that system are fully meeting their capital requirements. in these circumstances, having a highly variable capital requirement presents a significant management challenge. we are considering ways of preserving the dynamism of stress testing while reducing its volatility, and plan to seek comment on a proposal in this area in the not - too - distant future. in addition, we are also exploring ways of improving our approach to measuring risks in the trading book. firms'trading books are dynamic and complex, as firms hold both long and short positions. many have noted that a single market shock does not adequately capture risks in firms'trading book, and we agree with those comments. we are exploring ways to incorporate multiple market shocks in our stress test without adding volatility to the results and without increasing the compliance burden. we are also considering adjusting another element of the scb proposal in order to provide more notice to firms. currently, and under the scb proposal, a firm must decide whether to increase or decrease its planned dividends and share repurchases for the upcoming year without knowledge of a key constraint : the results of the stress test. in other words, we require a firm to give us a formal plan for dividends and stock repurchases without knowing what its effective capital requirement is. if it guesses wrong, it could be publicly shamed for failing the stress test ( if its dividends are too high relative to capital ), or penalized in the markets for inadequate distribution of income ( if its dividends are too low relative to capital ). now, while this might at first blush appear to be pointless and obdurate cruelty, the reasoning behind the practice was initially perfectly sensible : it reflected the view that firms should think rigorously about their capital uses and needs in developing their capital distribution plans, rather than rely primarily on the results of the supervisory stress test to guide those plans. now that we all have several years'experience with this system, however, firms have told us that they would be able to engage in more thoughtful capital planning if they had knowledge of that year's stress test results before finalizing their distribution plans for the upcoming year. i am sympathetic to their concerns, and will ask the board to adjust the operation of the rule so that firms know their scb before they decide on their planned distributions for the coming year. this adjustment in sequence will also help firms manage volatility in the scb. we expect firms to continue to maintain robust stress testing practices and use

in broad terms, the basic structure of higher education remains much the same today, and it has been one that has proven sufficiently flexible to respond to the needs of a changing economy. certainly, if we are to remain preeminent in transforming knowledge into economic value, the u. s. system of higher education must remain the world leader in generating scientific and technological breakthroughs and in preparing workers to meet the evolving demands for skilled labor. however, the pressure to enable all workers to benefit from the new technologies also requires that we strengthen the significant contributions of other types of training and educational programs, especially for those with lesser skills. the notion that formal degree programs at any scholastic level or that any other training program established today can be crafted to fully support the requirements of one ’ s full working life has become subject to increasing doubt. it is evident that we need to foster a flexible education system – one that integrates work and training and that serves the needs both of experienced workers at different stages in their careers and of students embarking on their initial course of study. community colleges, for example, have become important providers of job skills training not just for students who may eventually move on to a four - year college or university but for individuals with jobs – particularly workers seeking to retool, retrain, or simply to broaden their skills. the increasing availability of courses that can be taken “ at a distance ” over the internet means that learning can more easily occur outside the workplace or the classroom. economists have long argued that a significant proportion of the work knowledge that one acquires in a lifetime is produced on the job. several decades ago much of that on - the - job training was acquired through work experience. today, businesses and labor unions are placing greater emphasis on the value of formal education and training programs – ranging from corporate universities to partnerships with community colleges and other providers – as well as relationships with public agencies, including welfare - to - work and school - to - work programs. these efforts recognize that technologically advanced learning must be grounded in real - world curriculums that are relevant to changing business needs and that it be provided in flexible venues that open access to development of skills to as many workers as possible. meeting the complex range of skills likely to be required of our workforce in the future presents a significant challenge to our educational system. but it is a challenge we cannot afford to ignore. we must provide young people with the opportunities and incentives to learn. we must ensure that our population at all