the ending of fixed - term employment. according to the bureau of labor statistics ( bls ), over the past ten years, gross job losses in the united states have averaged about 7. 7 million jobs per quarter. 4 multiplying 7. 7 million by four suggests that about 31 million u. s. jobs are eliminated each year. research suggests, however, that because this number includes temporary layoffs, seasonal closings, and other job losses that are reversed within the year, it overstates longer - term job losses by about double ( davis, haltiwanger, and schuh, 1996 ). hence, a reasonably conservative estimate is that, excluding seasonal and other short - term layoffs, about 15 million jobs are lost each year in the united states, equal to nearly 14 percent of the current level of nonfarm private employment. of course, because net private - sector job creation in the united states over the past ten years has averaged more than 1. 8 million per year, these losses were more than offset by the creation of about 17 million jobs per year during the same period. truly, the u. s. labor market exhibits a phenomenal capacity for creative destruction. comparing the 310, 000 or so gross job losses per year that kletzer ( 2001 ) attributes to increased imports to the 15 million total job losses, we find that only slightly more than 2 percent of gross job losses are the result of import competition. in other words, for the typical job loser during the past ten years, the chances are 98 percent that some factor other than competition from imports was the principal reason for displacement. data are for the period 1992 : q3 to 2003 : q2 and are drawn from the bls ’ s business establishment dynamics survey. kletzer ’ s calculations apply to the longer period since 1979. what about the current situation? although u. s. employment stagnated for an extended period after the recovery got under way and has recently risen only slowly, there is little basis for blaming the recent poor employment performance on import competition. indeed, as a share of gdp, imports to the united states have actually fallen since 2000, from 14. 7 percent of gdp in 2000 to 13. 7 percent in 2003. the worsening of the u. s. trade deficit as a share of gdp in recent years is entirely due to a fall in exports, from 10. 9 percent of gdp in 2000 to 9. 3 percent of gdp in 2003

stearns and aig were failing, and by the fallout from the failure of lehman brothers, the universe of firms that appeared too - big - to - fail during periods of stress included more than insured depository institutions and extended beyond the perimeter of traditional safety and soundness regulation. a major reorientation of our regulatory and supervisory system is needed to address head - on the problem of systemic risk. my subject today is how we should understand and undertake the improvement of microprudential regulation and the development of macroprudential regulation. the theme i want to highlight is how, to a considerable extent, the integration of traditional lending, trading activities, and capital markets defines both of these tasks. 2 gary stern & ron feldman ( 2004 ), too big to fail. the views presented here are my own and not necessarily those of other members of the board of governors or the federal open market committee. a recent history of financial regulation systemic crises typically reveal failures across the financial system. the present situation is no exception, with fundamental problems apparent in both the private and public sectors. there was a massive breakdown of risk management and a suspension of simple common sense within many financial firms. we also witnessed serious shortcomings in government regulation of financial institutions and markets as, for example, with respect to subprime mortgages, certain securitization practices, and some uses of credit default swaps. these weaknesses were revealed as rapid and unsustainable appreciation of some asset prices – especially in residential real estate – continued for a considerable time. but, while these failings of recent years – and the global macroeconomic imbalances within which these failings were nurtured – surely ignited and exacerbated the current crisis, the breadth and depth of the financial breakdown suggest that it has much deeper roots. in many respects, this crisis is the culmination of changes in both the organization and regulation of financial markets that began in the 1970s. following the banking crisis of the early 1930s, and the famous bank holiday declared by president roosevelt soon after his inauguration, congress enacted dramatic new measures that would define financial regulation for decades. most important for commercial banking were creation of the federal deposit insurance corporation ( fdic ) and the glass - steagall act. glass - steagall sharply limited both the securities business of commercial banks and their affiliations with securities firms. creation of the fdic addressed the problem of runs and panics by insuring the bank accounts of the vast