community banks during the crisis actually may have done a better job of serving their local markets and maintaining lending standards. while this group of banks has a higher concentration of commercial real estate to capital, there is evidence that they are working effectively, and in some instances, more cooperatively than the largest banks with their borrowers to work out or reduce losses, based on their knowledge and active monitoring of customers. some of our largest banks would be well - served to take a lesson. it is also no coincidence that with breakdowns in other parts of the marketplace, a substantial portion of regional and community banks have increased their loans to businesses. during 2009, 45 percent of the banks with under $ 1 billion in assets increased their business lending. and while it may make some of the largest banks uncomfortable to hear this, regional and community banks have managed all this while operating at a competitive disadvantage. for it is the largest financial firms that have an implicit, recently made explicit, guarantee that taxpayer dollars will be used to protect them from failure, regardless of what risks they assume. it is only now that we are discussing legislation to address the issue of a special class of the largest firms that we have deemed too - big - to - fail. this is the one item that must be addressed if we are to have any real competitive equity among all financial institutions. what is proposed may need to be strengthened, but it is a start. let me end my remarks by quickly commenting on the federal reserve ’ s role as a supervisor of regional and community banks, something that will soon come under debate in the senate and perhaps again in the house. the strong opposition to removing the federal reserve from regional and community bank supervision, voiced by myself and others from the federal reserve, is not driven by the idea of simply protecting our “ turf ” or saving federal reserve jobs. the record very clearly shows that the federal reserve system has made important changes to its operations when such moves benefit the country as a whole regardless of the impact on the federal reserve. most notably, the federal reserve was among the strongest supporters of check 21 legislation, while realizing it would mean the eventual loss of thousands of federal reserve check processing jobs. the legislation improved the efficiency of our payments system, and while it was painful for me personally to see the elimination of hundreds of jobs in my district, it was a step we had to take to best serve the nation. in this case, however, serving the best interest of the nation does not mean reducing the federal reserve

historically large fiscal deficits and a very large debt level. without a dramatic change, the deficit and the debt will only become more daunting with the rising cost of entitlement programs and likely higher interest rates. for well over a decade, the u. s. consumer has been a principal source of world demand and economic growth. as a result, the united states has incurred consistently large trade deficits, contributing to imbalances in the global economy. as we have painfully learned from the housing bust, growth built on imbalances is ultimately unsustainable. circumstances require, therefore, that we transition from an economy that relies too heavily on consumption and government spending for growth toward more sustainable sources of bis central bankers ’ speeches demand and economic prosperity. how we undertake this transition will define our economy and country ’ s economic future. to start, over the next several years, we must change our national savings, consumption and investment habits. such shifts, though fundamental to long - term economic health, are admittedly difficult to accomplish. they require changes in behavior and expectations. they involve dramatic shifts in resource use, which are not painless as workers are temporarily displaced and industries are disrupted. the pain is immediate, and the payoff comes slowly. however, the gains also can be significant, as more sustainable long - run economic growth is well worth the effort and sacrifice. in a recent visit to singapore, i witnessed that nation ’ s commitment to job creation. for example, during the recent crisis and recession, singapore developed a program to retrain unemployed workers to ensure they would have the skills needed when its manufacturing sector recovered. as is well understood, workforce training matters. i spoke with individuals who described the drive to bring new factories on - line, with the goal of bringing a factory online with minimal delays and, by their description, without compromising safety. lessons from germany other countries have made similar changes out of necessity or during a time of economic distress such as we are experiencing today. countries have made deliberate choices and not relied on chance to change economic incentives and behavior that served to improve economic performance. i ’ m not advocating that we pick winners and losers – in fact, that is my biggest argument against too - big - to - fail financial institutions. rather, i have observed a number of countries that are building and expanding their manufacturing bases – such as korea, singapore and china – that have been able to experience strong gdp growth over long periods of time. germany offers another example