loss of a home and reduced access to future credit. such outcomes can be even more likely if loan products have complex repayment terms that are not fully understood, or if the borrowers have unrealistic expectations of their future income or house prices. on the lender side, the originate - to - distribute model can leave lenders with weaker incentives to maintain strong underwriting standards. in particular, originators who securitize may inadequately screen potential borrowers unless investors provide oversight and insist on practices that align originator incentives with the underlying risk. the originate - to - distribute system is thus not only a potential source of risk to the financial system but also raises concerns regarding consumer protection. sources of the recent problem with this background in mind, let me turn now to the recent problems in the subprime mortgage market. as is widely known, delinquency rates on subprime mortgages have increased sharply over the past year. the distress has been concentrated among the twothirds of subprime borrowers who have variable - rate mortgages ; more than 17 percent of those mortgages are in serious delinquency, about a tripling of the share since mid - 2005. 1 near - prime loans are showing a rise in serious delinquencies as well, although it is much smaller than for subprime. serious delinquencies encompass foreclosures, and those are also up sharply – lenders initiated foreclosure proceedings for an average of 320, 000 mortgage loans per quarter in the first half of this year, up from 240, 000 loans per quarter over the preceding two years. 2 this increase in foreclosures has been largely associated with subprime mortgages. many factors contributed to the sharp increases in subprime delinquencies and foreclosures, both separately and in combination. first, the unemployment rate in an area can significantly undermine the ability of people in that area to repay their mortgages. states in the midwest hit hardest by job cuts in the auto industry, such as michigan and ohio, are among the states with the highest rates of new foreclosures. a second key factor has been the slowing of house prices : one national index, which rose at close to a double - digit pace from 2000 through 2005, has slowed to show only small gains for the past several quarters, and some areas are seeing outright price declines. by damping the growth of home equity, sluggis

christine lagarde : frankfurt and europe in a new decade speech by ms christine lagarde, president of the european central bank, at the new year ’ s reception of the city of frankfurt, frankfurt am main, 16 january 2020. * * * first of all, let me start by wishing you all a happy new year! it really is a great pleasure to be part of this neujahrsempfang and to welcome in the new year with all of you, my new neighbours in my new home. you might be disappointed – or perhaps relieved – to learn that i won ’ t be talking about monetary policy this evening. we ’ re in the quiet period ahead of our governing council meeting next week where members do not discuss policy issues. frankfurt as a european city the character of every community is shaped by two choices we make : how we organise ourselves internally and how we relate to others externally. that ’ s true of companies and institutions, and it ’ s true of cities and regions, like frankfurt and the rhein - main area. arriving here as a newcomer, i was immediately struck by the inner character this city has developed : it is open, vibrant, aspirational. the history and culture of frankfurt instantly resonates – it is the birthplace of goethe, the site of the first german parliament in 1848, the famous home of apfelwein. but the feeling is also more than that. frankfurt is a community bristling with the creative energy of its financial industries, its data hubs, its start - ups, its universities. and there is a palpable sense of the civic pride that the people of frankfurt have for this city and their commitment to its success – what i understand you call the burgertum. indeed, i recently saw this in evidence during a visit to the stadel museum with jens weidmann. there i learnt how much the wonderful collection owes to the dedication of frankfurt ’ s citizens and their participation in various vereine that support it. but as important as frankfurt is as a german city, it has always been a european city, too. its internal vibrancy has been supported by an open external attitude. frankfurt was an important city in the holy roman empire of the german nation – a much earlier example of several states uniting to form a common political community – as the site of imperial elections and the place of imperial coronations. it has long been at the economic crossroads of europe, located on the most important