daniel k tarullo : opening remarks at the economic growth and regulatory paperwork reduction act outreach meeting opening remarks by mr daniel k tarullo, member of the board of governors of the federal reserve system, at the economic growth and regulatory paperwork reduction act outreach meeting, arlington, virginia, 2 december 2015. * * * on behalf of the federal reserve board, let me join my colleagues from the other bank regulatory agencies in welcoming you to this sixth and final outreach meeting being held as part of the interagency review process under the economic growth and regulatory paperwork reduction act ( egrpra ). as you know, egrpra requires the federal banking agencies to conduct a decennial joint review of our regulations to identify those that are outdated, unnecessary, or unduly burdensome. at the third outreach meeting this past spring, i suggested that we could regard the egrpra review as a success only if it leads to significant reduction in regulatory burden for smaller banks. over the course of this year, there has been a wide range of comments on a wide range of regulatory practices. but many have been concentrated in what are obviously a few key areas of concern to smaller banks. these include simplifying the regulatory capital rules for smaller community banks ; modifying the information collected by consolidated reports of condition and income, the so - called “ call report ” ; and updating certain regulations and supervisory practices under the community reinvestment act to reflect current banking practices. first, many commenters have urged a change regarding the application of the basel iii capital requirements to community banks. they have argued that simpler capital rules are needed to reduce the compliance burden for smaller institutions because it is disproportionate to the benefits of the framework ’ s increased risk sensitivity. the greater detail of the basel iii framework requires a degree of categorization, recordkeeping, and reporting that can be particularly costly for smaller community banks. as i have publicly stated before, i believe that it is possible to develop a simpler set of capital requirements for smaller banks that will be consistent both with the safety and soundness aims of prudential regulation and with our statutory obligations such as the collins amendment. second, commenters have called for changes to the call report. the call report is filed quarterly and used by regulators to monitor the safety and soundness, performance, and risk profile of each institution and to assess the condition of the banking system. many of the comments have advocated modifying the types and amounts of information

meetings where we said something like, “ this is what we have to do, we are not certain how it will work out, but this is the very best thing we can do ”. q : what happens to politicians when they get their hands on a budget? a : there ’ s a natural tendency to want to spend more money, because everybody asks you to spend more money, and the pressure is always people coming along and wanting money for this and for that. that ’ s why in some countries you need to have a very powerful treasury, as we have in israel. there is this spending tendency, governments prefer to run deficits. it ’ s very interesting that in two cases that culture changed dramatically – canada in the 1990s and australia in the 1980s – were chronic - deficit countries in australia now it ’ s bad for the government to run a deficit, and in canada they worry about the deficits much more. why? because they cut the deficits and they grew much faster in both cases, they saw the results of running a decent economic policy. can you rely on that? not really, it depends on each country. q : what do you see as your responsibility when house prices, or property prices, get out of kilter? a : we have to do what we can to prevent that happening. the main problem for a central bank is that it operates on the financing side, which is to say on the demand side of the housing market. we can raise the interest rate, impose regulations on the banks, which we ’ ve done, that will moderate the impact of low interest rates on demand for housing. but … reducing the price of housing on the demand side does not cause more houses to be built, it causes less houses to be built. the real place that you can get action that will solve the housing problem is on the supply side … if you increase the supply of land in this country more rapidly, you will be able to get housing prices down. if you can speed up the pace at which it ’ s possible to get planning permission, which is the place we ’ re worst in the doing business study – if we can deal with those prices, we ’ ll get the supply of houses to go up, which will increase production and reduce prices. we have to do what we can because we operate on the demand side, but we don ’ t have the control over supply that would enable israel to solve its housing problems. one of the reasons we ’ ve