example, governor kroszner of the federal reserve board serves as a director of neighborworks america, a nonprofit organization that has been helping thousands of borrowers facing current or potential distress to obtain assistance from their lenders, their servicers, or trusted counselors through a hotline. the federal reserve board's staff has been working with consumer and community affairs groups throughout the federal reserve system to help identify localities that are most at risk of high foreclosures, with the intent to help local groups better focus their outreach efforts to borrowers. other contributions include foreclosure prevention programs, such as the home ownership preservation initiative, which the federal reserve bank of chicago helped to initiate, and efforts by reserve banks to convene workshops for stakeholders to develop community - based solutions to mortgage delinquencies in their areas. the federal reserve system is also engaged in research and analysis that should help inform policy responses to these issues. the congress is also focused on reducing homeowners'risk of foreclosure. one statutory change that could help is the modernization of programs administered by the federal housing administration ( fha ). the fha has considerable experience helping low - and moderate - income households obtain home financing, but it has lost market share in recent years, partly because borrowers have moved toward nontraditional products with moreflexible and quicker underwriting and processing and partly because of a cap on the maximum loan value that can be insured. in modernizing the fha, the congress might encourage joint efforts with the private sector that expedite the refinancing of subprime loans held by creditworthy borrowers facing resets. it might also consider granting the agency the flexibility to design products that improve affordability through such features as variable maturities or shared appreciation. also, the fha could provide more refinancing options for riskier households if it could tailor the premiums it charges for mortgage insurance to the risk profile of the borrower. as i have discussed in earlier testimony, the federal reserve is taking steps to avoid subprime lending problems from recurring while preserving responsible subprime lending. in coordination with other federal supervisory agencies and the conference of state banking supervisors ( csbs ), we have issued principles - based underwriting guidance on subprime mortgages to help ensure that borrowers obtain loans that they can afford to repay and have the opportunity to refinance without prepayment penalty for a reasonable period before the

evidence in favor of efficiency gains is weak. the study also found that the effects of consolidation on competition and credit flows are very case - specific and depend on the nature of markets for specific products and services. as i noted, this study was commissioned by finance ministers and central bank governors, so we investigated the implications of consolidation for central bank policies. the study found that financial consolidation has not significantly affected either the conduct or the effectiveness of monetary policy. however, it also suggests that central banks should remain alert to the implications of future consolidation - induced reductions in the competitiveness of the markets most important for monetary policy implementation. similarly, central banks ought to monitor potential future changes in the transmission mechanisms for monetary policy. importantly, the study also concluded that existing policies appear adequate to address individual firm and systemic risks now and in the intermediate term. however, going forward, the study identifies a number of areas that deserve careful attention by policymakers. for example, enhanced contingency planning could reduce the risks to individual firms and the broader financial system, should a large and complex financial institution become seriously distressed. because no institution is too big to fail, i believe that regulators should develop a clearer understanding of several key factors. these factors include the administration of bankruptcy laws and conventions across borders ; the coordination of supervisory policies within and across borders ; the treatment of over - the - counter derivatives, foreign exchange, and other " market " activities in distress situations ; the roles and responsibilities of managers and boards of directors ; and the administration of the lender - of - last - resort function. our study helped to clarify the need for international attention to contingency planning. in general, both crisis prevention and crisis management could be improved by additional communication and cooperation among central banks, finance ministries, and other financial supervisors, both domestically and internationally. consolidation in the us against this international background, i would like to look at what has been occurring in the united states. in the u. s., more than 4, 000 commercial banking and thrift organizations were acquired between 1990 and 2000. the pace of merger activity generally increased between 1990 and 1998, peaking at more than 500 deals in 1998. in 1999 and 2000, the number of mergers and acquisitions returned to the levels experienced at the start of the decade. partly offsetting this trend, more than 1, 400 charters for new banks and thrifts were issued during the 1990s. 1998 was also the standout year in terms of transaction size. deals completed in that year accounted