regulators of internationally active banks. soon, the european union is likely to assume this privilege as well. we understand that any requirements we impose on foreign banks operating in the united states may well be imposed on u. s. firms operating abroad. in addition, we are operating under a veil of ignorance, as we don ’ t know whether the next firm in distress will be a u. s. firm operating globally or a foreign firm with u. s. operations. this provides us with strong incentives to view the risks from both sides. - 5as the home regulator to u. s. global systemically important banking organizations ( gsibs ), we and the federal deposit insurance corporation ( fdic ) have used the living wills process to set the expectation that a firm appropriately balance prepositioned and centrally managed resources. 2 this expectation is based on the premise that the optimal balance will depend on factors such as the firm ’ s structure and the host jurisdictions in which the firm operates. as such, the board and the fdic have asked u. s. g - sibs to analyze and anticipate capital and liquidity resources needed to ensure the continued operation of material entities in resolution. regarding capital, the positioning of a u. s. g - sib ’ s internal total loss absorbing capacity ( tlac ) should reflect a balance of certainty - - prepositioning internal tlac directly at material entities - - and flexibility - - holding recapitalization resources at the parent, known as contributable resources - - to meet unanticipated losses at material entities. 3 regarding liquidity, the board and fdic expect a u. s. g - sib to appropriately estimate and maintain sufficient liquidity for material entities, an expectation known as resolution liquidity adequacy and positioning, or rlap. 4 rlap expectations are intended to be designed so that liquidity is not “ double counted ” among home and host jurisdictions, to provide transparency into the location of liquidity across the firm ’ s material entities, and to ensure that liquidity can flow where needed with minimal potential disruption. the rlap approach is section 165 ( d ) of the dodd - frank wall street reform and consumer protection act requires a large firm to submit an annual resolution plan, or living will, that describes the company ’ s strategy for rapid and orderly resolution under bankruptcy in the event of material financial distress or failure of the company. if the federal reserve

for release on delivery 12 : 50 p. m. edt september 27, 2021 navigating delta headwinds on the path to a full recovery remarks by lael brainard member board of governors of the federal reserve system at “ shocks, shifts, and the emerging economic landscape ” 2021 annual meeting of the national association for business economics arlington, virginia september 27, 2021 it is a great honor to join the community of nabe fellows, and i want to express my appreciation to the board of directors of nabe. 1 given the unprecedented nature of the pandemic shock, it should be no surprise that the recovery is not proceeding in a straight line. the economy continues to make welcome progress, but the delta variant has been more disruptive than initially expected. the headwinds from delta are a reminder that the virus continues to pose downside risks to the outlook. delta highlights the importance of being attentive to economic outcomes and not getting too attached to an outlook that may get buffeted by evolving virus conditions. indeed, delta disrupted both demand and supply. many forecasters have downgraded consumer spending in the second half of the year, as delta has limited the acceleration in services spending that had been anticipated to help offset the drag on activity from fiscal support shifting from being a tailwind to a headwind. although the retail sales print for august was stronger than expected, the level of spending in august was not much changed from june. high - frequency data indicate that consumption of discretionary services, such as restaurants and travel, stalled or may have even moved lower in some categories since july. this development doesn ’ t appear to be sensitive to regional variations in vaccinations, perhaps reflecting the high transmissibility of delta. for example, the consumption of food services has declined recently even in states with relatively high vaccination rates and low case counts. 2 i am grateful to kurt lewis of the federal reserve board for his assistance in preparing this text. these views are my own and do not necessarily reflect those of the federal reserve board or the federal open market committee. reflecting these trends, consumer confidence declined in the michigan and conference board surveys in august. for more information on the university of michigan survey of consumers, see https : / / data. sca. isr. umich. edu / survey - info. php. for more information on the conference board consumer confidence survey, see https : / / conference - board. org / data / consumerconfide