richard w fisher : a report on the texas economy and a hawk ( s ) eye view on recent fed pronouncements – what does it all mean? remarks by mr richard w fisher, president and chief executive officer of the federal reserve bank of dallas, before the headliners club, austin, texas, 2 february 2012. * * * thank you, patti [ ohlendorf ]. i am flattered that such a great group of austinites has turned out tonight. i am especially pleased that alejandro and rosa laura junco are here. alejandro is ceo of the print media company grupo reforma. he has earned a sterling reputation for journalistic independence in a part of the world where independence is a rare and sometimes dangerous thing. columbia university, the university of missouri and michigan state university have honored him for his journalistic accomplishments, and the university of texas at austin has named him a distinguished alumnus. alejandro ’ s company and its flagship paper in mexico city take their name from la reforma, a period of liberalizing reforms that transformed mexico into a nation state in the mid - 19th century, beginning with the overthrow of the man texans know best and like least – santa anna – and ending with the ascension to power of a good general gone bad, porfirio diaz. as a child growing up in mexico city, i was taught about la reforma in school. to this day, i can probably tell you as much about benito juarez, journalist - turned - jurist - turned - president jose maria iglesias and other reformistas as i can about houston or lamar or washington or lincoln. 1 alejandro and rosa laura, seeing you tonight has revived school - day memories of some 53 years ago! it is a delight and honor to be with you. i will do two things tonight. first, i will give you an update on the performance of the texas economy and what lies ahead. second, i will give you my personal view of what the federal reserve ’ s open market committee – the fomc – announced after our meeting last week. then, time permitting, i will be happy to avoid answering any questions you might have. an update on the texas economy the economic performance of texas since december 2007 – the beginning of the u. s. recession, according to the national bureau of economic research – can be summarized with the chart being projected on the screen denoting employment growth in the 12 federal reserve districts. the federal reserve bank of dallas and its branches in houston, san

nonbank fortune 500 executives. ” a recent survey conducted for the wall street journal of ceo compensation at 350 public companies shows that financial services compensation has been tempered ; the rate of increase in compensation for 2010 was just 1 percent. 11 the journal attributed this to higher levels of scrutiny of financial firms as well as pressure from shareholders and regulators. even so, some financial - sector ceos enjoyed robust increases in their total compensation, including a 74 percent increase and a 51 percent increase at two of the five largest u. s. banking organizations. interestingly, the trading revenue of these two firms accounted for almost half of the $ 56 billion in total trading revenue mentioned by mr. wilmers. these recent numbers buttress nocera ’ s reasonable conclusion that bank ceos “ were being compensated in no small part on their trading profits – which gave them every incentive to keep taking those excessive risks. ” i am sympathetic to these concerns. i have no problem with risk takers being rewarded with large compensation packages. i put my own and my partners ’ capital at risk for the 20 years i operated in the markets and profited handsomely. but i never was provided with capital that was safeguarded by government guarantees. there is no logic to having the public underwrite through deposit insurance or subsidize through protective regulation the risktaking ventures of large financial institutions and their executives. there is a substantial case to be made for separating the “ public utility ” – or traditional core function of banking – from the risk - taking function. to be sure, financial problems are not limited to large institutions and their complex, opaque and conflicted operations. regional and community institutions that have, for the most part, stuck to the public utility function have faced their own difficulties, especially in the context of construction lending. but while over 300 banks failed during the crisis, another 7, 000 did not. community and regional banks that are not too big to fail appear to have succumbed less to the herdlike mentality and promiscuous financial behavior that affected their megabank peers. moreover, when smaller banks got into deep trouble, regulators generally took them over and resolved them. in the treatment of big banks, regulators, for the most part, tiptoed around them. failing big banks were allowed to lumber on, with government support, despite the extensive damage they wrought. big banks that gambled and generated unsustainable losses received a huge public benefit : too - big - to - fail support. postcrisi