thomas c baxter, jr : financial stability – the role of the federal reserve system remarks by mr thomas c baxter, jr, executive vice president and general counsel of the federal reserve bank of new york, at the future of banking regulation and supervision in the eu conference, frankfurt am main, 15 november 2013. * * * today we gather to celebrate the career of a great central bank lawyer, antonio sainz de vicuna, who is retiring from his position as general counsel of the european central bank. the accomplishments of the european central bank ( ecb ) in a short period of time are a huge credit to the people who built the organization. antonio is one of those people. he was there even before the very beginning, given his position as general counsel of the european monetary institute back in 1994. many here have heard antonio talk about those seminal first days, when european monetary union was considered nothing more than a remarkable experiment that would never become a reality. of course, monetary union within the eurozone has become reality, and the success of the ecb has inspired the ecb ’ s latest challenge. as antonio retires, the ecb is taking the first important steps toward becoming a pan - european banking supervisor. the fact that banking supervision is being entrusted to the ecb is perhaps the best evidence of its overwhelming success as a european institution. of course, it is rare that great success comes without hardship. the global financial crisis has tested both the ecb and the organization that i am privileged to serve, the federal reserve. the federal reserve ’ s financial stability role, my topic for today, was at the center of the response to the crisis in the united states. because this was the worst financial crisis in the united states since our great depression, conditions within our national economy produced instability, which naturally provoked a reaction from the federal reserve. from my personal perspective, one of the most inspiring moments was when chairman bernanke spoke in february of 2009 at the national press club. there, he said “ the federal reserve has done, and will continue to do, everything possible within the limits of its authority to assist in restoring our nation to financial stability and economic prosperity.... ” 1 no statement encapsulated the financial stability objective as succinctly and as clearly. in speaking here at the ecb, i would be remiss if i did not mention a substantially similar statement by ecb president mario draghi in july of 2012. president draghi said that

system. ” 10 in commenting during a recent press conference about the federal reserve ’ s objective as a consolidated supervisor of the holding company of many systemically important financial groups, chairman bernanke said “ the primary goal of the consolidated supervision by the fed is to make sure that the firms – the firm doesn ’ t in any way endanger the stability of the broad financial system. ” 11 today, both the penumbra of the federal reserve act and the express terms of the doddfrank act place financial stability within the federal reserve ’ s legal mandate. during the crisis, the federal reserve needed to restore financial stability so that the federal reserve could work to achieve price stability and maximum employment. the effort at restoration caused us to explore techniques we had never used before, and, as chairman bernanke exhorted us, to do “ whatever it takes. ” to succeed with this mission, lawyers at the federal reserve needed to interpret our authority in new and different ways, and we did so. i hope that my remarks today reflect on that important function of counsel. the role of counsel, of course, does not end with interpreting legal authorities to address new and unanticipated challenges. it also involves patrolling the frontiers of our powers and id. at 483. dodd frank wall street reform and consumer protection act, pub. l. no. 111 – 203, 124 stat. 1376 ( 2010 ). 12 u. s. c. § 5365. 12 u. s. c. § 5365 ( a ) ( 1 ). 12 u. s. c. § 1842 ( c ) ( 7 ). ben s. bernanke, chairman, board of governors of the federal reserve system, september 18, 2013, press conference. bis central bankers ’ speeches recognizing where and when the rule of law forecloses options. this is essential to the credibility of the central bank, a concept closely connected with the public ’ s trust. to conclude, i hope these remarks about financial stability also reflect on what our legal colleagues have accomplished at the ecb. in this regard, i pay tribute to the leadership of antonio sainz de vicuna, and to his work not only in presiding at the birth of the euro, but guiding the ecb to take the extraordinary actions necessary to preserve the euro. as president draghi accurately forecast, they have been enough. antonio, as you step down as general counsel, i congratulate you on the accomplishment of