who helped make these companies highly successful. at their peak, these three companies alone employed roughly 20 percent of the rochester workforce. these workers developed innovative new products and processes, which often resulted in patents that remain valuable to this day. in many ways, rochester, and its skilled workforce, was ahead of its time. these companies, though, came under pressure in the 1980s as a result of rapid technological changes and increased global competition. as their employment began to decline, some workers left the area while others remained. indeed the legacy of the “ big 3 ” lies not in what was lost, but in what remains in the skills and entrepreneurial spirit of the many talented people that are here today. some of these talented people started their own companies, while others found different ways to contribute their unique talents to the local economy. as a result, rochester continues to reinvent itself, and is now much more diverse, with an employment base that is no longer concentrated among a few large manufacturers. the top employers in the region, like the university of rochester and rochester institute of bis central bankers ’ speeches technology ( rit ), wegmans, the rochester general health system and paychex, just to name a few, perform a variety of activities, from health care and education to consumer and business services. the process of reinvention and economic diversification, in part, allowed the region to better weather the storm of the great recession compared to past economic recessions. for rochester, the downturn was both shorter and less severe in terms of job loss than for the nation as a whole – a situation quite different from what had occurred before. though it still lags the nation, the rochester area has continued to grow at a solid pace through the recovery. this is no small feat, and it certainly is not true for all of upstate new york. for example, the recovery has been much more sluggish in syracuse and utica, and binghamton has yet to see any meaningful recovery. despite rochester ’ s relatively favorable economic performance in recent years, the region ’ s job base is actually slightly lower today than it was at the start of this century. while at first blush it may seem that such a statistic indicates a stagnant economy, that couldn ’ t be further from the truth. when you look deeper, you see an economy that has been very active and dynamic in a number of respects. while some parts of the economy have declined, other areas have grown to fill in

basis, whether or not they happen to be affiliated with a bank. to minimize regulatory burden and avoid duplication, the twotiered framework of umbrella supervision of financial holding companies and functional regulation of their subsidiaries requires enhanced cooperation and coordination among federal and state supervisory authorities. efforts are well underway among the relevant federal and state financial services authorities to establish agreements and procedures to effectively implement congress ’ mandate. before moving on, i want to address the topic of community reinvestment in the context of grammleach - bliley. as you may be aware, over the course of debating and negotiating the details of the act, some members of congress wanted to strengthen cra requirements, while others wanted them rolled back. in the end, of course, the two sides compromised. some have argued that those desiring to weaken cra prevailed because, among other things, the act extends the interval between compliance examinations for highly rated institutions. i disagree with this perspective. under the new law, bank holding companies cannot become financial holding companies or engage in any financial activities newly authorized by the act unless all of their depository institutions have cra ratings of satisfactory or better. and should any depository institution subsidiary of an approved fhc subsequently fail to maintain a satisfactory cra rating, the fhc would be prohibited from commencing any new financial activities. in this way, the act extends the ramifications of poor cra performance to potential nonbank activities. it also provides powerful incentives for expansionminded companies to achieve and maintain at least satisfactory cra ratings. in my view, this amounts to a reaffirmation of the key principles of the community reinvestment act. revision of the 1988 basel accord let me move on to the basel committee ’ s major initiative to revise the capital accord. the primary tool of capital regulation currently is the set of minimum ratios that were devised in 1988 by the basel committee on banking supervision, which i have the honor to chair. without question, the accord was a milestone achievement - for the first time, supervisors in g - 10 countries were able to use a common yardstick for assessing banks ’ capital adequacy. but the accord has a number of serious shortcomings. it does not adequately differentiate among degrees of credit risk and, as a result, banks have had incentives to take on higher risk exposures within broad risk categories. banks have also tended to engage in transactions that lower regulatory capital requirements without reducing economic risk. for example, through asset sec