by income held only 8 percent of all financial assets held by households. a larger lesson from the financial crisis, of course, is how important it is to promote assetbuilding, including saving for a rainy day, as protection from the ups and downs of the economy. i surely hope that our nation will not face another crisis anytime soon as severe as the one we recently experienced. but for many lower - income families without assets, the definition of a financial crisis is a month or two without a paycheck, or the advent of a sudden illness or some other unexpected expense. families with assets to draw on are able to deal with these developments as bumps in the road. families without these assets can end up, very suddenly, off the road. according to the board ’ s recent survey of household economics and decisionmaking, an unexpected expense of just $ 400 would prompt the majority of households to borrow money, sell something, or simply not pay at all. the federal reserve ’ s mission is to promote a healthy economy and strong financial system, and that is why we have promoted and will continue to promote asset - building. one way we do this is through the community development programs at each of our 12 reserve banks, and through the federal reserve board ’ s division of consumer and community affairs in bis central bankers ’ speeches washington. as a research institution, and a convener of stakeholders involved in community development, i believe the fed can help you in carrying out your mission, to encourage families to take the small steps that over time can lead to the accumulation of considerable assets. thank you for the chance to be a small part of this conference, and for your commitment to a cause that i strongly support. bis central bankers ’ speeches

premium on focusing supervisory resources at high - risk areas and conducting sufficient transaction testing to identify variances between policy and practice. increasingly this involves conducting transaction testing with highly qualified specialists. targeting resources at retaining, recruiting and developing such specialists as well as providing them with automated tools to enhance their efficiency and effectiveness is a top supervisory priority at the federal reserve. closing in closing, i would like to emphasize the significant amount of attention that the ltcm incident, in particular, and bank relationships with hedge funds, in general, have received, and continue to receive, from both public and private venues. although market discipline may not have worked in preventing the ltcm event in the first place, the marketplace has reacted appropriately and we have learned much to carry us forward. banks and securities firms, in their own self - interest, have tightened their risk management processes as they relate to hedge funds. hedge funds now face a new reality of tougher counterparty oversight. supervisors are also enhancing their oversight of banks ’ hedge fund exposures. the supervisory guidance issued by the basle committee, the occ, and the federal reserve represents an effective, quick, and needed response to an important issue. this guidance effectively reinforces private sector initiatives to enhance counterparty credit risk management processes. as i mentioned at the outset, even more work needs to be done to ensure that the lessons we have learned over the past two years become engrained in standard practice and to ensure that effective market discipline is brought to bear on the risk - taking of hedge funds and other entities that make use of significant financial leverage. in particular, we look forward to the reports and recommendations of the counterparty risk management policy group that will provide additional practical tools for implementing both industry and supervisory sound practices in counterparty credit risk management.