fellow board members and i know that community banks provide essential financial services to households, small businesses, and farms in communities throughout the country. we know that community banks serve many customers that large banks do not and provide services that are not offered by large banks in many communities. this circumstance is especially true in rural areas and other small communities, where community banks are sometimes the only retail financial institutions. we understand that community bankers serve members of their local communities who are not just their customers, but also their neighbors and their friends. we know the strong links these banks have to the people and businesses in their communities provide firsthand knowledge of local economic conditions. my colleagues on the board understand, as i do, that these close ties give community bankers special insight and understanding into local needs so that they can tailor their products and services to meet those needs. although community banks largely kept to their traditional business model of prudent, local lending and avoided the excessive risk - tasking that helped fuel the financial crisis, that crisis, and the deep recession that followed, devastated many communities and the banks that serve them. the significant improvement in the economy since then has helped communities bis central bankers ’ speeches and community banks, but i am well aware that the challenges for this sector continue, and my board colleagues understand this also. we know and appreciate these concerns because the board makes it our business to regularly and extensively meet with and talk to community bankers and industry leaders. the board of governors meets twice a year with the community depository institutions advisory council, which includes representatives of community banks, thrifts, and credit unions in each of the 12 federal reserve districts. 1 the board also has a subcommittee on smaller regional and community banking, headed by governor powell and including governor brainard. 2 let me also say that the experiences, aspirations, and challenges of community banking are not new to me. before i became chair of the board of governors and vice chair before that, i spent six years as president of the san francisco fed. in this role, i was responsible for the supervision of a substantial number of community banking organizations in the nine states of the 12th district. among the things i learned from that experience is that, when it comes to bank regulation and supervision, one size does not fit all. to effectively promote safety and soundness and ensure consumer compliance without creating undue regulatory burden, rules and supervisory approaches should be tailored to different types of institutions. that is why the congress chose to exempt community banks from many aspects

prices, rationing, time - of - day metering, or voluntary restraint, electricity prices will remain unstable and ready availability of power will be uncertain. this is a worrisome situation for californians, certainly ; and because the state comprises one - eighth of our national gdp, it should be a concern for the u. s. economic outlook as well. fortunately, the overall effects on the california economy, and on those of its neighboring states seems to have been modest, at least to date. the short - term energy problems we are experiencing for gasoline, natural gas, and electric power will be resolved, one hopes, without any further adverse impact on our economy. nonetheless, the developments of the past couple of years have brought renewed attention to the longer - run prospects for energy markets in the united states. in making any assessment of those prospects it is important to recognize the extent to which market mechanisms have helped to overcome earlier apparent limitations on resources. largely in response to past oil price increases, the energy intensity of the united states economy has been reduced by almost half from the levels of the early 1970s. much of the energy displacement was accomplished by 1985, within a few years of the peak in the real price of oil. progress in reducing energy intensity has proceeded further since then but at a lessened pace. this more modest pace should not be surprising, given the generally lower level of real oil prices that has prevailed since 1985, and which carried over into natural gas and electric power prices. what has changed dramatically in recent years is the production side of the oil and gas markets, where technological changes are taking place that are likely to make existing energy reserves stretch further while keeping long - term energy costs lower than they otherwise would have been. the development of seismic techniques and satellite surveillance to discover promising new oil reservoirs has roughly doubled the drilling success rate for new - field wildcat wells during the past decade. new techniques facilitate far deeper drilling of promising pools, especially offshore. the newer recovery innovations reportedly have raised the proportion of oil reserves eventually brought to the surface from one - third to nearly one - half in recent decades. one might expect that, as a consequence of what has been a dramatic shift away from the hit - or - miss wildcat oil and gas exploration and development of the past to more advanced technologies, the cost of developing new fields and, hence, the long - term marginal costs of new oil and gas would have declined. and, indeed, these costs have declined, but by less