december 2007. the final rule adds four key protections for a newly defined category of " higher - priced mortgage loans " secured by a consumer's principal dwelling. the higher - priced thresholds adopted by the board would cover all, or virtually all, of the subprime market and a portion of the alt - a market. for loans in this category, these protections will prohibit a lender from making a loan without regard to a borrower's ability to repay the loan from income and assets other than the home's value. second, lenders are prohibited from making " stated income " loans and are required in each case to verify the income and assets they rely upon to determine borrowers'repayment ability. third, the rules restrict the use of prepayment penalties in cases where the borrower could encounter payment shock. finally, creditors are required to establish an escrow account for property taxes and homeowner's insurance for all first - lien mortgage loans. in addition to rules for higher - cost loans, the board adopted other protections that apply to all mortgage loans secured by a consumer's principal dwelling, regardless of the cost. the rules prohibit lenders or brokers from coercing, influencing or otherwise encouraging an appraiser to misstate or misrepresent the value of the property. the rules also prohibit, among other things, servicers from engaging in certain unfair practices. i note that the board is working on another important rulemaking action with other federal agencies and state organizations to implement the registration requirements for residential mortgage loan originators employed by federally supervised institutions, as required by the s. a. f. e. mortgaging licensing act of 2008 ( safe act ). the safe act, when implemented, will provide for increased accountability and tracking of loan originators in a publicly accessible database. under the safe act, an individual is prohibited from engaging in loan origination without obtaining and maintaining annually a unique identifier and either a license and registration as a state - licensed loan originator or a registration as a federal loan originator. prevention and future challenges the federal reserve will continue to take actions against institutions that violate consumer protection or fair lending laws, engage in unfair or deceptive practices, or otherwise engage in unsafe or unsound lending practices. we will continue to focus on strong supervision to prevent the occurrence of these practices and violations. in addition to our own examination and enforcement activities, we will continue our efforts to coordinate with other

debate in the public domain. this is partially due to fears that the costs incurred by banks holding sight deposits with the snb will, at some point, be passed on to their clients. but there is a more fundamental issue here. at first glance, negative rates violate the intuition that savings must be remunerated. however, this intuition is misleading. the interest rate reflects the price of today ’ s negative interest rates have been implemented not just in switzerland, but also in an increasing number of other advanced economies, such as denmark and sweden. bis central bankers ’ speeches consumption in terms of consumption in the future. it is a relative price. there is nothing untenable in tomorrow ’ s consumption being more valuable than today ’ s. of course, while not untenable, negative nominal rates are not representative of a normal state of affairs. rather, they mirror the current exceptional circumstances of the global economy and of switzerland. to understand why switzerland is experiencing a period of negative interest rates, it is necessary to step back and recall three structural features that characterise the highly integrated swiss economy : its “ traditional ” current account surplus, its globally traded, freely floating currency, which is commonly perceived as a “ safe haven ”, and – as a result – its persistently lower interest rates, especially relative to the euro area. 2 in “ normal ” times, switzerland ’ s traditional current account surplus is compatible with a stable currency, as it is compensated by net capital outflows of similar magnitude, with the negative interest rate differential providing the proper incentive for capital exports. this “ benign ” equilibrium has been severely tested by recent financial market developments. the financial crisis has exacerbated the global appetite for swiss franc investments because of their safe haven status. in addition, global interest rates have fallen to near zero levels, virtually eliminating any interest rate differential, and thus further reducing the incentives for swiss investors to re - export their excess savings abroad. together, these developments largely explain the observed net inflows of private capital to switzerland since the crisis, and, despite them being compensated by public sector capital exports through foreign exchange interventions by the snb, the persistent strength of the swiss franc. these developments also highlight a first key fact of swiss monetary policy : at any point in time, the attractiveness of the swiss franc for both domestic and foreign investors is predominantly determined by the size of the interest rate differential and the safe haven status, with the latter being particularly important in times of