level by fomc participants in march was 3 percent, more than a full percentage point below pre - crisis estimates. this decline in the long - run neutral rate, and an even larger decline in the short - run neutral rate, imply that even the very low rates of recent years may be providing less support to the economy than may appear. at present, the median fomc participant estimates that we will reach a long - run neutral level by year - end 2019 if the economy performs about as expected ( figure 6 ). the balance sheet in september 2014, the fomc outlined its plans for the balance sheet. that initial guidance has been supplemented over time in other fomc communications, most recently in the minutes of the may meeting. here is a summary of the key points : over this period, the size of the balance sheet has been maintained by our reinvestment policy, which i will consider later in the remarks. - 7 • normalization of the balance sheet will commence only after the normalization of the level of the federal funds rate is well under way. 10 most fomc participants think that this condition will be satisfied later this year if the economy continues broadly on its current path. 11 • the balance sheet will be allowed to shrink passively as our holdings of treasury and agency securities mature ( or prepay ) and roll off. 12 • the process will be gradual and predictable. as noted in the may minutes, although no decisions have been made, the committee has discussed preannouncing a schedule of gradually increasing caps on the dollar value of securities that would be allowed to run off in a given month. • the committee will continue to use the federal funds rate as its principal tool for adjusting the stance of monetary policy. 13 • once the process of balance sheet normalization has begun, it should continue as planned as long as there is no material deterioration in the economic outlook. 14 see board of governors of the federal reserve system ( 2015 ), “ federal reserve issues fomc statement, ” press release, december 16, https : / / www. federalreserve. gov / newsevents / pressreleases / monetary20151216a. htm. see board of governors of the federal reserve system ( 2017 ), “ minutes of the federal open market committee, may 2 - 3, 2017, ” press release, may 24, https : / / www. federalreserve. gov / newsevents / pressrel

nontraditional mortgages, particularly the " payment shock " if the loan's interest rate increases, or when the consumer is required to make fully amortizing payments. it is important for consumers to have the information necessary to understand the features and risks of these types of mortgages. as bankers create more complex products, they should pay particular attention to improving the quality of their disclosures and sales practices, so that consumers can clearly understand the features of those products. the federal reserve is committed to improving the information consumers receive about these products, including improving the disclosures required under the u. s. truth in lending act. as we work to improve the understanding of disclosure information to consumers, the federal reserve also engages in outreach activities and conducts research to help us better understand consumer behavior and inform our judgment with regard to the best approaches to achieve consumer understanding. to this end, we sponsor consumer surveys, hold public hearings, discuss issues with our consumer advisory council, and conduct consumer focus groups and other types of consumer testing. conclusion the topics i have focused on this morning, portfolio concentration risk in cre, improved risk sensitivity of basel ii, enterprise wide compliance of bsa / aml and clear communication to consumers about complex products, emphasize that risk management needs to be integrated into daily operations of banks. as an organization chooses to accept more risk exposure to implement its strategies, it is imperative that the organization strengthen its risk management practices appropriately. a bank should clearly understand the implications of the risks it chooses to accept, ensure that the risk mitigants it has chosen work effectively, and that capital is strong enough to support the bank throughout an extended period of unexpected losses. i would also like to note that the federal reserve has an excellent working relationship with the financial services authority and the bank of england. we have worked together effectively on bankspecific issues and broader questions of regulatory policy and financial stability. while there is a wide range of issues with which supervisors must grapple, including those i have discussed today, i believe that supervisory cooperation can indeed create a safe and sound global marketplace while allowing financial institutions to remain prosperous.