, federal deposit insurance corporation, and u. s. department of the treasury ( 2009 ). " treasury, federal reserve, and the fdic provide assistance to bank of america, " joint press release, january 16. - - - - - - - - - - - - ( 2009 ). " summary of terms, " term sheet, january 15. supplementary financing program u. s. department of the treasury ( 2008 ). " treasury announces supplementary financing program, " press release, september 17. federal reserve bank of new york ( 2008 ). " statement regarding supplementary financing program, " statement, september 17. central bank liquidity swaps board of governors of the federal reserve system ( 2008 ). " federal reserve, banco central do brasil, banco de mexico, bank of korea, and monetary authority of singapore announce the establishment of temporary reciprocal currency arrangements, " press release, october 29. - - - - - - - - - - - - ( 2008 ). " federal reserve and other central banks announce further measures to address elevated pressures in funding markets, " press release, september 18. - - - - - - - - - - - - ( 2008 ). " federal reserve and reserve bank of new zealand announce the establishment of a temporary reciprocal currency arrangement, " press release, october 28. - - - - - - - - - - - - ( 2008 ). " federal reserve and other central banks announce additional measures to address elevated pressures in funding markets, " press release, september 24. - - - - - - - - - - - - ( 2007 ). " federal reserve and other central banks announce measures designed to address elevated pressures in short - term funding markets, " press release, december 12. selected federal reserve system speeches and articles bernanke, ben s. ( 2009 ). " the crisis and the policy response, " speech at stamp lecture, london school of economics, london, england, january 13. bernanke, ben s. ( 2008 ). " federal reserve policies in the financial crisis, " speech at the greater austin chamber of commerce, austin, texas, december 1. evans, charles ( 2009 ). " economic update, " speech, january 15. fettig, david ( 2008 ). " the history of a powerful paragraph : section 13 ( 3 ) enacted fed business loans 76 years ago, " the region, federal reserve bank of minneapolis, june. federal reserve bank of san francisco ( 2009 ). " fed

expectations with respect to prudent management of credit exposures to hedge funds and other leveraged counterparties. after the ltcm episode, the federal reserve contributed substantively to a report by the basel committee on banking supervision ( bcbs ) that identified sound practices for managing such exposures. these practices covered the overall strategy for credit risk management, the processes for information gathering and due diligence, the measurement and control of credit exposures, the limit - setting process, the use of collateral and other mechanisms for limiting losses, and the ongoing monitoring of positions and exposures. iosco issued similar supervisory guidance around the same time. as the umbrella supervisor of u. s. bank holding companies, the federal reserve began issuing supervisory guidance on the management of counterparty credit risks in the early 1990s. the bcbs sound practices were incorporated in this guidance to reflect the lessons learned from the ltcm episode. adherence to the guidance is assessed as part of examinations of the global banks that are among the principal hedge fund counterparties. the federal reserve's supervision of counterparty risk management practices is part of a broader, more comprehensive set of supervisory initiatives. the goal of these initiatives is to assess whether global banks'risk - management practices and financial market infrastructures are sufficiently robust to cope with stresses that could accompany a deterioration of market conditions, including a deterioration that might result from the rapid liquidation of hedge funds'positions. as i will discuss in greater detail, those supervisory initiatives include comprehensive reviews of firms'stress - testing practices ; ( 2 ) a multilateral supervisory assessment of the leading global banks'current practices for managing their exposures to hedge funds ; ( 3 ) a review of the risks associated with the rapid growth of " leveraged lending " ; ( 4 ) a new assessment of practices to manage liquidity risk ; and ( 5 ) continued efforts to reduce risks associated with weaknesses in the clearing and settlement of credit derivatives and other otc derivatives. 1. stress - testing global banks perform stress tests to assess the potential effects of a variety of adverse scenarios, including the effects of greater market volatility or reduced liquidity on their market risks and counterparty credit risks. they also consider scenarios in which their access to funding could be reduced, and develop contingency funding plans accordingly. a review of selected global banks'stress - testing practices that the federal reserve conducted in 2006 indicated a need for the banks to enhance their capacity to aggregate credit exposures at the firmwide level, including across counterpart