to answer three more fundamental questions. first, how important is community bank lending to the overall mortgage market? second, how important is mortgage lending to the community banking model? and third, are there any indications that community bank lending poses the same risks as the subprime lending that shared many of the same characteristics? how important is community bank lending to the overall mortgage market? one of the advantages of working at the federal reserve is having access to what i believe is one of the finest research staffs anywhere. because of the federal reserve ’ s role in the economy and financial stability, we have teams of top - notch economists and financial analysts to help policymakers reach the best possible understanding of economic and financial trends. but they are equally valuable in assessing the effects of regulatory policy. so i asked federal reserve staff to examine available data to try to come up with answers to my questions about mortgage lending and community banks. i would like to share with you the answers they uncovered. analysis of annual data on home lending reported pursuant to the home mortgage disclosure act ( hmda ) provides insight into the role of community banks in the mortgage market. 8 as you may know, hmda requires banking institutions, credit unions, and mortgage companies with offices in metropolitan areas to report details about the applications they receive and the loans they extend each year. 9 to investigate the role of community banks in the home lending market and to foster a more detailed understanding of mortgage lending within the broad group of community banks, our staff sorted lending institutions in hmda into three asset size categories : smaller community banks with assets under $ 500 million, larger community banks with assets between $ 500 million and $ 10 billion, and large banks with assets of more than $ 10 billion. for the analysis, all affiliated entities were combined and treated as a single organization. the hmda data indicate that community banks account for a significant fraction of total home loan originations each year. smaller community banks account for about 5 percent of for more information refer to robert b. avery, kenneth p. brevoort, neil bhutta, and glenn b. canner ( 2012 ), “ the mortgage market in 2011 : highlights from the data reported under the home mortgage disclosure act ( pdf ), ” federal reserve bulletin, vol. 98 ( september 18 ). the data include information about the types and purposes of the loans ; the disposition of applications ; information about the borrowers, such as their incomes ; and information about the location of the properties securing

support economic growth through other channels, including by boosting stock prices and house values. the resulting improvement in household wealth supports greater consumption spending. the costs of asset purchases turning to the potential costs of the federal reserve ’ s asset purchases, there are some that definitely need to be monitored over time. at this stage, i do not see any that would cause me to advocate a curtailment of our purchase program. to address one concern that i have heard, there is no evidence that the federal reserve ’ s purchases have impaired the functioning of financial markets, and, while we continue to monitor market function carefully, so long as we pursue our purchases sensibly, i do not expect market functioning to become a problem in the future. further, i ’ ve argued previously, and still judge, that the fomc has the tools it needs to withdraw accommodation, even if the balance sheet at that time is large. these tools include a new one, approved by the congress during the financial crisis, which allows the federal reserve to pay banks interest on their reserves. a suite of supporting tools, such as reverse repurchase agreements with a empirical studies have drawn on the experience of the federal reserve ’ s large - scale asset purchases in recent years, as well as from earlier episodes in the united states and from the experience with asset purchases in the united kingdom. see, for example, d ’ amico and king ( forthcoming ), d ’ amico and others ( 2012 ), gagnon and others ( 2011 ), hamilton and wu ( 2012 ), joyce and others ( 2011 ), krishnamurthy and vissing - jørgensen ( 2011 ), and swanson ( 2011 ). see hancock and passmore ( 2012 ). bis central bankers ’ speeches wide range of counterparties and the term deposit facility, are routinely tested to make sure that the federal reserve is prepared to use them and that they will work as planned. two additional costs have been discussed at recent meetings of the fomc. first, the expansion of the balance sheet has implications for the federal reserve ’ s earnings from its asset holdings and, hence, for its remittances to the treasury. second, some have raised the possibility that the committee ’ s policies could have negative consequences for financial stability. with respect to the federal reserve ’ s remittances, balance sheet operations are intended to support economic growth and job creation in a context of price stability and not to maximize federal reserve income. there