examiners became concerned about concentrations in commercial real estate lending several years before the financial crisis. despite the red flags raised by this lending, it was difficult for examiners to challenge bank management at a time when these loans were performing well and banks were generating record profits. there was also strong pushback from the industry when the banking regulators began raising alarms about the potential risks of excessive concentrations. regulators finally issued guidance on concentrations in commercial real estate in late 2006, but in retrospect i think it is fair to wonder whether action should have been taken sooner. that brings me to my next point, which is that examiners have a key role to play in reviewing and assessing the quality of a bank ’ s internal controls, compliance, internal audit, et cetera. a central element of the federal reserve ’ s supervisory programs is assessing the effectiveness of these processes and functions. we should understand where a bank ’ s primary risks arise and use enforcement tools as necessary to ensure that management is sufficiently focused on these risks. examiners should clearly communicate their findings to banks and maintain a regular dialogue about their risks and their risk management processes. when examiners find weaknesses in any of these areas, we expect that banks will address them in a timely manner. one thing i would note here is that if done properly, effective examination requires looking behind the numbers. the crisis made clear that a bank that appears to be in sound financial condition may actually have a ticking time bomb on its books. as i said before, it can be difficult for an examiner to tell a profitable bank with strong financial indicators that there are management weaknesses. but that is exactly what we should empower our examiners to do because we know that the seeds of financial crisis are planted during the good times. when conducting an examination, an examiner should be attuned to weaknesses in governance, risk management, and internal controls that may not pose a current problem but that may expose the bank to losses in the future. and ultimately, as you know, it is easier to fix a problem during the good times. bis central bankers ’ speeches finally, one of the key roles that examiners play in a healthy financial system is to provide context and perspective. this is natural given the number of banking organizations that we examine and inspect, and i believe the federal reserve ’ s renewed financial stability mandate under the dodd - frank act will enhance our ability to assess not just individual banks, but also the system as a whole. examiners have a longstanding practice of

had to show resilience and strength in the face of a once - in - a - hundred - year pandemic and prepare for a world where once - in - a - hundred - year events occur every couple of years. that strength and learning will serve you well as you embark on your life ’ s work. as you do so, i hope some of you are considering a career in public service. others, not so much. i get it. public service is not glamorous. still, i hope many of you will consider devoting a part of your life ’ s work to a public mission and will do so with enthusiasm and urgency, because public service has a profound effect on the lives of people and communities across the country. and it can be motivating and satisfying in ways that are rare. so perhaps i could provide a glimpse of the hopes and dreams that animate my journey and guide my work, as a reminder that you can and must dream big and stay true to your chosen mission as you navigate your journey with as much passion as professionalism and as much integrity as intellect. so let me start by tracing back what i do today to what i cared about when i was a young american growing up in europe. ever since i was a little girl observing life in poland under soviet rule, i have been making mental checklists of the communities around me : gray apartment block with cratered walls and broken glass, dilapidated factory with an open furnace, long line at the bread shop. - 3i noticed the contrast between the bright colors and bustle of the farmers selling produce from their own plots of land and the gray bleakness of communist factories and poorly stocked shelves. and the even greater contrast with west germany at a time when it was fast integrating with its western neighbors : new cars, thriving small businesses, packed store shelves. what i observed around me as i came of age, i later understood, were features of the cold war battle over the ideals of freedom and enterprise and the kind of political systems and institutions that could best uphold those ideals. in those early days it was hard to imagine the rise of solidarity and the fall of the wall. three decades later, it is inspiring to stand with a united and free europe as it opposes russia ’ s war of aggression against ukraine. once i started working, i found myself compiling these checklists in maggie thatcher ’ s industrial towns, in auto assembly plants in detroit, in financial - crisis - stricken mexico city,