kevin stiroh : introductory remarks at 2017 community bankers conference introductory remarks by mr kevin stiroh, executive vice president of the financial institution supervision group of the federal reserve bank of new york, at the 2017 community bankers conference, federal reserve bank of new york, new york city, 6 april 2017. * * * introduction good morning. i ’ d like to welcome you to the 2017 community bankers conference. the federal reserve bank of new york is pleased to once again host this conference and to continue to foster a robust dialogue on key industry trends and supervisory issues affecting community banks. in addition to about 130 representatives of community and smaller regional banks in the second district of the federal reserve system, we are happy to welcome fellow supervisors from the states of new york, connecticut and new jersey ; representatives of the fdic and the occ ; and colleagues from the board of governors and philadelphia, cleveland, chicago and atlanta federal reserve banks. in all, we have record attendance with 178 participants. as in past years, our goal for this conference is to promote a constructive dialogue between senior managers and directors of smaller financial organizations in our district and federal and state supervisors. this type of constructive engagement helps us reach our shared objective of resilient financial institutions operating in a safe and sound financial system that supports the growth and stability of the u. s. economy. during my brief remarks this morning, i ’ d like to highlight three related topics that i believe are relevant to you as community bankers : the critical role that community banks play in the u. s. economy, particularly at the local level ; trends in small business lending ; and recent efforts to enhance the efficiency of the regulatory and supervisory framework. my comments today are my own and do not necessarily represent those of the federal reserve bank of new york or the federal reserve system. the critical role of community banks let me begin with some thoughts on what we seek to achieve through supervision. a core objective for safety and soundness supervision is to ensure that supervised entities are resilient. that is, a firm should be able to continue to operate and provide financial services across a wide range of economic and financial conditions. supervisors and regulators can support this objective through our focus on stronger capital and liquidity, comprehensive risk management and robust governance and controls. all of this makes firms resilient to unexpected shocks and allows them to continue to serve their customers and communities. resilience, however, is not the end objective. rather, we seek to ensure that banks of all

“ [ w ] ithin our mandate, the ecb is ready to do whatever it takes to preserve the euro ”. 2 whenever i have referenced president draghi ’ s “ whatever it takes ” statement, antonio is quick to note that president draghi, unlike chairman bernanke, appended a forecast to his version of “ whatever it takes ”. he assured everyone that “ it will be enough ”. now this audience of lawyers will pay special attention to both quotations, because each notes that the central bank must act within the bounds of its legal authority. it is not simply “ whatever it takes ” come hell or high water ; it is “ whatever it takes ” within the central bank ’ s mandate, thereby turning attention to the limits set by the substantive law. the bernanke and draghi statements are consequential not only because they highlight objectives of critical importance to each central bank, namely financial stability for the federal reserve and preservation of the euro for the ecb. the statements also highlight that the central bank ben s. bernanke, chairman, board of governors of the federal reserve system, speech at the national press club luncheon, february 18, 2009. mario draghi, president of the european central bank, speech at the global investment conference in london, july 26, 2012. bis central bankers ’ speeches objective is to be achieved within the boundaries set by the rule of law. who is it that is called upon to declare and interpret the boundaries of the central bank mandate? it is the central bank ’ s legal counsel. i am asked periodically about the legal basis for the federal reserve ’ s financial stability objective. students of the federal reserve read our nearly 100 - year - old enabling statute, the federal reserve act, and cannot find the words “ financial stability ” anywhere in the act. how, then, can financial stability be a part of the federal reserve ’ s mandate? my response is that you do not need to see the words “ financial stability ” in the federal reserve act for that to be a key part of our mandate. the federal reserve ’ s financial stability mandate is seen in the penumbra of the federal reserve act, and that is legally sufficient. without trying to cover this important topic exhaustively as in a formal legal opinion or a brief filed with a court, let me outline here the essence of the analysis. the starting point in every discussion of the federal reserve ’ s mandate is section 2a of the federal reserve act, known