run and transitional floor periods before we move to full implementation without floors. this is consistent with the overall process we have laid out for implementing basel ii. we want to ensure that the minimum regulatory capital levels for each institution and in the aggregate for the group of basel ii banks provide an adequate capital cushion consistent with safety and soundness. probably the most important thing we learned from the qis4 analysis is that progress is being made toward developing a risk - sensitive capital system. in terms of the specifics of the analysis, we learned that the drop in qis4 capital was largely due to the favorable point in the business cycle when the data were collected. while the previous qis3 exercise was conducted with data from 2002, a higher credit loss year, qis4 reflected asset portfolio, risk - management information and models during one of the best periods of credit quality in recent years. we learned that the dispersion was largely due to varying risk parameters used by the institutions, which was permissible in the qis4 exercise, but also due to portfolio differences. that is, banks have different approaches to risk - management processes, and their models and databases reflect those differences. we also learned that some of the data submitted by individual institutions was not complete ; in some cases banks did not have estimates of loss in stress periods - - or used estimates that we thought were not very sophisticated - - which caused minimum regulatory capital to be underestimated. based on the results of qis4, the federal reserve recognizes that all institutions have additional work to do. in our view, the findings did not point to insurmountable problems, but instead identified areas for future supervisory focus. in that way, the analysis was critical in providing comfort to enable us to move forward. it is also helpful to remember that the qis4 exercise was conducted on a best - efforts basis. it was just one step in a progression of events leading to adoption of the basel ii framework. we certainly expect that as we move closer to implementation, supervisory oversight of the basel ii implementation methodologies by our examination teams would increase. indeed, during the qualification process we expect to have several additional opportunities to evaluate institutions'risk - management processes, models, and estimates - - and provide feedback to the institutions on their progress. so while the qis4 results clearly provided a much better sense than before of the progress in implementing basel ii and offered additional insights about the link between risks and capital, qis4 should not be

ben s bernanke : brief remarks – the fed ’ s efforts with respect to diversity speech by mr ben s bernanke, chairman of the board of governors of the us federal reserve system, at the congressional black caucus foundation's annual legislative conference, washington dc, 25 september 2009. * * * good morning. thank you for the opportunity to speak during the congressional black caucus foundation's annual legislative conference. congresswoman waters, i appreciate the invitation and your leadership in this area. let me make a few brief comments about the federal reserve's efforts with respect to diversity, and i look forward to our dialogue afterward. as you know, in response to the financial crisis that began more than two years ago, the federal reserve has introduced various programs to improve the functioning of key financial markets, with the goal of helping to restore the flow of credit that our economy needs. usage of many of these programs has been winding down as markets improve, but one program for which an ongoing need still clearly exists is the term asset - backed securities loan facility, or talf. this program, which was implemented this year, has helped restart the securitization markets for various types of consumer and small business credit. securitization markets are an important source of credit, and their virtual shutdown during the crisis has reduced credit availability for many borrowers. since its inception, the talf has indirectly financed nearly 3 million loans to households ( excluding credit card loans ) and nearly 400, 000 loans to small businesses. investors participate in the talf by receiving loans from the federal reserve to finance purchases of asset - backed securities. talf was designed from the start to be available to a diverse set of participants : talf loans to purchase asset - backed securities are available to virtually any u. s. - domiciled firm, and firms can participate with investments as low as $ 500, 000. there have been 121 borrowers so far, including investors of all sizes. since talf is open to all investment firms, we needed agents to work with potential borrowers. in march, i participated in the tarp / talf access summit that you organized. at that summit, we heard that a more diverse set of talf agents would help bring in a more diverse set of talf borrowers. acting on that good suggestion, we recently announced the inclusion of four new talf agents, selected to increase the diversity of talf borrowers. three of the four are owned by