setting monetary policy. future considerations regarding the federal reserve ’ s balance sheet policy looking ahead, the fomc continues to reduce the size of its balance sheet as it seeks to maintain a sufficiently restrictive stance of monetary policy to bring inflation back down to its 2 percent goal. recently, the fomc voted to slow the pace of securities runoff by around half beginning in june. 15 in its plans for reducing the size of the federal reserve ’ s balance sheet released in may 2022, the fomc noted that it would eventually slow and then stop securities runoff when reserve balances are somewhat above the levels it judges to be consistent with ample reserves to ensure a smooth transition to ample - reserves levels. 16 aggregate reserve levels currently stand at around the levels at the start of balance sheet runoff in june 2022, and there are still sizable balances in the overnight reverse repurchase agreement ( on rrp ) facility. in light of these conditions, i would have supported either waiting to slow the pace of balance sheet runoff to a later point in time or implementing a more tapered slowing in the pace of runoff. 17 ‘ quantitative tightening around the globe : what have we learned? ’ by wenxin du, kristin forbes and matthew luzzetti, ” speech delivered at the 2024 u. s. monetary policy forum sponsored by the university of chicago booth school of business, march 1, https : / / www. dallasfed. org / news / speeches / logan / 2024 / lkl240301. see the may 2024 fomc statement, which is available on the board ’ s website at https : / / www. federalreserve. gov / monetarypolicy / fomccalendars. htm. see the plans for reducing the size of the federal reserve ’ s balance sheet, which is available on the board ’ s website at https : / / www. federalreserve. gov / monetarypolicy / policy - normalization. htm. aggregate reserves stood at around $ 3. 3 trillion just before start of balance sheet runoff in june 2022 ; see board of governors of the federal reserve system ( 2022 ), statistical release h. 4. 1, “ factors affecting reserve balances of depository institutions and condition statement of federal reserve banks ” ( june 2 ), https : / / www. federalreserve. gov / releases / h41 / 20220602. - 10 while it

: final rules issued by the cfpb 2013, webpage, january 17. bis central bankers ’ speeches borrowers, but also increase the cost of servicing nonperforming loans. this issue is compounded by current servicing compensation arrangements under which servicers receive the same fee for the routine processing of current loans as they do for the more expensive processing of delinquent loans. this model – especially in conjunction with higher defaultservicing costs – gives lenders an incentive to avoid originating loans to borrowers who are more likely to default. a change to servicer compensation models for delinquent loans could alleviate some of these concerns. government regulations will also affect the cost of mortgage credit. in january, the cfpb released rules, in addition to those for servicing standards, on ability - to - repay requirements, the definition of a qualified mortgage ( qm ), and loan originator compensation. 13 the federal reserve and other agencies are in the process of moving forward on proposed rulemakings that would implement revised regulatory capital requirements and the requirements for risk retention mandated by the dodd - frank wall street reform and consumer protection act of 2010, which include an exemption for mortgages that meet the definition of qualified residential mortgages ( qrm ). as the regulatory capital and risk retention requirements are still under deliberation, i won ’ t comment on these regulations today. however, i will share a few thoughts on the possible effects of the qm rulemaking on access to credit. as background, the qm rule is part of a larger ability - to - repay rulemaking that requires lenders to make a reasonable and good faith determination that the borrower can repay the loan. the rulemaking addresses the lax underwriting practices that flourished during the housing boom by setting minimum underwriting standards and by providing borrowers with protections against lending abuses. in particular, borrowers can sue the lender for violations of the ability - to - repay rules and claim monetary damages. if the original lender sells or securitizes the loan, the borrower can claim these damages at any time in a foreclosure action taken by the lender or any assignee. if the mortgage meets the qm standard, however, the lender receives greater protection from such potential lawsuits because it is presumed that the borrower had the ability to repay the loan. loans that fall outside the qm standard may be more costly to originate than loans that meet the standard for at least four reasons