it will be impractical to implement. this has led to the consideration of a dual or bifurcated approach to capital that parallels our approach to supervision. such an approach would recognize the potential tension between the complexity and cost of the next version of the international capital standards and the more limited needs of smaller, more traditional banks. implementing a second, more streamlined capital adequacy standard for qualifying domestic institutions would seem to have merit. discussions on such an approach are only preliminary, but the arguments for continuing to more fully calibrate our supervisory and regulatory approaches to the nature and risk profiles of the institutions we supervise are compelling. capital standards and the supervisory process are two of the three key tools regulators use to get their job done. the third tool, disclosure, holds promise for yielding benefits to our financial system both domestically and globally. in past decades, the business of banking was fairly opaque but straightforward, with banking risks largely embedded in the credit judgments inherent in the loan portfolio. today, with the explosion in financial innovation that has created various derivative, securitization, insurance, and other structured products and the greater diversity in activities permitted by the gramm - leach - bliley act, not only are risks more opaque, but even when revealed, sometimes difficult to interpret. fortunately, the same technology and financial techniques that have created this added complexity can also be harnessed to produce more meaningful disclosures that allow markets to analyze risks and exert discipline on those that would take on imprudent levels of exposure. while not a panacea, improved disclosure can complement the supervisory process and regulatory capital, and obviate more intrusive investigations, holding out the promise of less supervisory intervention. recently, the federal reserve, in collaboration with the securities and exchange commission and the office of the comptroller of the currency, established a private - sector working group to review industry best practices and develop options for improving the public disclosure of financial information by large, complex banking and securities organizations. enhanced disclosures are also being pursued through regulatory reporting. a proposal to be released shortly will eliminate less meaningful items on the call report and request additional information on activities of growing significance for some institutions, including loan servicing, securitizations, venture capital, and insurance. more relevant regulatory disclosures should not only improve transparency but should also help our off - site monitoring and tailoring of our supervisory program. in closing then, we live in a fascinating period in american history, in which rapid

, home - ownership rates among blacks rose from 43 % in 1995 to 48 % in the first quarter of 2000, suggesting that some progress has been made in access to credit for minorities. although breaking down the barriers that have produced disparities in income and wealth is not simple, promoting equal access to credit for sound borrowers is one step in the right direction. as i have said previously, discrimination is against the interests of business - yet business people too often practice it. to the extent that market participants discriminate, they erect barriers to the free flow of capital and labor to their most profitable employment, and the distribution of output is distorted. in the end, costs are higher, less real output is produced, and national wealth accumulation is slowed. by removing the non - economic distortions that arise as a result of discrimination, we can generate higher returns to both human and physical capital. banking and other lending organizations that develop expertise to tap, educate, and encourage underserved customers are likely to provide better and more informed access to credit and expand profit opportunities. in that regard, many banks are well equipped to tailor their services to individual customer circumstances in a personalized setting and to educate customers about various products and services that could help them achieve their financial goals. in today ’ s more complex world, the diversity of financial product choices facing consumers is truly astonishing. similarly, banks are now also facing much broader choices, especially when one considers the opportunities presented by the passage of the gramm - leach - bliley act. by modernizing our banking laws and making them more consistent with marketplace realities and the needs of consumers, the financial services industry will be able to grow and innovate with far fewer artificial constraints. how various financial service providers choose to take advantage of the act will be one of the more interesting dynamics as our financial system evolves in the years ahead. clearly, many franchises can succeed by continuing to focus on traditional banking. organizations that decide to depart from past successful strategies by expanding into new activities should do so only after careful consideration. as of mid - may, 270 domestic banking organizations and 17 foreign banking organizations had filed to become financial holding companies. of those, roughly three - quarters had less than one billion dollars in assets. i suspect that many of these organizations are not intending to immediately launch into full - scale brokerage, venture capital, or insurance activities, but rather are looking to keep their options open and retain flexibility should opportunities present themselves. if true, that