william c dudley : student loans and household finance opening remarks by mr william c dudley, president and chief executive officer of the federal reserve bank of new york, at the convening on student loan data conference, new york city, 4 march 2015. * * * andrew haughwout, joseph tracy and wilbert van der klaauw assisted in preparing these remarks. good morning. i ’ m happy to welcome you to the new york fed for this workshop that is intended to increase our understanding of student debt and how it affects individuals, their families and the economy. i am delighted to see such widespread and growing interest in this important topic. making continued progress on understanding these issues will depend critically on efforts to identify and address existing data gaps that hamper its study. i am particularly happy to welcome deputy secretary sarah bloom raskin, who has spoken frequently and eloquently in the past about the need for improvements in student loan servicing and debt collection, the macroeconomic consequences of increased student debt, and the need for better data and analysis. i look forward to her remarks today. before i make some specific comments on student debt, let me take a step back and say a few words on household finance more generally. as always, what i say represents my own views and not necessarily those of the federal open market committee or the federal reserve system. 1 there are several reasons the new york fed has increased its focus on household finance. first, the financial crisis made it obvious that an ability to understand and anticipate what is happening in the household sector is essential to gauging the strength and resiliency of the u. s. economy. second, our policy actions are intended to change the incentives facing households, so it is important to be able to gauge how our policies are transmitted into household financial decisions. good information on household borrowing, for example, allows us to see how monetary policy affects outcomes such as auto loan originations. third, better household finance research helps support our community outreach and development missions. a major challenge to achieving these goals is that household finances have traditionally been poorly documented. we have lots of information about corporate sector debt and equity, but comparable basic facts about the household sector are much harder to come by. for example, the lack of timely, comprehensive data made it more difficult to understand how vulnerable the household sector ’ s financial position had become by 2007. i ’ m happy to say that we ’ ve made progress in beginning to close this data gap

, uniform rules ensure that the minimum requirements for risk identification and limitation are the same for all market participants, meaning that they can be assessed under fair conditions. on the other hand, rules establish trust. trust which banks and savings banks desperately need to do business. trust which many banks lost during the financial crisis. trust which has since had to be painstakingly rebuilt. 3 eliminate unnecessary burdens ladies and gentlemen, regulation and supervision are not expendable. this justifies a certain amount of burdens resulting from regulation. i am firmly convinced that regulation and supervision have a positive overall impact on the economy, consumers, and banks and savings banks themselves. that said, it is also clear that we should eliminate undesirably high burdens from regulation as far as possible, as i'm sure you will all agree. for that reason i would now like to talk about whether and where i can see such undesirably high burdens – and what we can do about them. however, i am opposed to a broad - brush criticism of regulation. this applies in particular to internationally harmonised rules for large institutions. as you are all aware, we have undertaken extensive reform measures in the past few years and are currently working on the final details in the basel committee. our work was and still is shaped by what we have learned from the financial crisis. one consequence of this is that the international rules have since become more extensive and complex. the increased complexity of the rulebook reflects the complexity of the global banking business, and is therefore completely justified. but the new rules do not solely concern the very big institutions operating on a global scale. the framework of the basel committee affects rules at both the european and national levels. these rules ultimately define the framework conditions of smaller institutions, thereby affecting you and your employees. in fact, this has resulted in burdens for smaller and medium - sized banks, some of which are undesirable and even harmful, because small institutions cannot utilise the economies of scale that large banks profit from when adhering to the rules. the regulatory framework has already partially taken this into account with gradations which vary according to an institution's size and business model. yet necessary measures such as the procurement of new it systems or the 2 / 4 bis central bankers'speeches recruitment of staff who ensure that the rules are complied with are still leading to high fixed costs, which represent a large burden to smaller institutions. when regulation makes size an advantage, this