kulkarni and hyun song shin. “ dividends and bank capital in the financial crisis of 2007 – 2009, ” nber working papers 16896, national bureau of economic research, 2011. 4 beverly hirtle. “ bank holding company dividends and repurchases during the financial crisis. ” federal reserve bank of new york staff report no. 666, march 2014. 5 viral acharya, robert engel and matthew richardson. “ capital shortfall : a new approach to ranking and regulating system risk. ” american economic review, 102 ( 3 ) ( 2012 ), pp. 59 – 64. 6 the 9 - quarter, rather than two year, horizon provides a two year forward horizon after the one - quarter gap between the “ as of ” date of the stress test and when robust data on banks ’ balance sheets, off - balance sheet exposures, and income are available. 7 / 8 bis central bankers'speeches 7 european banking authority. “ 2018 eu - wide stress test : methodological note. ” november 17, 2017. www. eba. europa. eu / documents / 10180 / 2106643 / 2018 + eu - wide + stress + test + - + methodological + note. pdf 8 see, for instance, international monetary fund. global financial stability report. april 2009. www. imf. org / en / news / articles / 2015 / 09 / 28 / 04 / 53 / sores042109c 9 board of governors of the federal reserve system. 2009. “ supervisory capital assessment program : overview of results. ” may 7, 2009. www. federalreserve. gov / newsevents / files / bcreg20090507a1. pdf 10 the exception to this approach is for the global market shock on trading and counterparty positions, which is assumed to occur instantaneously in a single quarter. 11 sales, purchases and acquisitions that have been contractually agreed by but not consummated by the start of the stress test are incorporated into the projections, however. 12 board of governors of the federal reserve system. “ dodd - frank act stress test 2018 : supervisory stress test methodology and results. ” results - 20180621. pdf. june 2018. www. federalreserve. gov / publications / files / 2018 - dfast - methodology - 13 daniel k. tarullo. “ stress testing after five years. ” remarks at the federal reserve ’ s third

culture is needed in order to measure progress. i proposed an industrywide survey, but there may be other good alternatives. once again, i invite the industry to take the initiative on these issues, and to look to the public sector for support. i also hope that we will attend to issues that we may have overlooked in our earlier discussions. gillian tett of the financial times argues in her new book, the silo effect, that the key to understanding any culture is identifying and explaining “ social silences " — the issues that are not being discussed. 6 where do we encounter those issues in reforming the culture of financial services? one place might be the role of investors in firms. are their expectations of returns reasonable and consistent with a trustworthy financial services industry? another place might be the boardroom. boards should establish and promote a culture based on ethics and respect for law. have boards risen to this challenge? if not, what ’ s needed? and, going forward, are we thinking hard about how technological change will influence incentives, behavior and culture? we ’ ll hear these issues discussed in several panels today. these issues require thoughtful reflection by the industry. the need for reflection, though, is not limited to boards, or even to banks. regulators and bankers alike can benefit from such a habit. in that vein, i want to share with you an everyday checklist proposed by ignazio angeloni of the european central bank. 7 he has posed six questions that seek to make responsibility for culture both individual and routine : are you doing what you promised to do? are you using your best knowledge and intention in doing it? are you doing what public authorities, superiors, colleagues and business partners expect you to do, and if not why? are you conforming to the mission and the values of your company, as they are publicly 2 / 3 bis central bankers'speeches stated? will your actions enhance public confidence in your company and in the financial sector? finally, and crucially, would you behave similarly if your actions were publicly observed? i suspect that while seemingly simple, the discipline of asking ourselves these questions on a regular basis and answering them thoughtfully and honestly may be more challenging, thought provoking and effective than one might initially think. i thank the staff at the new york fed who put together today ’ s program, and their colleagues who are in the audience and watching today. the diverse professional training and experience of our staff are among the new york fed ’ s strengths. bank