board takes very seriously. perhaps it would be useful to review briefly what the law says. fdicia requires that, regardless of the size of a bank, the bank resolution method chosen by the fdic be the least costly of all possible methods for meeting the fdic's obligation to protect insured deposits. in addition, fdicia prohibits the fdic from assisting uninsured depositors and creditors, or shareholders of an insured depository institution. add to these fdicia provisions the depositor preference provisions in the omnibus budget reconciliation act of 1993, and you have some rather potent reasons for the market to be disciplined in its dealings with insured depositories. the only exception to these obligations is the so - called “ systemic risk exception. ” but the systemic risk exception is quite tough and explicit. it requires concurrence by two - thirds of the federal reserve board, two - thirds of the fdic board, and the secretary of treasury in consultation with the president that conformance with least - cost resolution would “ have serious adverse effects on economic conditions or financial activity ” before the fdic is allowed to “ take other action or provide assistance as necessary to avoid or mitigate such effects. ” in addition, if the systemic risk exception is used, any insurance fund losses arising from such exceptional actions must be recovered through special assessments on all depository institutions that are members of the relevant federal deposit insurance fund. lastly, the comptroller general must subsequently review the agencies'actions and report its findings to congress. the sum total of these conditions establishes, in my view, a rather high hurdle that must be cleared before the systemic risk exception can be used. the fdicia and other reforms have, i believe, altered market perceptions of too - big - to - fail. nonetheless, the obvious need for the central bank and other government agencies to prevent a systemic collapse of the banking and financial system, the creation of seemingly ever - larger financial organizations, and the inherent uncertainties involved in the management of any crisis leave room for doubt in some observers ’ minds. perhaps by its very nature this is an issue that can never be fully resolved. but it seems clear to me that any institution, regardless of size, can fail in the sense that existing stockholders can lose their total investment, existing management can be replaced, and uninsured creditors can suffer losses. in some cases it may be necessary for an institution to stay in operation and be wound down in an orderly way

jerome h powell : community development speech ( via webcast ) by mr jerome h powell, chair of the board of governors of the federal reserve system, at the " 2021 just economy conference ", sponsored by the national community reinvestment coalition, washington dc, 3 may 2021. * * * good afternoon. it is a pleasure to be with you today. together, over the past year, we have been making our way through a very difficult time. we are not out of the woods yet, but i am glad to say that we are now making real progress. while some countries are still suffering terribly in the grip of covid - 19, the economic outlook here in the united states has clearly brightened. vaccination levels are rising. fiscal and monetary policy are providing strong support. the economy is reopening, bringing stronger economic activity and job creation. that is the high - level perspective — let ’ s call it the 30, 000 foot view — and from that vantage point, we see improvement. but we should also take a look at what is happening at street level. lives and livelihoods have been affected in ways that vary from person to person, family to family, and community to community. the economic downturn has not fallen evenly on all americans, and those least able to bear the burden have been the hardest hit. the pain is all the greater in light of the gains we had seen in the years prior to the pandemic. covid swept in as the united states was experiencing the longest expansion on record. unemployment was at 50 - year lows, and inflation remained under control. wages were moving up, particularly for the lowest - paid workers. long - standing racial disparities in unemployment were narrowing, and many who had struggled for years were finding jobs. it was not until the later years of that expansion that its benefits had started to reach those on the margins. during our fed listens events, we met with people around the country and heard repeatedly about the life - changing gains of the strong labor market, particularly at the lower end of the income spectrum. just a few months later, those stories changed to ones of job losses, overextended support services, and businesses built over generations closing their doors for good. while the recovery is gathering strength, it has been slower for those in lower - paid jobs : almost 20 percent of workers who were in the lowest earnings quartile in february of 2020 were not employed a year later, compared to