banks continues to decline. notably, after several years of reduced lending following the recession, we are starting to see slow but steady loan growth at community banks. while this expansion in lending must be prudent, on balance i consider this growth an encouraging sign of an improving economy. addressing too big to fail let me begin by discussing an issue that i know has been on the minds of many community bankers : how policymakers are addressing the problem of banks that are perceived to be too big to fail. 1 community banks share the interest we all have in reducing the systemic risk this topic has been addressed in greater detail in previous speeches by federal reserve governors, including daniel k. tarullo ( 2013 ), “ evaluating progress in regulatory reforms to promote financial stability ”, speech delivered at the peterson institute for international economics, washington, may 3 ; jerome h. powell ( 2013 ), “ ending ‘ too big to fail'”, speech delivered at the institute of international bankers 2013 washington conference, washington, march 4 ; and janet l. yellen ( 2013 ), “ regulatory landscapes : a u. s. perspective ”, bis central bankers ’ speeches posed by firms that are large, complex, and interconnected, and also in reducing any potential competitive advantages that such firms may enjoy as a result of too - big - to - fail. the dodd - frank wall street reform and consumer protection act ( dodd - frank act ) addresses the too - big - to - fail issue through steps intended to limit both the likelihood that systemically important firms would fail and the potential damage from any that do. the federal reserve and the other financial regulatory agencies have issued a number of regulations to implement the requirements set forth in the legislation and to enhance the supervision of the largest financial firms. but even before dodd - frank became law, the federal reserve began to strengthen its oversight of the largest, most complex banking firms and require these firms to materially improve their capital adequacy. for example, in 2009, we conducted the first stress tests of the largest 19 u. s. bank holding companies. that test has subsequently evolved into our annual comprehensive capital analysis and review, known as ccar, which requires all bank holding companies with total assets of $ 50 billion or more to submit annual capital plans for review by the federal reserve. ccar helps ensure that the largest banking organizations will have enough capital to continue operating through times of economic and financial stress. 2 to be clear, as the federal banking agencies have stated

##tm. board of governors ( 2012 ), “ agencies clarify supervisory expectations for stress testing by community banks ”, press release, may 14, http : / / www. federalreserve. gov / newsevents / press / bcreg / 20120514b. htm. to help non - complex community banking organizations better understand the new capital rule, the agencies published a guide that summarizes changes to the capital rules for exposures commonly held by such organizations. see board of governors, fdic, and occ ( 2013 ), new capital rule : community bank guide ( pdf ) ( washington : board of governors, fdic, and occ, july ), http : / / www. federalreserve. gov / bankinforeg / basel / files / capital _ rule _ community _ bank _ guide _ 20130709. pdf. bis central bankers ’ speeches these systemically important firms. we also need to ensure that the new rules are embedded in our supervision of the largest firms ; and, we must continue to watch for emerging sources of systemic risk and take steps as appropriate to address these risks. one such risk that the federal reserve has been monitoring closely is the reliance of some firms on potentially volatile short - term wholesale funding. 5 we are carefully considering the systemic vulnerabilities that may be posed by overreliance on short - term wholesale funding and are weighing potential policy responses. while it would be premature to indicate whether or how we might address these vulnerabilities, i can say that few, if any, community banks are reliant on levels of short - term wholesale funding that could raise concerns about systemic risk, and regulators would carefully consider the ramifications of any action, including the effect on community banks. improving our understanding of community banks in carefully considering how our actions affect community banks, the federal reserve is committed to understanding your institutions and the challenges you face. we continue to try to improve that understanding in two important ways – research and outreach. the fed is uniquely positioned to employ these two methods because of our traditional strength as a research institution and because of our structure, with reserve banks that have deep roots in communities in every region of the country. in the past several years, research staff across the federal reserve system who were independently exploring issues related to community banking have developed an informal network to share findings and identify areas for further research. after some of the fruits of this effort were shared with the board,