alan greenspan : evolving challenges for bankers and supervisors remarks by mr alan greenspan, chairman of the board of governors of the us federal reserve system, before the national association of urban bankers, urban financial services coalition, san francisco, ( via videoconference ), on 25 may 2000. * * * it is a pleasure to discuss with you the evolving challenges for bankers and supervisors posed by financial reform and continuing technological and financial innovation. today the nation is enjoying the longest - running economic expansion in its history. the expansion has not only been unprecedented in its duration, but also in its strength. clearly the rapid technological innovation of the past decade has played a strong role in the expansion ’ s endurance by improving labor productivity and opportunities for businesses to efficiently expand their output of goods and services. economic growth has also been supported by the strength and stability of our banking system, which recently recorded its eighth consecutive year of record earnings. the agility with which our banking system recovered from the severe difficulties of the late 1980s and early 1990s to fulfill a critical intermediary role is a testament to its resilience. however, as our economy continues to evolve rapidly, banking organizations will need to continue to adapt to the changing needs of businesses and consumers. in particular, with the passage of the gramm - leach - bliley act, our financial services industry will be better able to meet those demands in the decades to come through prudent innovation. as an example of innovation and adaptation, i note that your own organization is widening its scope to invite membership from the entire financial services industry. broadening your reach to include insurance, brokerage and other financial services not only reflects market realities but should also assist in your endeavors to improve the economic development of underserved communities and promote the professional growth of your members. while innovations and adaptations in our economy have helped create and prolong the prosperity we are now enjoying, they also bring to bear new challenges. today i would like to provide a brief overview of what i think are the key challenges, risks, and opportunities faced by bankers and their supervisors. to start, i would like to shift your attention from the vibrant economy and exceptional banking conditions to some of the risks that are always present. for example, the lax standards, excesses and fraud present in the recent few recent bank failures show that even as most banks post record profits, the deposit insurance fund can still experience disproportionate losses from undisciplined institutions. the high

potential for technology to bridge the urban - rural divide in access to health care, and the critical importance of preparing workers for the digital economy. 4 third and last, community development staff at the federal reserve board and several reserve banks have conducted research to better understand housing affordability challenges affecting rural communities nationwide, recognizing the importance of sufficient affordable housing to a community ’ s economic vitality. researchers found that, as in many urban areas nationwide, a large portion of renters in rural communities housing assistance council ( 2018 ), “ creating connections : what broadband means for rural america, ” rural voices, vol. 22 ( 2 ), available at http : / / www. ruralhome. org. for example, see federal reserve bank of dallas ( 2016 ), closing the digital divide : a framework for meeting cra obligations ( dallas : frb dallas, july, rev. december 2016 ), https : / / www. dallasfed. org / ~ / media / documents / cd / pubs / digitaldivide. pdf ; jordana barton ( 2018 ), “ telehealth along the texas - mexico border, ” rural health quarterly, june, http : / / ruralhealthquarterly. com / home / 2018 / 06 / 23 / telehealth - along - the - texas - mexico - border ; and jordana barton ( 2018 ). “ preparing workers for the expanding digital economy, ” investing in america ’ s workforce : improving outcomes for workers and employers, august, available at https : / / www. dallasfed. org / cd / digital. - 4struggle to afford their rent - - a finding that will not come as a surprise in this room. fortunately, our staff also highlighted promising policy and practice solutions that have been implemented in some communities to try to address these challenges, including the establishment of dedicated funding for affordable housing and the elimination of exclusionary land use and zoning policies. 5 while this type of research and community engagement work is a central component of our efforts to support rural areas, we also know that communities need resources and dedicated local partners to help implement many of the strategies involved. cra has been an important tool for strengthening local community and economic development infrastructure since it was enacted in 1977. we also recognize that significant changes in the financial services industry since then have hindered the law ’ s effectiveness, especially in rural communities, and that an update of the implementing regulations is appropriate. as my colleague governor brainard has noted