of consumers. studies have shown that if borrower income is held constant, loan features do matter to the successful repayment of a loan. so i hope we have learned that misaligned incentives that result in harm to consumers have implications for the economy overall. if we recognize this, then we must also recognize that consumer protections cannot be viewed as an ancillary component of a scheme to regulate for safety and soundness. rather, they are fundamental to the quality of the credit upon which the economy is built. having said that, policymakers must also consider the desirability of a dynamic economy, one in which useful innovations are encouraged and credit is made available to as many consumers as have the ability to benefit from it. the tension between protecting consumers and making credit broadly available is one that is as important in making an individual loan as it is to ensuring the stability of the economy. the key to successful policy formulation is to resist the temptation to regulate the problem of the moment. for example, if, in reaction to the abuses in consumer and mortgage lending over the past few years, we were to focus solely on consumer protection policies, the result could be overly restrictive access to credit, which could threaten future economic growth. on the other hand, if the policy focus is strictly on stabilizing the banking sector without giving due consideration to consumer protection, both consumer and investor confidence will remain weak and we will risk repeating the mistakes of the past. trust in the financial system can be regained only if sufficient consumer protections are in place to give borrowers reason to believe they will be treated fairly. the role of the federal reserve the federal reserve addresses its consumer protection responsibilities in a variety of ways, using its regulatory and supervisory authority as well as its consumer education, research, and outreach capabilities. we take a multifaceted approach to consumer protection, for a couple of reasons. first, our organization is in the unique position of being a central bank as well as a regulator and supervisor for the banking industry. moreover, our experience in this arena has taught us that there is no one solution sufficient to address the information needs and substantive protection of consumers in credit transactions. by offering a broad spectrum of products, services, and activities, we aim to provide consumers with the information necessary to make good financial decisions. for example, based on our belief that clear and well - organized disclosures can help consumers make good choices among financial products, the federal reserve has used its regulatory authority to develop extensive new disclosures for

sarah bloom raskin : downturns and recoveries – what the economies in los angeles and the united states tell us speech by ms sarah bloom raskin, member of the board of governors of the federal reserve system, at the federal reserve bank of sand francisco business and community leaders luncheon, los angeles, california, 12 april 2012. * * * good afternoon. i appreciate this opportunity to speak with you today. i ’ m not sure when you last found yourself in a planetarium. at the start of my most recent visit, i was handed a brochure that said “ sit anywhere. all seats provide equal viewing of the universe. ” i took the brochure but instead of contemplating the stars, i contemplated my job as a governor on the federal reserve board. and it occurred to me that the brochure was wrong. completely wrong. all seats do not provide equal viewing of the universe. some seats are better than others. it ’ s not just that the big dipper is clearer than ursa minor from certain seats. if you want, for example, to see the economy, you don ’ t necessarily want to always be sitting in washington. that is not a seat that tells you everything you need to know about the economy. you have to break out, set free, and hightail it out of the beltway to los angeles. it ’ s critical to appropriate policymaking that we get a multidimensional view of the so - called economic universe. from that perspective, it is an understatement to say that these are profoundly challenging times for millions of americans. many families have suffered significant declines in their net worth over the past several years, especially as the value of their homes and other assets has plummeted. many households have faced job losses or large reductions in the number of hours worked, events that have reduced family income and well - being. while i ’ m not happy to bear witness to households trying to navigate these difficulties, we would be poor policymakers if we consistently avoided the seats that give us this view. in short, i ’ m very pleased to be here, but i ’ m here on a mission. it ’ s a quest to understand what the seat from los angeles tells us about the economy, and more generally, how the path of the economy in a recovery may depend on the path of the economy in a recession. to rewind and review : the u. s. economy recently endured a financial crisis rival