no widespread bank runs : in general depositors did not line up at their bank and request their deposits, even for banks that were widely reported to be in poor financial condition. this is likely the case because of the widespread understanding of u. s. federally insured deposit insurance, which protects depositors ’ funds up to the current limit of $ 250, 000, and the presence of the discount window, by which banks can increase their cash holdings to meet withdrawal demands without having to sell assets at panic prices. 12 however, the financial crisis of 2007 – 09 manifested another type of run on banks as well as non - banks, a run on the short - term, non - deposit debt issued by the intermediaries. this is a point made clearly by gary gorton ( 2012 ). these runs weren ’ t clearly and easily visible to the public, and this fact impeded the quick understanding of the severity and potential consequences of the run that was underway. i ’ ve outlined two strains of thought that provide models for us to understand the mechanisms that amplify what might initially be small shocks into large and dangerous events for the economy : the procyclical leverage of financial intermediaries and their sensitivity to measures of financial risk, such as volatility, and the potential for private intermediaries to issue moneylike instruments. when the economy is vulnerable to a financial crisis – that is when the levels of debt are high and the macroeconomy is at or past a peak, and in some cases, a housing boom is ending – then financial intermediary leverage and the issuance of money - like debt instruments can become excessive. such excess can lead to a rapid scramble to deleverage – that is, to reduce levels of debt, causing fire sales and failures of financial intermediaries, which, in turn, confers further distress on the financial economy and the working of the prior to october 3, 2009 the fdic limit on deposit insurance was $ 100, 000, but was raised on that day to $ 250, 000, for a temporary period. the dodd - frank act made the expansion in the insurance limit permanent. bis central bankers ’ speeches macroeconomy generally, as important sources of credit are blocked from reaching households and firms. in essence, i ’ ve argued that there are two views of the mechanisms that could lead to a crisis : one is about excessive leverage or the scarcity of loss - bearing capacity that builds up in an expanding economy

stock of vacant homes will shrink when foreclosures fall and more empty homes are sold or rented out. on the sales side, even though low mortgage interest rates and falling home prices have together boosted housing affordability to its highest level in 40 years, the current pace of sales is quite sluggish. impediments to home sales include tight lending standards, a weak job market and continued uncertainty about home prices. importantly, the large drop in home prices between 2006 and 2008 also reduced homeowner equity broadly, making it more difficult to “ trade - up ” and move into better homes. with lower home prices, many families now owe more on their mortgages than their homes are worth. this means that they cannot refinance or sell their homes easily if they experience a crisis such as a job loss or a serious illness. foreclosure completions are at an all - time high, although the initiation of new foreclosures may be finally slowing. recently, attention has focused on cases where some of the documentation used in the foreclosure process may have been flawed. the fed actively encourages efforts to find viable alternatives to foreclosure. not many people know this, but a team of new york fed officials work with mortgage counselors and community activists to support distressed homeowners, and our lawyers support legal aid programs for people facing foreclosure. at the same time, it is important that foreclosures that comply with the law can ultimately take place. this is a necessary part of returning the housing market to more normal conditions. along with two other agencies, the fed is reviewing the foreclosure practices at the major bank mortgage servicers. we are also keeping an eye on banks ’ potential liabilities where they made representations about mortgages bought by investors that may not have been correct in all cases. we want to ensure that the housing finance business is supported by robust back - office operations – for processing of new mortgages as well as foreclosures – so that homebuyers and investors have full confidence in the process. we are monitoring developments closely in order to evaluate any potential impact on housing or financial markets and the overall economy. economic conditions in upstate new york now let me turn to economic conditions in upstate new york. it is no secret that this region has struggled with weak economic growth and population loss in recent decades. the region has experienced some very painful economic restructuring, particularly as it lost so many of its