of Dodd-Frank and of the fact that theories of
financial stability that might inform the fashioning of this system are in many respects still
undeveloped or, at the least, contested. I will begin with a brief survey of Dodd-Frank's
financial stability provisions before turning to a few examples.
Dodd-Frank as a statutory framework for financial stability regulation
Dodd-Frank creates a legal and institutional framework within which financial stability
regulation is to be developed but, with a couple of notable exceptions, it does not delineate
the steps that should actually be taken to promote financial stability. A useful point of
comparison is the Banking Act of 1933, which did not use the terms "financial stability" or
"systemic risk," but which specified the Glass-Steagall rule separating commercial from
investment banking, limited transactions of banks with their affiliates, and established the
federal deposit insurance system to prevent banking runs and panics. While statutory
modifications and considerable administrative implementation of course followed over the
years, the key elements of the regulatory scheme for financial stability were contained within
the original legislation itself.
In contrast, there are relatively few Dodd-Frank provisions that more or less directly affect the
policy changes intended to reduce risks to financial stability. Even the so-called Volcker Rule,
which prohibits proprietary trading by banks, bank holding companies, and their affiliates,3
will require considerable regulatory build-out before its constraints will be clear. Provisions
that require only modest administrative interpretation, such as the limit on acquisitions that
would bring a financial firm's consolidated liabilities to more than 10 percent of the aggregate
consolidated liabilities of all financial companies,4 are not central elements of the legislation.
At the risk of some oversimplification, one can classify most uses of the financial stability
concept in Dodd-Frank into four categories: (1) as a goal for a new regulatory authority,
(2) as an instruction for ongoing analysis and monitoring, (3) as a direct legal standard, and
(4) as a factor for consideration in decisions on applications for various proposed actions
subject to regulatory approval.
First, financial stability is used as a stated goal motivating a new regulatory or supervisory
authority without itself being the standard used in the realization of that authority. For
example, Dodd-Frank reverses the restrictions that Gramm-Leach-Bliley placed on the
powers of the Federal Reserve Board to examine subsidiaries of bank holding companies
regulated by other agencies by referring explicitly to the Board's need to be informed of risks
within the subsidiaries that may "pose a threat to . . . the stability of the financial system of
the United States."5 Another example is section 165, which requires that the Federal Reserve
establish a special set of prudential requirements for bank holding companies with more than
$50 billion in assets in order to "prevent or mitigate risks to the financial stability of the United
States that could arise from the material financial distress or failure, or ongoing activities of
large, international financial institutions." Similarly, the far-reaching requirement in Title VII
that five federal financial regulators establish margin requirements for uncleared swaps
written by swap dealers and other major market participants is intended to "offset the greater
risk to the [dealers] and the financial system arising from the use of [uncleared] swaps."6
Second, Dodd-Frank takes a number of steps to enhance the capacity of the government to
monitor and analyze threats to financial stability. Most prominent among these are the
creation of the Financial Stability Oversight Council (FSOC) and the Office of Financial
Research (OFR).7 The FSOC is composed of ten voting and five nonvoting members - the
heads of relevant federal offices and regulatory agencies, and three representatives of state
financial regulators.8 As I will discuss in a moment, the FSOC as a collective entity has a
limited, though important, direct regulatory role. Much of its time, however, will be spent
fulfilling its mandate from Congress to assess risks to financial stability, including - where
appropriate - making recommendations for action to agencies under existing regulatory
authority or to Congress to fill gaps in existing authority in response to identified systemic
risks.9 The stated purpose of OFR is to support the FSOC and its member agencies through
research, the collection and standardization of data, the development of tools for measuring
4
DFA § 622, adding Section 14 to the Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.).
5
DFA §604(b), amending §5(c)(2) of the Banking Holding Company Act.
6
Section 731, amending Commodities Exchange Act by adding new Section 4s - this is §4s(e)(3)(A).
7
Others include the authority granted the SEC to require reporting of certain information by hedge funds (§ 404)
and the creation of a new Federal Insurance Office, which is charged with "'identifying issues or gaps in the
regulation of insurance that could contribute to a systemic crisis in the insurance industry or the United States
financial system."' 31 USC 313 (c)(1)(A), as added by DFA §502.
8
There are ten voting members and five non-voting members. The voting members are the Secretary of the
Treasury, who serves as the Chairperson of the FSOC; the Chairman of the Board of Governors of the
Federal Reserve System; the Comptroller of the Currency; the Director of the Consumer Financial Protection
Bureau; the Chairman of the Securities and Exchange Commission; the Chairperson of the Federal Deposit
Insurance Corporation; the Chairperson of the Commodity Futures Trading Commission; the Director of the
Federal Housing Finance Agency; the Chairman of the National Credit Union Administration Board; and an
independent member with insurance expertise. The non-voting members are the Director of the OFR, the
Director of the Federal Insurance Office, a state insurance commissioner selected by the state insurance
commissioners, a state banking supervisor chosen by the state banking supervisors, and a state securities
commissioner designated by the state securities supervisors.
9
DFA §120. The FSOC is also required to issue an annual report to Congress assessing the impact of market
and regulatory developments on, and threats to, the financial stability of the United States. DFA§ 112(a)(2)(N).
and monitoring risk, and related activities.10 FSOC and OFR are each also required to make
an annual report to Congress on financial stability.11
The third use of financial stability in Dodd-Frank is as a direct legal standard for the exercise
of a regulatory authority, as opposed to my first category of Dodd-Frank provisions, which
simply cite financial stability concerns as a motivation for a regulatory or supervisory
program. To date, the most conspicuous of this type of provision have been the authorities
granted the FSOC to designate nonbank financial companies and financial market utilities as
"systemically important." The first of these authorities is directed at financial firms that are not
bank holding companies, and thus not subject to capital requirements and other parts of the
holding company regulatory regime. This authority is a direct response to experience in the
financial crisis. During 2008, serious problems at AIG and the five so-called "free-standing"
investment banks - that is, firms not part of a bank holding company - contributed
substantially to the severe stress in the financial system, with the failure of Lehman Brothers
in September igniting the most acute phase of the crisis.
The standard to be applied by the FSOC is whether "material financial distress at the U.S.
nonbank financial company, or the nature, scope, size, scale, concentration,
interconnectedness, or mix of the activities of the U.S. nonbank financial company, could
pose a threat to the financial stability of the United States."12 There follows a lengthy list of
"considerations" to be taken into account by the FSOC. However, particularly insofar as the
last of these is "any other risk-related factors that the Council deems appropriate,"13 the list
does not provide extensive guidance for the FSOC in applying the basic standard. Any
companies so designated by the FSOC will be subject to supervision by the Federal
Reserve, as well as to the special Section 165 prudential standards I mentioned earlier. To
date, no firms have been designated, though the FSOC is actively considering possible
designees. Of course, the five previously free-standing investment banks have either been
dismantled (Lehman), converted into bank holding companies (Goldman Sachs and Morgan
Stanley), or absorbed into a bank holding company (Bear Stearns and Merrill Lynch).
The other designation authority granted the FSOC is for financial market utilities, defined as
multilateral transfer, clearing, or settlement systems for payments, securities, or other
financial transactions among financial institutions.14 Once designated as systemically
important,15 financial market utilities are subject to prudential standards established by the
Federal Reserve, the Securities and Exchange Commission, and the Commodities Futures
Trading Commission for the purpose of reducing systemic risk and supporting financial
stability.16 Here, in addition to providing considerations for the FSOC in making its
determination, the statute elaborates the standard of "systemically important" a bit, defining
that term to mean a situation "where the failure of or a disruption to the functioning of a
financial market utility or the conduct of a payment, clearing or settlement activity could
create, or increase, the risk of significant liquidity or credit problems spreading among
financial institutions or markets and thereby threaten the stability of the financial system of
the United States."17 In July, the FSOC designated eight financial market utilities as
systemically important and they are now subject to special risk-management standards.18
In addition to these designation authorities, Dodd-Frank grants the FSOC very broad scope
for dealing with a large bank holding company or designated nonbank financial company that
"poses a grave threat to the financial stability of the United States."19 Upon the
recommendation of the Board of Governors, the FSOC may limit mergers, products, or
activities of the firm. If these actions are inadequate to mitigate the grave risk, the FSOC may
require the firm to divest assets or off-balance sheet items.
The fourth use of financial stability in Dodd-Frank is as a factor to be taken into account in
various regulatory determinations. So, for example, the list of considerations in the
International Banking Act for the Federal Reserve in determining whether to permit the
establishment of a foreign bank office, or to terminate an existing such office, was
augmented with a financial stability factor - specifically, whether the home country of a bank
that presents a risk to the stability of the U.S. financial system has taken, or is taking,
appropriate regulatory steps to mitigate that risk.20
Similarly, Dodd-Frank added "risk to the stability of the U.S. banking or financial system" to
the non-exhaustive lists of factors set forth in the Bank Merger Act and the Bank Holding
Company Act for consideration by banking regulators in evaluating a proposed merger or
acquisition by a bank or bank holding company. There are actually three statutory provisions
governing these transactions - Section 3(c) of the Bank Holding Company Act for bank
acquisitions by holding companies, Section 4(j) of the Bank Holding Company Act for
nonbank acquisitions by holding companies, and the Bank Merger Act for mergers by banks.
The statutory standards, and thus the import of the factors, are somewhat different.21 In all
three instances, however, the financial stability factor is not in itself dispositive, in contrast to
the statutory provisions covering designation of systemically important institutions or special
actions to address grave threats to financial stability.
This brief review shows how ubiquitous the concepts of financial stability and systemic risk
are in Dodd-Frank. The law creates or strengthens numerous forms of regulatory authority
that can be used to control numerous practices or circumstances associated with financial
instability. Yet the statute itself provides only limited guidance to regulators on how to
implement financial stability where it is established as a standard, or how to weigh it against
economic growth and other considerations where it is used as an informing concept for a
regulatory exercise or a factor to be considered in regulatory approvals. Moreover, one does
not really find in the statute or in its legislative history an implicit theory of financial stability
from which to infer answers to the regulatory questions just noted. Instead, Dodd-Frank
directs regulation at a number of perceived vulnerabilities created by large financial firms in
17
DFA §803 (9).
18
U.S. Department of the Treasury (2012). "'Financial Stability Oversight Council Makes First Designations in
Effort to Protect Against Future Financial Crises,"' press release, July 18.
19
DFA §121(a).
20
DFA §173.
21
The two dealing with the acquisition of merger of banks simply require that each factor be "'taken into
consideration,"' whereas the provision for acquisition of nonbanks requires consideration of the factors in the
context of a determination of whether the proposed transaction "'can reasonably be expected to produce
benefits to the public that outweigh possible adverse effects."'12 USC 1843(j)(2)(A). Somewhat confusingly,
and a bit unaccountably, the wording of the financial stability factor also differs. In the Bank Holding Company
§4(j)(2)(A) and Bank Merger Act lists, the new factor is simply "'risk to the stability of the United States banking
or financial system."' In the Bank Holding Company Act §3(c)list, the factor is "'greater or more concentrated
risks to the stability of the United States banking or financial system."' While the import of this different wording
does not seem great, it is unclear why it was chosen in this provision and not in the Bank Merger Act, which
also covers bank acquisitions.
particular, and to some degree in the financial system as a whole. To the extent one can
fairly induce an underlying principle, it is that the moral hazard associated with too-big-to-fail
institutions should be counteracted in a variety of ways.
The emphasis on too-big-to-fail institutions is both understandable and appropriate in light of
the experiences of 2008, including the major injections of government capital to stabilize
some of the nation's largest firms. And the absence of an informing, grand unified theory of
financial stability is hardly surprising in light of the history to which I alluded earlier. Indeed,
two years after passage of Dodd-Frank, there is not really an officially embraced consensus
theory of how financial stability is undermined. The first report of the new Office of Financial
Research - one of the more useful analyses of financial stability issued by the official sector
- does not attempt a theory of financial stability. It defines financial stability descriptively
rather than analytically, "that the financial system is operating sufficiently to provide its basic
functions for the economy even under stress,"22 and pragmatically tries to identify risks and
vulnerabilities.
Yet much of the theoretical work on financial stability of the last several years has suggested
that financial instability is, in important ways, endogenous to the financial system, or at least
the kind of financial system that has developed in recent decades. The Office of Financial
Research report just cited went on to note that the financial crisis had "served as a painful
reminder that the financial system is prone to internal instability."23 Contributions to the
literature by academics such as Markus Brunnermeier, Gary Gorton, Perry Mehrling, Andrew
Metrick, Hyun Song Shin, Andrei Shleifer, and Jean Tirole,24 although differing in some
important specifics, all paint a picture of a financial system prone to instability for reasons in
addition to, and quite independent of, classic too-big-to-fail concerns. Their various analyses
suggest the possibility of destabilization even in a financial world with no dominant firms, but
many medium-sized entities.
This perspective focuses on one of the most important effects of the progressive integration
of capital markets and conventional lending activities, something now popularly known as
"shadow banking" - that is, credit intermediation involving maturity transformation, and often
significant leverage, that is wholly or partly outside the traditional banking system. This
intermediation depends critically on the creation of instruments that are thought to be safe
and liquid, and as such, "cash equivalents" similar in function to insured deposits in the
commercial banking system. These instruments, much desired by certain kinds of investors,
are short-term liabilities of the shadow banking intermediary, which backs them with a
portfolio of longer-term assets that, because of some combination of high diversification and
low-default risk, are expected to perform very well under nearly all circumstances, but carry
significant tail risks that are not fully appreciated ex ante.
A now notorious example of a shadow banking intermediary was a special investment
vehicle (SIV) sponsored by a financial firm. A SIV bought tranches of securitized mortgages
with AAA credit ratings, which it financed through the issuance of short-term instruments that
22
Office of Financial Research, U.S. Department of the Treasury, 2012 Annual Report (PDF) (Washington:
Office of Financial Research), p. 1.
23
Office of Financial Research, 2012 Annual Report, p. 16.
24
Some representative examples include: Markus Brunnermeir, Andrew Crocket, Charles Goodhart,
Avinash D. Persaud, and Hyun Shin (2009), "'The Fundamental Principles of Financial Regulation,"' Geneva
Reports on the World Economy 11 (Geneva, Switzerland: International Center for Monetary and Banking
Studies, June); Gary Gorton and Andrew Metrick (2010), "'Regulating the Shadow Banking System,"'
Brookings Papers on Economic Activity (Washington, DC: Brookings Institution, Fall), pp. 261-297; Nicola
Gennaioli, Andrei Shleifer, and Robert W. Vishny (2012), "'Neglected Risks, Financial Innovation, and
Financial Fragility,"' Journal of Financial Economics, vol. 104, issue 3, pp. 452-468; Perry Mehrling (2011),
The New Lombard Street (Princeton, NJ: Princeton University Press); Jean Tirole (2011), "'Illiquidity and All Its
Friends,"' Journal of Economic Literature, vol. 49, issue 2, pp. 287-325
were regarded by investors as essentially a cash equivalent. But during the crisis, when tail
risk materialized, investors came to understand that even the upper tranches of subprime
and other mortgage securitizations might not be spared significant losses because of the
dramatic fall in housing prices and the equally dramatic rise in defaults. At the same time,
questions arose about the continued willingness and ability of sponsors to provide support to
the SIVs, despite a history of their having done so on both contractual and discretionary
bases. A kind of run ensued, as investors realized that their instruments were not truly
"equivalent" to cash and refused to roll over their short-term funding of the shadow banking
intermediary. Such SIVs are gone, but other forms of shadow banking continue in such
well-established forms as money market funds and repo markets.
The vulnerability of shadow banking to runs, as investors rapidly withdraw funding, can lead
to systemic problems as consequential as those associated with classic runs on traditional
banks. If shadow banking intermediaries must rapidly liquidate longer-term assets that they
can no longer fund, the impact extends across the financial system. The resulting declines in
asset prices trigger margin calls on other investors, who may then need to delever by selling
their own holdings, accelerating the fire sale of these, and potentially other, assets. In the
worst case, the result can be the kind of generalized asset price decline and liquidity freeze
observed at the height of the financial crisis.
Dodd-Frank does include some significant provisions that, when implemented, could mitigate
some of the risks associated with the shadow banking system and the potential for fire sales
more generally. Among these are the requirements for margining of over-the-counter
derivatives, increased use of central clearing facilities for derivatives, and higher prudential
standards for systemically important financial market utilities. But Dodd-Frank does not
fashion a far-reaching system of regulatory authority for the shadow banking system to
parallel the one it creates for systemically important institutions, or even to address fully the
significant connections - through implicit support and other channels - between the shadow
banking system and systemically important institutions. This is particularly noteworthy, as
there is clearly some potential for enhanced capital, liquidity, and other prudential
requirements for bank holding companies to cause more activity to migrate to the shadow
banking system.
With this background, I turn now to a closer look at a few instances of the challenges both in
elaborating the financial stability standards of Dodd-Frank with respect to systemically
important institutions and in addressing the shadow banking system.
Evaluating financial stability concerns associated with large institutions
As a prelude to this discussion, let me acknowledge that this is hardly the first time Congress
has enacted intentionally protean statutory standards in response to a serious economic
problem, and then relied on some combination of administrative regulation, law enforcement,
and the courts to develop and adapt those standards as learning and experience grow. The
antitrust laws provide a good example. The clause "contract, combination, or conspiracy in
restraint of trade"25 that is so familiar to us today posed its own major challenge of
interpretation immediately after passage of the Sherman Act in 1890. Indeed, in the first
cases brought under Section 1, both the Justice Department and the Supreme Court came
close to reasoning that a very broad range of contracts by definition restrained some trade
and thus might be illegal.26 These interpretations were soon abandoned, but they stand as an
admonition that early decisions under a new law can, in retrospect, look to have been
somewhat makeshift.
Systemic Risk Capital Surcharges
My first example is drawn from the Federal Reserve Board's experience in developing
enhanced capital standards for bank holding companies with more than $50 billion in assets,
as required by Section 165 of Dodd-Frank. As I noted a few moments ago, this is one of the
Dodd-Frank provisions that establishes financial stability as its aim, but not as a direct
statutory standard. Section 165 requires that the standards intended to prevent risks to
financial stability increase in stringency, based on the same non-exhaustive list of factors
used for the designation of nonbank systemically important financial firms,27 but provides no
further guidance.
In undertaking this task, we began with the premise that a financial stability motivation for
capital requirements is necessarily somewhat different from the institution-centered approach
of traditional capital standards, as embodied in the various Basel capital frameworks.
Firm-centered requirements are informed by asking what level of capital would be necessary
to allow the firm to remain a viable financial intermediary even after absorbing losses that,
within a fairly high level of confidence, might be encountered over some relevant timeframe.
The financial stability approach begins from the fact that there would be very large negative
externalities associated with the disorderly failure of any systemically important financial
institution, distinct from the costs incurred by the firm and its stakeholders.
The failure of such a firm, especially in a period of stress, significantly increases the chances
that other financial firms will themselves experience great stress, for two reasons. First, direct
counterparty impacts can lead to a classic domino effect. Second, because losses in a tail
event are much more likely to be correlated for firms deeply engaged in trading, structured
products, and other capital market instruments, all such firms are vulnerable to accelerating
losses as troubled firms sell their assets into a declining market. Enhanced capital
requirements should take into account these costs that a systemically important firm's failure
will inflict on the rest of the financial system, not the amount of loss its shareholders and
creditors will incur. Thus, the aim of financial stability capital standards is to reduce further
the probability that the firm might fail under stress through holding additional capital. These
additional capital requirements can also help offset any funding advantage derived from the
perceived status of such institutions as too-big-to-fail.
In acting on this rationale for capital standards to mitigate risks to financial stability, we first
sought to ensure that there would be an international initiative to develop financial stability
capital standards for global systemically important financial institutions, since the severe
distress or failure of a foreign banking institution of broad scope and global reach could have
effects on the U.S. financial system comparable to those caused by failure of a similar
domestic firm. The Basel Committee agreed to take up this agenda and is well on its way to
completing a framework covering more than two dozen large financial firms from around the
world. Our intention has been to make our enhanced capital standards under
Section 165 congruent with the Basel Committee's framework.
The task of determining how much additional capital is needed to reduce the probability of a
systemically important firm's failure to more acceptable levels is not a straightforward one.
Conceptually, there is a good starting point, in what has been termed the "expected impact"
approach, which calls for additional capital to reduce the probability of the firm's failure
sufficiently to equalize the expected impact on the financial system of the failure of a
systemically important firm and the failure of a banking firm just outside systemic status.28 But
implementing this concept is complicated by the fact that,