banks – get on board. if drivers are key players in ending texting - while - driving, then the banks themselves are essential actors in our economic comeback, and community banks play a central role. community banks were not major culprits in the subprime mortgage crisis, but they definitely suffered from it and took some hard hits because of it. the best community banks exemplify the high - road virtues that we seek to revive as standard operating practices throughout the banking system generally. i am referring to close customer service, long - term vision and sustained relationships, investment that benefits both the bank and the community, commitment to sound underwriting, and consistently legal and ethical practices and transparent governance. here at the graduate school, i imagine these high - road virtues to be one of the core values of the program, not peripheral after - thoughts to the course work that you are engaged in. this is good because, while i have been discussing the low road and the high road as though they are distinct and different physical destinations and directions, in fact it can often be difficult to tell the difference between the two. and just as a detailed map, gps system, and sound experience and judgment can help a driver know which road to take, it can require deep bis central bankers ’ speeches study, careful analysis, and commitment to be prepared to see the positive and negative dynamics intrinsic to any situation and then to make the right choice. i believe your institutions have the capacity to do a lot of good, and that in fact your banks are doing good work every day. and that is why it is a privilege to be here to address you as future leaders of our country ’ s community banks. the role of banks large - scale economic and financial events provide an opportunity to re - think basic assumptions – that is, once we get through the period of crisis management. but it takes a while to get there, and reactions to financial crises consist, first, of strategic containment, and then, of developing techniques of prevention. in terms of our recent financial crisis, the federal reserve attempted to provide the containment through the use of both traditional and innovative macroeconomic tools. congress, in turn, attempted to supply the subsequent preventative tools. in that regard, the dodd - frank wall street reform and consumer protection act ( dodd - frank act ), which embodied congress ’ strategy for preventing another crisis, was passed in july 2010. but in addition to containment and prevention, there is a third component to a meaningful

university of new hampshire ’ s carsey school of public policy and brought together representatives from banks, cdfis, mission - driven lenders, and small business online alternative lenders to talk about opportunities for collaboration, the challenges of scaling up small business lending, and potential consumer and safety and soundness regulatory issues facing partnerships between regulated financial institutions and alternative online lenders. as the sector grows and evolves, we will continue to monitor the development of online alternative lenders and the risks and opportunities that they may have for a range of stakeholders. if a bank is considering a referral partnership, the following questions could help identify potential risks : do existing customers have a need for the product or are there less expensive products that would better serve borrower ’ s needs? are the features, risks, and terms of the products offered through the referral program explained clearly and conspicuously, or are they buried in a lengthy document full of “ legalese ” that makes it difficult for borrowers to make a truly informed choice? finally, are the products offered through the referral partnership consistent with what would be recommended to a family member? ( see curran, 2013. ) there are several regulatory compliance - related questions that banks should consider. for example, have the loans offered or the lending platform to be partnered with been reviewed for compliance with applicable federal and state laws? have the loans originated by the partnering lending platform been reviewed from a consumer fairness standpoint? when assessing referral partnerships, have any issues been identified that would lead to disparate treatment of customers if banks selectively refer customers to online alternative lending partners? ( see federal reserve system community banking connections advisory board, 2014 ). bis central bankers ’ speeches alternative lending products. others have raised concerns about the risk that some small business borrowers may have difficulty fully understanding the terms of the various loan products or the risk of becoming trapped in layered debt that poses risks to the survival of their businesses. some industry participants have recently proposed that online lenders follow a voluntary set of guidelines designed to standardize best practices and mitigate these risks. 23 it is too soon to determine whether such efforts of industry participants to self - police will be sufficient. even with these efforts, some have suggested a need for regulators to take a more active role in defining and enforcing standards that apply more broadly in this sector. no doubt, ongoing technological advances and the evolving competitive lending landscape will continue to present both challenges and opportunities for community bankers who are deeply committed to the provision