. the city of chicago, for example, is putting $ 2 billion into renovating its crumbling schools. perhaps most important, strong growth and tight labor markets have opened opportunities for workers at all levels – opportunities to move up, to get better jobs, to get off welfare, to go back to school with less fear of being unable to find jobs on completion. and it isn ’ t just the united states that benefits from our prosperity – indeed, the vibrant american economy is contributing mightily to the revival of growth in what would otherwise be a weak global economy. asia is only beginning the process of recovery from the deep recession that followed the financial crisis of 1997, and the hoped - for engine of asian recover – the huge japanese economy – remains stalled. much of latin america is in recession as a result of the brazilian financial crisis and low commodity prices ; russia is struggling and exporting its troubles to its trading partners ; even western europe, affected by all of the above, is growing far more slowly than we are. when americans are prosperous, we spend an increasing portion of our rising incomes on imports. without the income generated by exporting to us, many other countries would be in much worse shape than they actually are. in the long run, the rapid accumulation of obligations to foreigners, which pays for our excess of imports over exports, cannot be sustained. in the meantime, however, we are financing some of our boom - times by borrowing the savings of foreigners, and they are benefiting by exporting to us. a slowdown in the u. s. economy would reduce our trade and current account deficits, but make it harder for the rest of the world to recover. the bottom line is, billions of people, not just us, benefit from the high performance of the u. s. economy, so what can we do to keep it functioning so well? the key conundrum is how we have managed to have such strong growth and associated tight labor markets, with subdued, even declining, inflation. some of the credit clearly goes to global forces that americans don ’ t control and which can ’ t be counted on to continue pushing in the same direction forever. the world financial crisis has weakened demand for internationally traded goods, especially commodities, including agricultural products, metals, and oil ( although the oil price has come back up recently as producing countries cut supply ). in the face of weak demand, world prices of just about everything tradable are low and competition is fierce. at

reimpose the firewalls on less than well capitalized banks automatically - - as some recent bills introduced in the congress would - but decided against it because a decline in a bank ’ s capital ratios may be wholly unrelated to the bank ’ s dealings with its section 20 affiliate. thus, for example, forcing a bank suffering serious losses on real estate lending to desist from credit enhancements may be unproductive or - - if the business is profitable - - counterproductive. the board also proposed to retain existing firewalls requiring adequate internal controls and documentation, including a requirement that a bank exercise independent and thorough credit judgment in any transaction involving an affiliate. although we expect banking organizations to have such internal controls and look for them during examinations, we believe that they are sufficiently important to warrant reinforcement through the operating standards. they are especially important in the section 20 context because of the likelihood that a bank and its section 20 affiliate may be selling similar products to the same customer. because of the potential for customer confusion as to which products are federally insured, the board proposed to require a section 20 affiliate to make disclosures to customers similar to those that the interagency statement requires of a bank selling nondeposit products on bank premises. the proposal would also continue to prohibit an affiliated bank from knowingly advising a customer to purchase securities underwritten or dealt in by a section 20 affiliate unless it notifies the customer of its affiliate ’ s role. the proposal also continues to prohibit a bank and its section 20 affiliate from sharing any nonpublic customer information without the customer ’ s consent. earlier board action on other firewalls and the revenue limit in addition to describing the board ’ s recent proposal, you also asked me to discuss other changes the board finalized last year : increasing the section 20 revenue limit from 10 percent to 25 percent ; allowing cross - marketing between a bank and a section 20 affiliate ; permitting employee interlocks between a bank and a section 20 affiliate ; and scaling back a restriction on officer and director interlocks. the review that led to changes to the cross - marketing and interlocks firewalls was akin to what the board recently went through for all the firewalls. the board acted on these firewalls before the rest because it had previously sought comment on them some years ago and because they were identified by commenters as among the most unduly burdensome of all the firewalls. after reviewing its experience administering these firewall