flow of credit through the banking system remains a central objective of the federal reserve. to achieve this outcome, we have been taking measures to ensure that our supervisory actions do not inadvertently impede sound lending. businesses need access to credit to maintain or expand their payrolls and make productive investments. and banks need to make sound loans to preserve their earnings stream, absorb credit losses, and support capital growth, as necessary. for this reason, we have joined with the other federal banking agencies to issue a series of policy statements to examiners : on the importance of bank lending to creditworthy borrowers, on small business lending, and on commercial real estate loan restructuring. 2 we see board of governors of the federal reserve system, federal deposit insurance corporation, office of the comptroller of the currency, and office of thrift supervision ( 2008 ), “ interagency statement on meeting the needs of creditworthy borrowers ”, joint press release, november 12 ; board of governors of the federal reserve system, federal deposit insurance corporation, national credit union administration, office of the comptroller of the currency, office of thrift supervision, and conference of state bank supervisors ( 2010 ), “ regulators issue statement on lending to creditworthy small businesses ”, joint press release, february 5 ; have followed up this formal guidance with training for examiners and outreach to the banking industry. our message is a simple one : institutions should strive to meet the needs of creditworthy borrowers, and the supervisory agencies should do all they can to help, not hinder, those efforts. we also are supporting sensible efforts to work with troubled borrowers to bring them back into good standing. in an effort such as this, feedback is critical. to help us better understand what is going on in the banks we supervise and in the communities they serve, we continue to seek many views. for example, reserve banks across the country are meeting with small business owners, community bankers and others to talk about opportunities for – and barriers to – small business lending. we are also developing a number of sources of information to help us evaluate whether banks are achieving the right balance between sound lending and necessary prudence. for example, examiners are collecting information on banks ’ workout practices and loan restructurings, which will act as a baseline for assessing the effectiveness of supervisory guidance. in addition, we have asked banks for more frequent and detailed information on smaller business loans, and we have added questions to our own senior loan officer opinion survey on bank lending

oversee their enterprise - wide compliance - risk management program, and the federal reserve views this trend very favorably. in these cases, the central function has been staffed with experienced compliance officers who are able to provide substantive guidance to business line managers and to keep senior management and boards of directors informed on how well the program is functioning, including by alerting them promptly about any material compliance breaches. overall, such a central function can contribute a great deal toward ensuring that the key elements of a sound and effective compliance - risk management program are present and functioning as intended. corporate standards - - tailored within the business lines how does a board - mandated " compliance culture " permeate a banking organization? among other ways, the culture and expectations are communicated through enterprise - wide compliance - risk management standards or objectives - - established by senior management within a corporate - level compliance function - - that reflect the expectations of the board. regardless of the compliance - risk management framework employed, the business line managers continue to " own " the compliance risk. that is, they are responsible for achieving compliance in their business lines and suffer the consequences in the event of compliance failures or missteps. business line managers convert the corporate compliance risk standards or objectives into policies and procedures tailored to the specific type and level of compliance risk inherent in their activities and to the specific laws of the jurisdictions in which they operate. to create appropriate compliance risk controls, organizations seek first to understand compliance risk across the entire entity. managers assess and evaluate the risks and controls within their scope of authority at least annually. however, an enterprise - wide compliance - risk management program is dynamic and proactive, meaning that risks are assessed whenever new business lines or activities are added or existing activities and processes are altered. once a particular business line has identified and assessed its compliance risks, it can design policies, detailed day - to - day procedures and processes, and associated risk - mitigating internal controls. the corporate compliance function plays an important role in advising business line managers as they assess risk. such counsel adds to consistency in approach and helps control for mis - estimated risk. the corporate compliance function's involvement also increases the organization's ability to aggregate and better understand risks across the organization. understanding of risk helps both the business lines and the compliance function develop internal controls that are reasonably designed to mitigate the risk. while the industry trend toward more - consolidated compliance risk management is a favorable development, it is critical that business line management remain engaged. as i noted, senior