bank liabilities are safe, easy - to - value claims that are well suited for transaction purposes and provide money - like benefits to firms and households. 5 second, in a world without lolr, shortages of liquid assets would be exacerbated during stress episodes. banks would likely hoard their liquidity buffers. knowing they must rely only on their own liquidity to meet demands even as market uncertainty is increasing and asset values suffer downward pressure, banks would have to reduce dramatically their core intermediation function. they would be reluctant to lend to firms and households that are themselves subject to the impact of the systemwide liquidity shocks. these real - economy actors would thus be unable to fulfill their own financial obligations in a timely fashion or would pare back their own activities out of concern about their ability to do so. another adverse feedback loop could result. even without liquidity regulation and with an lolr, there is a tendency to hoard liquidity during periods of financial instability, as evidenced between 2007 and 2009 when banks actually increased their balance sheet liquidity instead of running down their liquidity buffers. 6 it is worth noting that this very dynamic helped motivate the creation of the federal reserve. if solvent banks are confident that they will be able to borrow from the central bank against good collateral to meet any unforeseen funding needs, then they need not completely stop lending even amid increased uncertainty about future funding needs. lending by the central jean tirole ( 2011 ), “ illiquidity and all its friends, ” journal of economic literature, vol. 49 ( 2 ), pp. 287 – 325, at p. 295. tirole introduces the term in a general discussion of firm incentives, not in the context of lolr ( which he addresses later ). but the incentives would seem even stronger where lolr is available. banks also provide liquidity to operating firms via committed lines of credit, which are more efficient, in conditions of uncertainty, than an arrangement in which each operating firm attempts to hold sufficient funds in advance to meet potential liquidity needs, as discussed in holmstrom and tirole ( 1998 ), “ private and public supply of liquidity, ” journal of political economy, vol. 106 ( 1 ), pp. 1 – 40. see carlson, duygan - bump, and nelson ( forthcoming ). mark carlson ( 2013 ) presents evidence that this was also a very typical dynamic of liquidity crises historically, when

michelle w bowman : welcoming remarks - fedcommunities event welcoming remarks by ms michelle w bowman, member of the board of governors of the federal reserve system, at the fedcommunities event " keys to opportunity in the housing market : research on strategies for preserving and expanding rental housing affordability ", washington dc, 26 september 2023. * * * welcome, and thank you for joining us for the federal reserve's community development research seminar series. this series enables the sharing of important research on economic conditions and opportunities in lower - income communities. we believe that conducting research to better understand these topics is an important way to further the goal of promoting an inclusive u. s. economy. the theme of this year's seminar is " keys to opportunity in the u. s. housing market. " today's event is hosted by the board of governors and the reserve banks of philadelphia, atlanta, and minneapolis, and will focus on the affordability of rental housing and exploring potential strategies to address this important issue. we know that high - quality research can help us understand and address challenging issues, so i appreciate that we are joined by researchers and practitioners to discuss their work on this important topic. individual economic well - being and financial stability are often associated with access to stable, affordable housing. those at the lower end of the income spectrum tend to face the most acute hardships. we often find that renters face housing affordability challenges, in part because renters typically have lower incomes than homeowners. in addition, the median renter also tends to pay substantially more for housing as a percent of their income than many homeowners. as a result, they tend to have less room in their budgets for discretionary expenses, potentially leaving them more vulnerable to income disruptions or unexpected expenses. the most vulnerable populations faced significant risks going into the pandemic, but public policy interventions mitigated many of these risks. some of these policies will be discussed today. the job losses experienced during the pandemic and other economic disruptions exacerbated concerns about ongoing rent affordability and delinquency, but fortunately, those did not materialize. looking back, and with the goal of informing future policymakers facing similar circumstances, the pandemic experience provides a unique opportunity for housing researchers to gain valuable insight into the utility and efficiency of different policy actions. which programs were most effective in supporting renters throughout this period? were some more cost - effective than others?