markets more generally. this prosperity was fueled significantly by capital investment in information technology and in telecommunications capabilities. ongoing advances in technology, related in part to this investment, further supported the level of economic activity. the resulting structural improvements in productivity allowed for significant growth both in output and in compensation to workers, who in turn could acquire consumer goods and make financial investments in debt and equity markets. given the magnitude of the changes over the past decade, how does the reality of the current industry status compare with our expectations of ten years ago? let's start with the thrifts. many, if not most observers expected the thrift industry to struggle, perhaps never fully recovering from the problems of the 1980s and early 1990s. indeed, the future of any financial institution that specialized in originating and holding residential mortgages seemed somewhat murky. by the same token, many anticipated that the banking industry would be reined in by heavy regulation, the new regulatory capital standards, and - - perhaps - - significant aversion to bold new initiatives. and many expected that gradual movement toward broader interstate banking would bring about massive consolidation in the banking industry that would raise serious questions about the future of community banks and the value of the community banking franchise more generally. broader interstate banking also raised questions about the viability of the dual banking system, and the state banking charter in particular. technological improvements were expected to dramatically reduce the use of checks and cash. bricks and mortar branches were thought to be anachronistic, if not actual impediments, to operational efficiency. well, as you all know, forecasting is a difficult business. in the thrift industry, there has certainly been consolidation. there are now significantly fewer, but bigger, thrifts. as of june, there were just under 1, 000 thrifts, with total assets of $ 960 billion compared with 1, 952 thrifts with assets of $ 839 billion in 1992. the average thrift now has assets of about $ 960 million - - more than twice the average of $ 430 million in 1992 - - and has an annual growth rate of more than 9 percent. over this period many thrifts merged with each other while many others became part of bank holding companies, some of these operating as thrifts. some of those were ohio thrifts that were acquired by major banks in the late 1980s in the wake of the state deposit insurance crisis. today, the thrift industry continues to be strong and viable.

mark w olson : the banking industry in 2002 after a decade of change speech by mr mark w olson, member of the board of governors of the us federal reserve system, before the first annual convention of the ohio bankers league, columbus, ohio, 12 november 2002. * * * many of us began our careers in the financial services industry during an era when bank and thrift executives saw each other as both business competitors and political foes. i distinctly remember one experience i had as a member of the american bankers association's government relations committee in 1979. at our first meeting of the year, the " quarter - point differential " that thrift institutions were allowed under regulation q was the banking industry's top political priority. for those of you too young to remember, regulation q established the maximum allowable interest rate that could be paid on deposit accounts, which at the time was a quarter point higher for thrifts. this first annual meeting of the ohio bankers league following the merger of ohio's banking and thrift trade associations is emblematic of the changes that have taken place in these two industries. and this event presents a good opportunity to review today's depository financial service industries in the context of a decade of major change. to begin, let's review the highlights of the past decade. first, there was the bank and thrift crisis of the late 1980s and early 1990s. many banks and thrifts failed, and many others were weakened to the point that they became acquisition targets. the congress and the regulators responded forcefully with the federal institutions reform, recovery and enforcement act ( firrea ) in 1989, and the federal deposit insurance corporation improvement act ( fdicia ) in 1991. these legislative initiatives restricted banking practices, limited the supervisors'discretion in dealing with weak banks, imposed new regulatory requirements - - including prompt corrective action - - and strengthened supervisory oversight overall. beyond the bank and thrift crisis in this country, there were also indications that banks of other nations followed different norms of capital adequacy, which had implications for competitive equity and for the overall soundness of the global banking system. the g - 10 nations responded with the basel accord, a single, fairly simple global standard that was implemented in the early 1990s. the basel standards have become somewhat less simple over the years and are again under review. but achieving international agreement on both components of capital and a risk - based approach to capital adequacy was a major achievement. a second force