creation, participation on the financial stability oversight council ( fsoc ). this work is carried out by staff in that office as well as in many areas across the board and is overseen by the board ’ s newly created committee on financial stability. this work is proceeding in four pillars, which are in varying stages of advancement. see ben s. bernanke ( 2013 ), “ a century of u. s. central banking : goals, frameworks, accountability ”, speech delivered at “ the first 100 years of the federal reserve : the policy record, lessons learned, and prospects for the future ”, a conference sponsored by the national bureau of economic research, cambridge, mass., july 10. more precisely, it is predominantly a supervisor of depository institutions and depository institution holding companies. bis central bankers ’ speeches first pillar : surveillance the first pillar is surveillance of the possible risks that could threaten financial stability. research and historical case studies suggest that increasing valuation pressures accompanied by rising leverage, widening maturity mismatches, and the erosion of underwriting standards often provide important warning signals. drawing on this information and other analysis, each quarter federal reserve board staff systematically assess a standard set of financial vulnerabilities, including asset valuations and risk appetite, leverage, maturity and risk transformation, and interconnectedness in the broad financial system, and borrowing by households and businesses. the research that informs this work, by helping to identify financial patterns likely to be associated with rising risks of financial crisis, continues to grow. but its predictive power is still limited ; it remains difficult to identify ahead of time credit booms that are likely to cause severe damage, such as the subprime housing crisis, from those that do not, such as the high - tech boom, in part because risk - taking by financial market participants cannot always be well - observed. 3 over time, our and others ’ surveillance will benefit as the office of financial research established by the dodd - frank act, makes progress in facilitating the sharing of previously siloed data sets among the independent regulators and as international impediments are overcome, allowing more comprehensive analysis of financial transaction flows across different types of financial intermediaries and activities. this regular, systematic surveillance of financial vulnerabilities is buttressed by three other valuable types of analysis. first, we use the detailed information gathered through bank examinations and loan reviews that are the regular work of our supervisors to assess emerging risky practices ; these reviews helped identify deteriorating underwriting

lael brainard : the federal reserve ’ s financial stability agenda speech by ms lael brainard, member of the board of governors of the federal reserve system, at the hutchins center on fiscal and monetary policy, the brookings institution, washington dc, 3 december 2014. * * * although its founding statute makes no explicit mention of financial stability, the federal reserve was created in response to a severe financial panic, and safeguarding financial stability is deeply ingrained in the mission and culture of the federal reserve board. today, financial stability is more important than ever to the work of the federal reserve board. with the lessons from the crisis still fresh, we are in the process of strengthening our financial stability capabilities. 1 in carrying out the work of financial stability, the federal reserve is seen as the agency with the broadest sight lines across the economy and one that has some important stability tools, as well as a critical first responder when a crisis hits. but the federal reserve also faces limitations as a financial stability authority : it is predominantly a supervisor of banks and bank holding companies2 in a system with large capital markets, several independent agencies have responsibilities for regulation of nonbank financial intermediaries and markets, and no u. s. agency yet has access to complete data regarding bank and nonbank financial activities. recognizing these limitations, the federal reserve is likely to actively utilize the tools under its authority, which means placing a strong emphasis on structural resilience in the largest and most complex institutions, while strengthening less tested time - varying tools to lean against the buildup of risks and, in some circumstances, looking to the unique capacity of monetary policy to act across the financial system. it will also need to cooperate closely with other regulators to develop well - rehearsed working protocols and a joint sense of responsibility for financial stability, while respecting that each independent agency has its own specific statutory mandate and governing body. financial stability agenda in the wake of the financial crisis, the congress and the federal reserve itself became more deliberate and explicit about the responsibility for safeguarding the stability of the financial system. the dodd - frank act, enacted in july 2010, charged the federal reserve with specific authorities for the purposes of safeguarding financial stability. at the federal reserve, we created the office of financial stability policy and research to strengthen our cross - disciplinary approach to the identification and analysis of potential risks to the financial system and the broader economy and to support macroprudential supervision of large financial institutions and, following its