kevin m warsh : longer days, fewer weekends speech by mr kevin m warsh, member of the board of governors of the us federal reserve system, at the 12th annual international banking conference, chicago, illinois, 25 september 2009. * * * recent media stories and more substantial works chronicle in great detail the events of the past couple of years. 1 a pair of conclusions might be fairly drawn from these early drafts of history. one, the financial market turmoil of the past year proved to be of significant consequence to the economy. and two, the federal reserve distinguished itself from historical analogues by taking extraordinary actions to address risks to the economy. the commentary, however, tends to part ways as to whether the extraordinary actions undertaken were to the good or the detriment of the u. s. economy in the long - run. as my fellow members of the federal open market committee ( fomc ) and i stated earlier this week, economic activity has picked up, conditions in financial markets have improved further, and longer - term inflation expectations are stable. nonetheless, the second anniversary of the onset of the financial crisis – and about a year from the darkest days of the panic of 2008 – is no time to declare victory, scarcely the moment to hand out medals. 2 i cannot help but think of the strong but weary athlete who, after a morning swim, embarks upon a grueling cycling contest to a rising din of cheers and a smattering of boos … only to be reminded that he is participating in a triathlon, and that he has a long run still before him. in my view, it is unwise to prejudge the fed's policy strategy – or to declare the victor or the vanquished – by the split time, however notable it might be. we are at a critical transition period, of still unknown duration, and we must prepare diligently for an uneven road race ahead. if policy is not implemented with skill and force and some sense of proportionality, the success of the overall endeavor could suffer. judgments made by policymakers in the current period are likely to be as consequential as any made in the depths of the panic. that means policymakers should continue to communicate as clearly as possible the guideposts, conditions and means by which extraordinary monetary accommodation will be unwound, including the removal of excess bank reserves. 3 it also means that policymakers should acknowledge the heightened costs of policy error. the stakes are

humble but powerful emissary, defeated the evil king ravan of lanka and rescued his wife sita who had been abducted by ravan. upon ram ’ s return from exile, the people of ayodhya celebrated by lighting rows of deyas to welcome him back. this is perhaps the most common story of the origin of divali. last year, instead of going with the obvious, we chose the character hanuman for our divali program. in selecting hanuman, we realized there were themes and lessons in the ramayana that were very applicable to the central bank. we highlighted how like hanuman, central bank is a faithful servant to the people of our country. we highlighted how we diligently ensure their financial protection, no matter the size and ferocity of the ravans ( demons ) we take on. this year, we decided to continue with our exploration of the ramayana because it is my one intention that anyone attending our cultural programs should walk away with a greater appreciation and new found respect for whatever artform we are showcasing. bis central bankers ’ speeches so tonight when you leave here, no matter where you come from, i hope you are inspired not to see the ramayana as a deeply religious, complex hindu holy book, but a story poetically written that has at its heart the universal triumph of good over evil. tonight ’ s performance is entitled paanch kahani. it is hindi for five stories. we selected five stories from the ramayana because central bank is celebrating its 50th anniversary this december, and each story represents a decade in the bank ’ s life. the five stories to be performed by nrityanjali theatre are not the obvious divali stories with which many of us are familiar, but they are stories from the ramayana with powerful messages for central banking. the first story is about a lesser celebrated character in the ramayana, but incidentally the entire reason the epic ramayana was written. the first story is about shravan kumar. his life was one of devotion to his parents and this is what led to his death and triggered the chain of events that is the ramayana. the second story is about king dashrath whose karma and that of shravan kumar were inextricably linked. the third and fourth stories are about ram ’ s brothers, bharat and lakshman. the final story is about ram ’ s twin sons, luv and kush. shravan kumar ’ s story is applicable