lisa d cook : closing remarks - minorities in banking forum closing remarks by ms lisa d cook, member of the board of governors of the federal reserve system, at the minorities in banking forum, federal reserve bank of dallas, dallas, texas, 28 september 2023. * * * good afternoon! i am governor lisa d. cook. and it is a privilege to be able to say a few words to close out this important forum, now in its eighth year. 1 i am disappointed i couldn't be with you in person. but i am glad to have this opportunity to say why i believe your discussion these past two days is so important to the goal of promoting a healthy economy that works for everyone. the minorities in banking forum was started in 2016 by the federal reserve bank of kansas city but is now supported by all of the federal reserve's regional reserve banks because of a recognition of its important mission, which is to nurture the professional development of bankers and help ensure that the leaders of banks are representative of the communities they serve. if i tried to define the word " community, " i would start with trust - neighbors trusting neighbors and working together for the common good. successful banks also depend on trust - customers who believe their money will be safe, that they will be treated fairly, and that those making loan decisions and advising them understand their needs and their hopes. it is the same trust that drives economic decisionmaking throughout our economy. banks help build that trust when they are led by people who are truly representative of those they serve. the fed created the forum with a few mutually beneficial goals in mind. first, leaders from middle management through the senior level would have an opportunity to come together in an environment focused on the industry and your own professional development. secondly, we would do our best to connect you to the federal reserve and its work. and lastly, of particular importance to the federal reserve, this forum would help create and expand a pipeline and our network of diverse banking professionals. as we conclude this year's forum, i encourage each of you to continue the conversations from these last few days and carry forward the inspiration we've gained here. i encourage everyone to reach out to other participants. strong networks of peers and mentors will offer both support and advice as you advance in your career. i challenge you to expand your network and engage with and support others to pursue careers with a sense of purpose and deep engagement with the communities you serve. mentorship provides guidance and opportunities

paper, it does emphasize that there are two parts of the recent disruption in the credit market : credit losses at banks and the near - collapse of broad classes of securities markets. this perspective raises the issue, which i will return to later, of whether the negative consequences of the decline in intermediation required both of these elements to be present. estimating mortgage - credit losses the paper performs a very useful function by providing estimates of the credit losses likely to be realized on the current stock of outstanding loans. not only is this calculation crucial for their analysis, it is a useful survey of three different methodologies for arriving at loss estimates. the authors first use a standard vintage curve analysis on outstanding mortgagebacked securities. although this method makes the strong assumption that future loss curves will follow the same shape as previous loss curves, albeit at much higher levels, it provides a reasonable rough guess of the magnitudes of the losses. the second method the authors use is abx pricing of subprime mortgages plus standard loss estimates on prime and near - prime mortgages to come up with loss estimates. abx prices, in principle, ought to reflect the up - to - the - minute credit losses expected by market participants as well as changes in the price of liquidity and market risk. indeed, i was worried that abx pricing might overestimate credit losses because it carries premiums for these other risks, and trading may be light. for example, the aaa - rated tranches of recent vintages are trading for around sixty - six cents on the dollar, which seems to build in either extreme credit - loss estimates or compensation for other risks. however, the authors weight the various vintages and tranches of the abx by outstanding dollar amounts and get reasonable estimates, which suggests that this approach to estimating mortgage - credit losses may have some value. the authors'third method is quite clever and uses state - level foreclosure models to estimate how declines in house prices would increase foreclosure starts and thus lead to losses. figure 1 displays a reasonably tight relationship between the rate of foreclosures started in the third quarter of 2007 and the previous four - quarter change in house prices in the fifty states and the district of columbia. this figure provides some backing for their approach, which, in effect, uses the historical relationship between house price declines and foreclosure starts in states that have had significant house price declines to estimate the likely effect of current projected house price declines