in times of stress. a mandatory subordinated debt requirement would likely be most costly to banking organizations when either the markets are under stress, the economy is deteriorating, or the bank itself is in financial difficulty. during these periods, the cost of issuing risk - sensitive securities would likely increase, and, at such times, forced issuance of subordinated debt would be particularly costly. i believe proposals that increase market discipline inevitably risk aggravating instability in times of overall stress. eliminating deposit insurance, for example, would have the same qualitative outcome. the key in designing approaches to enhance market discipline is therefore to ensure a favorable tradeoff – sufficiently better controlled risk - taking in good times and bad times relative to somewhat aggravated risks during periods of overall stress. subordinated debt, with its relatively long maturities and therefore limited ability to “ run, ” appears to offer such a favorable tradeoff.. the cost of reduced funding flexibility. another major cost of a subordinated debt proposal would be the reduced flexibility in financing, resulting in a somewhat higher cost of financing than would otherwise be available. these higher costs may also vary with business conditions, market conditions, and banking conditions. one of the ironies of a subordinated debt proposal is that it suggests that additional regulation is required to induce additional market discipline. regulations are never costless, so we must, therefore, ask what additional costs might be imposed as a consequence of the mandate. of course, to the extent that the proposal follows existing market conventions – in terms of the amount, frequency, etc. – the incremental costs are limited, though, of course, so are the benefits. it is therefore important to be satisfied that the benefits outweigh the costs. more research is important a subordinated debt proposal is, in my judgment, promising and intriguing. still, there remain questions to be answered. to move in the direction of answers, the federal reserve is working to improve the data it has available on the market price of subordinated debt issued by banks and bank holding companies, as well as other market data that could be useful in signaling changes in the risk profiles of banking organizations. we will be evaluating the degree to which prices of market instruments track the changing risk profiles of banking organizations, assessing the usefulness of such market signals in the surveillance of the financial conditions of large, complex banking organizations, and evaluating the potential usefulness of such data in the supervisory process. we believe that before we seriously consider imposing a mandate related to

organizations from shuttering, putting them in a better position to keep workers on and to hire them back as the economy continues to recover. the main street lending program ( main street ) has been of significant interest to this committee and to the public. many of the businesses affected by the pandemic are smaller firms that rely on banks for loans, rather than public credit markets. main street is designed to facilitate the flow of credit to small and medium - sized businesses. in establishing the facility, we conducted extensive outreach, soliciting public comment and holding in - depth discussions with lenders and borrowers of all sizes. in response to feedback, we have continued to make adjustments to main street to provide greater support to small and medium - sized businesses and to nonprofit organizations such as educational institutions, hospitals, and social service organizations. nearly 600 banks, representing well more than half of the assets in the banking system, have either completed registration or are in the process of doing so. about 230 loans totaling roughly $ 2 billion are either funded or in the pipeline. main street is intended for businesses that were on a sound footing pre - pandemic and that have good longer - term prospects but which have 1 / 5 bis central bankers'speeches encountered temporary cash flow problems due to the pandemic and are not able to get credit on reasonable terms as a result. main street loans may not be the right solution for some businesses, in part because the cares act states clearly that these loans cannot be forgiven. our credit facilities have improved lending conditions broadly, including for potential main street borrowers. the evidence suggests that most creditworthy small and medium - sized businesses can currently get loans from private - sector financial institutions. many of our programs rely on emergency lending powers that require the support of the treasury department and are available only in unusual circumstances. by serving as a backstop to key credit markets, our programs have significantly increased the extension of credit from private lenders. however, the facilities are only that — a backstop. they are designed to support the functioning of private markets, not to replace them. moreover, these are lending, not spending powers. many borrowers will benefit from these programs, as will the overall economy, but for others, a loan that could be difficult to repay might not be the answer. in these cases, direct fiscal support may be needed. our economy will recover fully from this difficult period. we remain committed to using our full range of tools to support the economy for as long