we share the concerns of congress that certain lending practices may have led to the problems we are seeing in the subprime market today. we are looking closely at practices such as prepayment penalties, failure to offer escrow accounts for taxes and insurance, stated - income and low - documentation lending, and the failure to give adequate consideration to a borrower's ability to repay. to ensure that any new rules will protect consumers without inappropriately reducing access to credit, the board has obtained input from a wide variety of interested parties. i chaired a full day hearing in june that yielded valuable insight from both industry and consumer groups. the board also solicited written comments from the public on the practices discussed at the hearing. the board received nearly 100 comment letters, and staff is closely examining the issues raised and discussing possible remedies. other federal and state agencies have been consulted as part of our efforts under hoepa. we have also sought the views of our consumer advisory council, which advises the board on matters in the area of consumer financial services. the council's members represent the interests of consumers, communities, and the financial services industry. coordinated enforcement of consumer protection laws enforcement of consumer protection measures is also critical to protecting consumers from irresponsible or predatory lending. indeed, the consumer financial services laws implemented by the federal reserve contain a number of substantive protections, reflecting carefully considered judgments by congress that certain practices should be restricted or prohibited. the federal reserve enforces these rules through oversight of the institutions it examines for compliance with consumer protection laws and regulations. the regulatory scheme for the mortgage industry has become extremely complex as the breadth and depth of this market has grown over the past decade and the role of nonbank mortgage lenders, particularly in the subprime market, has increased. as i mentioned previously, data collected under the home mortgage disclosure act show that independent mortgage companies made about half of higher - priced mortgages in 2006. in addition, there has been an increased presence of mortgage brokers, often independent entities who take loan applications and shop them to depository institutions or other lenders. these market developments have resulted in mortgage lending extending beyond the federal banking agencies'oversight, and this underscores the importance of collaborating with the state banking agencies and other organizations to address concerns in the subprime mortgage market. to this end, we have launched a cooperative pilot project with other federal and state agencies to conduct reviews of non - depository lenders with significant subprime

funds, and central counterparties — have become more important users of u. s. dollar funding, though they lack access to funding backstops, such as central bank facilities, in times of stress. cross - border links between banks and nonbank entities have also increased, and there has been a shift of global portfolios toward u. s. securities and cross - border lending into emerging market economies ( emes ), much of which is in u. s. dollars. changes in the functioning of financial markets have also affected how the financial system provides liquidity and transmits price changes, and many of the recent changes stem from the increased role of nonbank players. in markets with more standardized products, electronic trading has grown, increasing the use of high - frequency trading and the role of principal trading firms in providing liquidity. by contrast, other markets, such as funding markets for corporate credit, have grown significantly in size but continue to be traded over - the - counter with low levels of automated trading. the covid shock and its propagation the outbreak of covid - 19 and efforts to contain it generated simultaneous hits to aggregate supply and demand. voluntary and mandated quarantines, lockdowns, and social distancing efforts lowered aggregate demand, caused large job losses, and sharply increased uncertainty. workplaces closed and travel was curtailed, disrupting global supply chains. important sectors of the global economy, such as tourism and transportation, came to a rapid stop. as the concern about the virus spread, these effects grew. according to figures from the international monetary fund, we ultimately wound up with the deepest and broadest global recession since the great depression. 1 the “ dash for cash " as businesses scrambled to remain liquid amidst this global “ sudden stop, ” demand for liquidity in u. s. dollars increased globally. commercial entities with debt denominated in u. s. dollars sought to increase their holdings of u. s. dollars. unprecedented asset price volatility and record or near - record trading volumes led to significant margin calls, which amplified the demand for cash. some market participants may not have anticipated the size of these margin calls, and they were forced to sell less liquid assets rapidly to meet them. those forced sales on top of other pricing pressures, resulted in unwanted procyclicality. traditional sources of cash were unable to handle the significant and sudden increase in demand. normally, market participants can generate cash by converting assets to cash in secured funding markets or