- banks. is the bank regulatory framework efficient? does it allow banks sufficient freedom and flexibility to operate and meet customer needs? and importantly, are there areas within the approach to regulation and supervision that simply cannot be justified based on a cost - benefit analysis? the answer to the latter is " yes. " there are a number of areas where right - sizing regulation and our supervisory approach would be appropriate and can be done in a way that does not sacrifice safety and soundness or threaten financial stability. regulation is most effective when it strikes an appropriate balance between competing goals and objectives. in the banking system, this means operating in a safe, sound, and financially stable way, while also supporting economic growth and efficiency. when we fail to consider this broader context, we risk disincentivizing growth, imposing overly burdensome and unnecessary regulations, setting opaque and unreasonable expectations through the supervisory process, and forcing the inefficient allocation of capital. sometimes this debate escapes from the dusty offices of the banking regulators into plain view, as during the past year on the basel iii endgame package of bank capital reforms. while this proposal prompted extensive comment from a wide range of commenters, it also inspired a negative television and radio advertising campaign, which is unprecedented for a relatively technical bank regulatory issue. but these ads highlighted an uncomfortable truth : the regulatory approach we took failed to consider or deliver a reasonable proposal, one aligned with the original basel agreement yet suited to the particulars of the u. s. banking system. instead, the proposal released last year opted for significant capital increases for some banks, in excess of 20 percent, departing significantly from the approach adopted by our international counterparts. this public engagement has been useful, and it seems to have softened some of the over - calibrated positions underpinning the original capital reform proposal. but this level of public engagement and debate was also a byproduct of the rulemaking process. while regulatory overreach can threaten the credibility of agency action in the eyes of the public, a transparent process allows public commenters to pressure test and pushback on agency action. 7 / 9 bis - central bankers'speeches however, when agencies overwhelm the process by publishing thousands of pages of rulemakings in a short period of time, the public's ability to provide meaningful feedback on our rules is compromised. last year the federal financial agencies published over 5, 000 pages of rules and proposals. and yet, even when the public is able

to comment on these voluminous proposals, regulators often ignore this constructive feedback and move forward to publish final rules with minimal or no changes relative to their proposals, as with the community reinvestment act rule. maintenance of an existing regulatory framework is not glamorous but is perhaps one of the more important agency functions to ensure that the framework is striking the right balance between promoting a strong banking system and supporting economic growth. this requires reviewing and updating regulations to ensure that prior agency actions continue to address problems efficiently as industries and conditions change. 3 when agencies prioritize the creation of new regulation in the absence of a statutory mandate, harmful and unintended consequences can result. one such example is the adverse effects of regulatory constraints on treasury market functioning. rules like the supplementary leverage ratio, the g - sib surcharge, and the liquidity coverage ratio pose known and identified constraints on the treasury market that may contribute to future stress and market disruption if left unaddressed. finally, while transparency - like that intended by the rulemaking process - can lead to better public engagement and outcomes, it is important that agency actions are transparent even when not legally mandated. the most obvious opportunity for additional transparency in the banking framework is in supervision. supervision by its nature involves confidential and detailed inquiries into bank operations, with examiners evaluating quantitative measures like capital and liquidity, while making judgmental assessments of the activities and risks of the institution, and its risk - management approach. supervisory expectations should not surprise regulated firms, and yet transparency of these expectations is often challenging to achieve. in fact, since the failure of svb supervisory surprises have become more common in bank examinations. in light of the recent supreme court cases regarding agency actions, agencies should respond in a way that furthers the goals of transparency and accountability, and act as a check on regulatory overreach. the elimination of chevron deference has the potential to transform agency rulemakings positively - in a way that promotes the pragmatic approach i outlined in this discussion. the same considerations we follow in the pursuit of our statutory objectives could help support rulemakings that are built upon a stronger factual and analytical basis, with a thorough and more comprehensive explanation of an agency's policy approach. closing thoughts while my remarks today have largely focused on federal reserve responsibilities, a pragmatic approach has broader applicability. agencies can build public support for their activities by following these simple principles - a rigorous focus on statutory objectives, a foundation based