” remarks at the quarterly regional economic press briefing, new york city. august 12. bis central bankers ’ speeches current with their payments – using the special consumer credit panel we developed. the report for the second quarter of this year was just released on monday. 3 families in new jersey are reducing their debt levels. as of the second quarter of this year, for those people with a credit report, average debt per person was about $ 60, 400 down from $ 63, 000 three years ago. but the crisis has taken its toll. delinquency rates on the debt are high : 7. 4 percent of all debt in the state is seriously delinquent, roughly the same rate as the nation. the comparable figure for the state just three years ago was 4. 1 percent, so, like the nation, households in the state still appear to have a considerable way to go before they reach more comfortable debt levels. while there have been indications that home prices in the area have been firming in the past few months, the mortgage crisis continues to take a toll on new jersey homeowners. as of march of this year, 10 percent of all borrowers in the state were either 90 - plus days delinquent on their mortgages or their homes were in foreclosure – above the national rate of 7. 7 percent. in essex county, that rate had reached 16 percent, and in newark it was 30 percent. in our recent small business survey, which we conducted in may, we asked firms to report on their first quarter sales and their future outlook. the results were encouraging. over twothirds of firms told us they had stable or increased sales in q1, up from 50 percent last year. when asked about their future outlook, while the majority of business owners, 56 percent, were neutral – many more said they were optimistic than pessimistic – 37 percent compared with only 7 percent. conclusion these debt and delinquency figures, together with the weak jobs picture, suggest that new jersey faces a number of challenges. in the near term, the key issue will be to expand jobs and reduce unemployment. at this point it is difficult to say when the pace of recovery in the state will pick up, but several factors appear encouraging. a continued expansion of output and employment nationally would clearly help to expand activity and employment in a number of industries in the state, including professional and business services and the goods distribution industries. also, the pace of contraction in

s. and overseas, we hope to broaden the understanding of the role and objectives of supervision. the goal is to spur conversation and new research on what supervision should be trying to achieve and the best means for achieving those ends. just as important, we want to generate ideas for how to better assess the effectiveness of supervisory activities. in a world of limited resources, how do we deploy our people and technology in the most effective way to limit disruption and distress at individual firms and to the financial system, while still fostering an efficient and innovative financial system? in considering these questions, a good starting point is to understand more fully what supervisors do and how they do it in the current environment. the papers that are being presented here today are largely aimed at achieving this goal. as described in the first paper – “ supervising large, complex financial institutions : what do supervisors do? ” – bank supervision has long been an integral component of the federal reserve ’ s beverly hirtle, david lucca and joseph tracy assisted in preparing these remarks. bis central bankers ’ speeches responsibilities. at a broad level, federal reserve supervision of large financial institutions is guided by two key objectives : “ enhancing the resiliency of a firm to lower the probability of its failure or inability to serve as a financial intermediary [ and ] reducing the impact on the financial system and the broader economy in the event of a firm ’ s failure or material weakness. ” 2 in addressing these objectives, bank supervisors enforce laws and regulations, but there is much more to supervision than just enforcement. the activities and practices at large, complex financial organizations are simply too intricate and evolve too quickly to be fully described ex ante in regulation. banking supervision works in concert with regulation as the more flexible element of banking policy. supervisory policy and standards can, and do, evolve over time to reflect the evolution in practice in the banking industry and in financial markets. overall, supervisors are guided by the mandate to identify any practices or conditions at supervised firms that are a threat to the safety and soundness of those firms – and, of course, to ensure that the firms take all necessary steps to promptly remediate any such conditions. critically, the definition of what constitutes “ safe and sound ” is not hard - coded into regulation, but is guided by the information and analysis done by supervisors and other federal reserve staff, such as economists, attorneys and market analysts. supervisory expectations and standards are expressed through public guidance such as supervision and regulation letters ( sr letters