the capital structure of the restructured firm. it is probably crucial that the post - bail - in capital structure provide enough loss - bearing capacity to make regeneration of the company's prospects credible. estimates of the market capacity to purchase bail - in eligible instruments relative to the amounts of such instruments that would be needed and the price sensitivity of markets to volume and financial institution credit quality. funding of the restructuring firm. the reactions of rating agencies and of customers either influenced by rating agency actions or subject to bylaws or guidelines. legal authority and enforceability across jurisdictions. the appropriate legal authorization not only needs to exist in each home country jurisdiction, but we also need proposed legal mechanisms to ensure that : – supervisors in other countries will not treat the triggering of bail - in as an insolvency event ; – supervisors in other countries will coordinate with the home country in exercising any supervisory trigger in their jurisdiction ; and – the company ’ s debt conversion will be honored in all jurisdictions ( through choice of law or other legal foundation ). i ’ ll conclude with the timing of the trigger. a key question is when such a mechanism has the greatest chance of success. in my personal view, it seems unlikely that the proverbial “ one minute to midnight ” is the right moment for action – by then most firms would face a severe shortage of liquidity and serious constraints in the ability to undertake new business. timing that is too early brings with it a host of repercussions and risks, of course. if i interpret a bail - in mechanism against the three - part supervisory program for troubled firms that i described at the beginning, conversion of debt to equity stakes is a mechanism to replenish capital, a critical element, but just one of the three key elements. the comparison suggests that the conversion of debt to equity by itself may not be sufficient and a fully developed proposal for a bail - in mechanism will need to include thorough identification and workout of problem assets and positions, as well as a revamped business plan that demonstrates the ability of the financial firm to return to profitability. a return to the issue of time let me conclude by returning to the theme of time. long - standing supervisory practice aims to intercept problems before they threaten the viability of a financial institution and to promote action by the firm ’ s directors and management while the firm still has the opportunity to recover. but supervisors will not always execute timely, successfully and in all necessary cases and financial firms will not always be able

adjusting our supervisory approach. 2 this includes, for example, monitoring and outreach to help banks of all sizes understand current challenges and risks ; a temporary reduction in exam activities, particularly for the smallest and lowest risk institutions ; and additional time to resolve non - critical existing supervisory findings. these actions should help financial institutions deploy their resources as efficiently as possible and continue to support their customers and local economies in a prudent and fair manner. on the regulatory side, the fed has taken a number of steps to encourage banks to use their balance sheet to support borrowers. for community banks, for example, the federal banking agencies are implementing the part of the cares act to lower the community bank leverage ratio. 3 4 in terms of liquidity provision, the fed has actively encouraged banks to use the discount window to help meet the demand for credit from household and businesses. 5 to make this more attractive, the fed has lowered the borrowing rate, extended the term of these loans, and actively signaled support for discount window use. the fed also implemented the paycheck protection program liquidity facility ( ppplf ). 6 this facility is designed to support the effectiveness of the paycheck protection program, created by the cares act and implemented by the small business administration ( sba ), by extending credit to financial institutions that make ppp loans. supplying financial institutions with additional liquidity will help increase their capacity to make ppp loans. in term of eligibility for participation in the ppplf, the federal reserve is working to expand eligibility to ppp lenders that are not depository institutions in the near future. 7 consumer protection https : / / www. newyorkfed. org / newsevents / speeches / 2020 / sti200424 1 / 2 panel remarks : the fed and main street during the coronavirus pandemic - federal reserve bank of new york the fed has emphasized the importance of consumer protection during this period. the federal banking agencies, for example, made clear that lenders and servicers should adhere to consumer protection requirements, including fair lending laws, and provide the opportunity for all borrowers to benefit from these arrangements. 8 the federal banking agencies have confirmed that in the context of the community reinvestment act, they willl favorably consider retail banking services and retail lending activities in a financial institution's assessment areas that are responsive to the needs of low - and moderate - income individuals, small businesses, and small farms affected by covid - 19 consistent with safe and