, the federal reserve is committed to ensuring that the basel ii framework delivers a strong and risk - sensitive base of capital for our largest and most complex banking institutions. that is why we stand behind the additional safeguards contained in the basel ii npr to ensure strong capital levels during the transition to the new framework. we will remain vigilant, on an ongoing basis, in monitoring and assessing the impact of basel ii on both individual and aggregate regulatory capital requirements and in employing rigorous and thorough analysis to support our evaluation. by so doing, we believe that the proposals being discussed today can be implemented responsibly and in a safe and sound manner. thank you very much for your attention. i welcome any comments you may have and will be happy to answer any questions.

- term solution for many borrowers. fortunately, the housing market as a whole is a bright spot for the economy. higher home prices are improving the balance sheets of many households, even those that may face income and employment challenges, and new construction activity is generating new job opportunities. while affordability remains an important consideration, it is encouraging that housing has performed well in response to low interest rates. mortgage regulations and access to mortgage credit however, even during this period of strong performance in the housing market, access to affordable mortgage credit remains a barrier to homeownership for some borrowers, due in part to regulatory burden. since the last financial crisis more than a decade ago, there have been a number of new mortgage regulations that added requirements for both borrowers and lenders. 1 / 2 bis central bankers'speeches while many of these requirements have contributed to a safer and more consumer - friendly mortgage market, they have also introduced significant paperwork and delays that can present roadblocks for many borrowers. these new rules have also made it more difficult and costly for small banks to originate mortgage loans, leading many community banks to scale back on home lending activity or abandon it altogether. homeownership is as important to communities as it is to individuals, and access to credit for rural and low - to - moderate income communities often depends on community banks. in many communities, especially rural communities, if the local bank has been forced out of mortgage lending due to burdensome regulation, it means little or no access to mortgage credit, preventing buyers from financing home purchases and homeowners from selling their homes. many leaders of small community banks have told me that the compliance costs for originating smaller mortgages are prohibitive, and that the staffing and training required to meet the strict requirements are extraordinary in relation to the limited number of mortgages they originate. as one state banking commissioner said to me recently, “ it doesn ’ t make a lot of sense that you can make an $ 80, 000 truck loan on two sides of a sheet of paper, but that many, many pages of paperwork are required to make a $ 40, 000 loan on a mobile home or trailer. " in fact, i have been told by community bankers that they are sometimes compelled to make loans for lower - priced home purchases that are backed by other collateral, such as a car or equipment, because of the excessive burden of complying with the many residential home mortgage regulations and time frames for such small transactions. as a result