environment would be large. because you can read press releases to learn our policy stance rather than the pattern of reserve additions or drains, there is much less chance for confusion. for pricing any instrument beyond overnight, market participants apparently find the intended federal funds rate to be more informative than the noisy effective federal funds rate. nonetheless, it would be helpful to prevent a further increase in the volatility of the effective federal funds rate that might result from a further sweep - induced decline in required reserves. and a means is available to the congress today to accomplish that end : the federal reserve should be permitted to pay interest on reserves. as it stands now, depositories resort to complicated means to evade our reserve requirements - - such as retail sweeps - because our reserves are sterile and to do less would put them at a competitive disadvantage in a market where profit margins are paper thin. by paying interest on reserves, the incentive to engage in sweeps would be sharply reduced and the practice would likely diminish over time, if not end entirely. as a result, bankers could devote their attention to more productive pursuits, and reserve markets would be easier to read. conclusion i can assure you that i view financial markets as a national resource. to be sure, they do not light the way to proper policy making as perfectly as true believers may assert. but there is information to be gotten, and it has been my experience that policy makers do try to extract it. for our part, we will try to preserve those benefits. for your part, the private open market committee does public good - - even if it is the by - product of the pursuit of personal profits - - when it views policy making with a skeptical eye. after all, it is only the best of friends who have the courage to point out the most sensitive of faults.

lending as liquidity dried up. 3 in the immediate aftermath, despite a substantial reduction in jumbo lending as a share of the overall mortgage market, the data indicate that the share of community bank jumbo mortgage lending held steady. such lending actually increased at community banks that were not dependent on correspondent banking and at those that were sufficiently well capitalized and more profitable. and, by their sheer numbers and their central role in local communities, these banks are vital and competitive players in a highly diverse landscape for financial services. they often provide competitive options where none would otherwise exist, thereby lower borrowing costs for businesses and consumers. whether we single them out for special advantage is a question for legitimate debate. what i do know is that what we most certainly should not do is hinder them from engaging in a fair fight. the post - crisis regulatory landscape this brings me to regulatory policy. one of the questions i am most frequently asked when i speak to audiences like this one is, “ what on earth is going on in washington these days? ” well, there certainly is a lot going on. right now, among some other things, federal regulators are working to build out hundreds of requirements laid out by congress in the dodd - frank wall street reform and consumer protection act. and, in the midst of this complicated rule - writing effort, there is a renewed debate over whether these requirements are sufficient to end too - big - to - fail. regulators are also continuing to oversee improvements to the operational problems in the massive numbers of foreclosures in the wake of the financial crisis and exploring the risks to financial stability that may persist in the differentially regulated parts of our financial system. this is all necessary work, and it is appropriately getting significant attention from officials at the highest levels in multiple agencies. uses to define community banks. and the vast majority of these ( 91 percent of all insured commercial banks ) are much smaller as of that date, with less than $ 1 billion in total assets. to highlight the importance of such research, the federal reserve system and the conference of state bank supervisors will host a conference on “ community banking in the 21st century “ at the federal reserve bank of st. louis on october 2 – 3, 2013. see paul calem, francisco covas, and jason wu ( 2011 ), “ the impact of a liquidity shock on bank lending : the case of the 2007 collapse of the private - label rmbs market ( pdf ), ” ( washington : board of governors of