the over - the - counter derivatives markets and to strengthen the oversight of financial market utilities and other critical financial infrastructure. in particular, u. s. agencies are working together to address structural weaknesses in the triparty repo market and in money market mutual funds. the unfinished business of financial regulatory reform let me now look forward. although we have made the financial system safer, important work remains in each of the three areas i have highlighted : the basic bank regulatory apparatus, addressing the problems posed by sifis, and limiting risks in shadow banking and financial markets. let me outline what i consider the principal pieces of unfinished business in global financial regulatory reform. strengthening the basic bank regulatory framework first, we must actively support the continuing efforts of the basel committee to strengthen the foundations of global bank regulation. key basel committee work in the years ahead will include finalizing the basel iii leverage ratio and nsfr, completing the comprehensive review of trading book capital requirements, adopting a global large - exposure regime, and increasing the comparability of risk - based capital requirements across banks and across countries. i want to highlight the importance of the committee ’ s work to explore ways to increase the standardization and comparability of the risk - based capital rules for global banks. the stability of the global financial system depends critically on the capital adequacy of global banks, the capital adequacy of global banks depends critically on the basel iii reforms, and much of the good progress in the basel iii reforms rests on the integrity and strength of the risk weights. reducing the probability of sifi failure as this brief history has highlighted, tougher prudential regulation and supervision have substantially reduced the probability of a sifi failure. ending too - big - to - fail will require steadfast implementation by global regulators over the next few years of the work already in train. some have proposed ideas for more sweeping restructuring of the banking system to solve too - big - to - fail. these ideas include resurrection of glass - steagall - style separation of bis central bankers ’ speeches commercial banking from investment banking and imposition of bank size limits. i am not persuaded that such blunt approaches would be the most efficient ways to address the toobig - to - fail problem. but at the same time i ’ m not convinced that the existing sifi regulatory work plan, which moves in the right direction, goes far enough. as my colleagues governors tarullo and stein have noted in recent speeches, it may be appropriate to

alan greenspan : the economic outlook testimony of mr alan greenspan, chairman of the board of governors of the us federal reserve system, before the joint economic committee, us congress, washington dc, 9 june 2005. * * * chairman saxton, vice chairman bennett, and members of the committee, i am pleased to appear once again before the joint economic committee. over the past year, the pace of economic activity in the united states has alternately paused and quickened. the most recent data support the view that the soft readings on the economy observed in the early spring were not presaging a more - serious slowdown in the pace of activity. consumer spending firmed again, and indicators of business investment became somewhat more upbeat. nonetheless, policymakers confront many of the same imbalances and uncertainties that were apparent a year ago. our household saving rate remains negligible. moreover, modest, if any, progress is evident in addressing the challenges associated with the pending shift of the baby - boom generation into retirement that will begin in a very few years. and although prices of imports have accelerated, we are, at best, in only the earliest stages of a stabilization of our current account deficit - a deficit that now exceeds 6 percent of u. s. gross domestic product ( gdp ). a major economic development over the past year has been the surge in the price of oil. sharply higher prices of oil imports have diminished u. s. purchasing power. the value of petroleum imports rose from 1. 4 percent of nominal gdp in the first quarter of 2004 to 1. 8 percent in the first quarter of this year. the alternating bouts of rising and falling oil prices have doubtless been a significant contributor to the periods of deceleration and acceleration of u. s. economic activity over the past year. despite the uneven character of the expansion over the past year, the u. s. economy has done well, on net, by most measures. real gdp has grown by 3. 7 percent over that period, the unemployment rate has fallen to 5. 1 percent, and core personal consumption expenditure prices have risen a historically modest 1. 6 percent. but the growth of productivity, though respectable at 2 - 1 / 2 percent over the year ending in the first quarter, is far less than the extraordinary pace of 5 - 1 / 2 percent during 2003. excluding a large but apparently transitory surge in bonuses and the proceeds of stock option exercises late last year, overall hourly labor compensation has exhibited