; related trend to household indebtedness, partly fueled by policies expanding homeownership to the poor2 ; bank for international settlements. 2010. bis annual report 2009 / 10, 28 june. basel, 75ff. bis central bankers ’ speeches – – insufficient framework and rules of the international financial system ; trend towards income and wealth inequality within advanced economies3 ; oil shock until mid - 2008 seems to have contributed to recession4. second, more immediate causes : asset market bubbles : bubbles started with financial innovations – turning mortgages into liquid assets ; these innovations led to bubbles that were fostered by a huge, unregulated shadow banking sector – excessive leverage ; intransparent products of “ financial industry ” attracted risk - loving investors5 ; false management incentives favoring short - termism. third, the triggering factors that helped the bubbles burst : massive defaults in the u. s. subprime mortgage market ; in a second step, the bankruptcy of lehman brothers. preliminary conclusion : financial crisis has been caused by a market failure, however, the ignorance of its risk is a major policy failure, – stemming from inadequate regulation and supervision of financial ( and housing ) markets ; – as well as overly loose global monetary policy. rajan r. 2010. how inequality fueled the crisis. project syndicate. 9 july. http : / / www. project - syndicate. org / commentary / rajan7 / english oecd 2008. growing unequal – income distribution and poverty in oecd countries. october, paris. hamilton, j. 2009. causes and consequences of the oil shock of 2007 – 08. brooking papers on economic activity. spring sibert, a. 2009. “ why did the bankers behave so badly? ”. voxeu. org. 18 may. http : / / www. voxeu. org / index. php? q = node / 3572 bis central bankers ’ speeches the dynamics of the crisis : sequencing of crises financial sector real economy www. oenb. at – – – – oenb. info @ oenb. at first, banking sector immediately hit by liquidity shortage : interbank market dried up ; banks refinanced themselves with fire sales of their assets ( asset meltdown ). second, the crisis reached the real economy great recession : dramatic drop in confidence ; plunge of international trade and manufacturing. third, a truly global crisis : – public finances no decoupling of emerging economies ( however

elizabeth a duke : the future of community banking speech by ms elizabeth a duke, member of the board of governors of the federal reserve system, at the southeastern bank management and directors conference, university of georgia, terry college of business, duluth, georgia, 5 february 2013. * * * i would like to thank the terry college of business at the university of georgia for the opportunity to discuss the future of community banking at this annual conference for bank officers and directors. community banks play an important role in our nation ’ s financial system, and i believe that the future of community banking is bright. but that is not to say that it will be easy. success, as always, will require energetic and engaged managers and board members who are sensitive to the financial needs of their communities, vigilant to economic conditions, and adaptive to changing regulatory requirements. i hear from a lot of community bankers who are concerned that the community banking model might not survive. many paint a picture so bleak that they see only personal retirement or sale of the bank as viable strategies. i completely understand how tiring it is to fight a financial crisis and survive a deep recession followed by a weak recovery only to confront what seems to be a tsunami of new regulations. i felt all of those same emotions in 1991. i was a community banker then. we had survived the savings and loan crisis with some bruises, but we were still standing. the financial institutions reform, recovery and enforcement act of 1989 ( firrea ) had been followed by the federal deposit insurance corporation improvement act ( fdicia ) in 1991. i had more new regulations stacked on my desk than i had employees in the bank. my bank had just reached the $ 100 million mark in total assets through the purchase of two branches from a failing thrift. even more daunting for me personally, was the sudden death of my bank ’ s chief executive officer ( ceo ), leaving me as the new ceo. frankly, i didn ’ t know how i was going to tackle all that lay in front of us. but those dark days in 1991 were followed by 15 years of exceptionally strong performance for all banks, including my own. and those experiences – the good and the bad – give me confidence in predicting a bright future for community banking today. just as the seeds of a crisis are often sown in earlier boom times, strength can be forged during the tough times that follow a crisis. as we did in the early 1990s, bankers and regulators today have learned from