i would suggest that exempting them from volcker compliance and resolving issues through the supervisory process would be a more effective use of bank and supervisory resources. see board of governors, fdic, and occ ( 2013 ), “ the volcker rule : community bank applicability ( pdf ), ” december 10. see 12 cfr part 225, appendix c, www. gpo. gov / fdsys / pkg / cfr - 2014 - title12 - vol3 / pdf / cfr - 2014 - title12 - vol3part225 - appc. pdf. bank holding companies with less than $ 500 million in assets may still be required to file regulatory reports with the same detail and frequency as larger bank holding companies if they meet certain criteria that are set forth in the instructions for the federal reserve fr y - 9sp and fr y - 9c regulatory reports or to otherwise meet supervisory needs. bis central bankers ’ speeches excessive debt. similarly, because most bank holding companies under $ 1 billion have limited activities outside of their banks, and we will still receive detailed quarterly bank data, the reduced regulatory reporting requirements for qualifying holding companies should not be problematic for supervisors. of course, the policy statement was issued by the board and thus one might think the board could raise the threshold on its own. however, the collins amendment to dodd - frank 19 effectively eliminates any authority of the board to extend the capital treatment in the policy statement to holding companies with assets greater than the threshold in effect on may 19, 2010, or to savings and loan holding companies of any size. thus, we would need legislative action to effect these changes. tiered supervision federal banking regulators have long organized supervision into portfolios of institutions based predominantly – though for larger firms, not exclusively – on asset size. various provisions of dodd - frank motivated the federal reserve to modify the composition of the portfolios somewhat. we have four such groups : ( 1 ) community banks, ( 2 ) regional banking organizations, ( 3 ) large banking organizations, and ( 4 ) firms overseen by the large institution supervision coordinating committee ( liscc ). 20 this arrangement is not simply a matter of organizational convenience. nor is it only a means for promoting consistency of treatment among similar banks throughout the federal reserve system, important as that goal is. as with tiered regulation, this tiered approach to supervision is intended to take account of differences in business models, risks, relative regulatory burden, and other salient

core of the financial system is now much stronger and more resilient than before the crisis. all of that said, i would also agree that monetary policy may sometimes face tradeoffs between macroeconomic objectives and financial stability. indeed, it would be a divine coincidence if that were not the case. there are times when all of these objectives are aligned. for example, the fed ’ s initial unconventional policies supported both market functioning and aggregate demand. more broadly, post - crisis monetary policy supported asset values, reduced interest payments, and increased both employment and income. all of these effects are likely to have limited defaults and foreclosures and bolstered the balance sheets of households, businesses, and financial intermediaries, leaving the system more robust. but at times there will be tradeoffs. low - for - long interest rates can have adverse effects on financial institutions and markets through a number of plausible channels, as listed on the next slide. 8 after all, low interest rates are intended to encourage some risk - see adrian and liang ( 2014 ). - 5taking. 9 the question is whether low rates have encouraged excessive risk - taking through the buildup of leverage or unsustainably high asset prices or through misallocation of capital. that question is particularly important today. historically, recessions often occurred when the fed tightened to control inflation. more recently, with inflation under control, overheating has shown up in the form of financial excess. core pce inflation remained close to or below 2 percent during both the late - 1990s stock market bubble and the mid - 2000s housing bubble that led to the financial crisis. real short - and long - term rates were relatively high in the late 1990s, so financial excess can also arise without a low - rate environment. nonetheless, the current extended period of very low nominal rates calls for a high degree of vigilance against the buildup of risks to the stability of the financial system. if we look at the channels listed here, the picture is mixed, but the bottom line is that there has not been an excessive buildup of leverage, maturity transformation, or broadly unsustainable asset prices. low long - term interest rates have weighed on profitability in the financial sector, although firms have so far coped with those pressures. as shown in the next slide, net interest margins ( nims ) for most banks have held up surprisingly well. nims have moved down for the largest banks. return on assets, shown to the