Insights from Winston & Strawn
Last Thursday, federal bank regulators testifying at a hearing conducted by the U. S. Senate Banking Committee expressed recognition of the need to reduce unnecessary regulatory burden, which was an important theme of the report issued the previous week by the U. S. Treasury Department. While not expressly supporting recommendations in the report, Federal Reserve Governor Jerome Powell echoed some of the report’s recommendations, such as that banks with assets of less than $10 billion be exempted from the Volcker Rule; that prudential standards not be triggered at $50 billion in asset size, but at a higher threshold; that the $10 billion in total asset stress test trigger also be increased; and that the Comprehensive Capital Analysis and Review (“CCAR”) process be made more transparent.
Below, we review the many recommendations made in the Treasury report.
On February 3, the President issued Executive Order 13772 setting forth Core Principles for regulating the U. S. financial system and directed the Secretary of the Treasury to identify laws and regulations inconsistent with those principles. On June 12, 2017, Secretary of Treasury Mnuchin released a report entitled “A Financial System that Creates Economic Opportunities” identifying banking regulations inconsistent with those Core Principles. Subsequent reports from Treasury will cover capital markets; asset management, insurance, and investments; and financial technology and innovation.
At the outset, the Treasury’s bank regulation report observed that regulations implementing the Dodd-Frank Act are insufficiently tailored to banks based on size and complexity and also represent shared overlapping multiple agency responsibilities that are not well-coordinated. However, the report expressed support for five elements of the current regulatory framework: capital standards, stress testing, liquidity requirements, living wills, and enhanced prudential standards.
The report recommends that the Financial Stability Oversight Council (FSOC) play a larger role in coordinating and directing regulatory and supervisory activities, possibly including giving it authority to appoint a lead regulator on an issue. Of course, FSOC is led by the Secretary of the Treasury appointed by the President. The report also recommends that the Office of Financial Research become part of the Treasury Department with its Director appointed by the Secretary without a fixed term, but removable at will, and that its budget come under the control of the Treasury.
Capital, Liquidity, and Leverage
The report recommends that statutory company-led stress tests only be required by firms with total consolidated assets of $50 billion or more, up from the current $10 billion threshold, and that, even then, regulators be given the discretion to exempt firms depending on their business model, balance sheet, and complexity. The report also suggests that the mid-year test be eliminated and that the number of scenarios be reduced from three to two: a baseline scenario and a severely adverse scenario. Other thresholds that, it says, should be revised include the current $50 billion threshold for enhanced prudential standards and for the CCAR, as well as for living wills. It further suggests that the CCAR cycle be changed to two years. Echoing the Financial CHOICE Act that has passed the House, the report supports an “off-ramp” for firms with a 10 percent leverage ratio. It also suggests that the Federal Reserve subject its stress testing and capital planning processes to public notice and comment. The report further advocates for standardized risk-weighting of assets rather than advanced approaches and also urges a more transparent, rules-based approach to calculating operational risk capital. The liquidity coverage ratio requirements, it suggests, should be limited to internationally active banks, and high-grade municipal bonds should count as “high-quality liquid assets” for that purpose. It also recommends delay of any net stable funding ratio rule and reduction of the frequency of the living will requirement to every two years and that greater guidance, subject to rulemaking procedures, be given on living wills. The Federal Deposit Insurance Corporation (“FDIC”) would be removed from the living will process if the report’s recommendations were adopted.
The report recommends recalibrating capital requirements that place an undue burden on individual asset classes. It also suggests making the Director of the Consumer Financial Protection Bureau (CFPB) removable at will by the President or restructuring the CFPB as an independent multi-member commission, funding it through the annual appropriations process, ensuring that regulated entities have adequate notice of CFPB legal interpretations before enforcement actions are brought. Additionally, the report suggests curbing abuses in investigations and enforcement actions by requiring that enforcement actions be brought in federal district courts rather than administratively, and that reviews of civil investigative demands issued by the CFPB be confidential and also be brought to court rather than to the CFPB Director. Further, the report urges that use of the CFPB’s Consumer Financial Civil Penalty Fund be limited to payment to bona fide victims of improper activities and to the U.S. Treasury and not for unappropriated programs. The report also suggests that the CFPB no-action letter process be aligned with those of other agencies. Moreover, the report suggests that access to the CFPB’s consumer complaint database be limited to federal and state agencies and not to the general public, and that the CFPB’s supervisory authority be repealed as duplicative and burdensome.
The report reviewed the residential mortgage lending market and made several important findings. It found, among other things, that the regulatory regime disproportionately discourages private capital from taking mortgage credit risk and that regulatory requirements deny many qualified Americans access to mortgages.
As discussed in this space last week, the report proposes significant changes to the Volcker Rule, but not its limitations on proprietary trading (other than to exempt banks from those limitations if their trading assets and liabilities exceed a threshold, to simplify the definition of the term “proprietary trading,” and to allow banks more easily to hedge and conduct market-making activities). The report also would refine the definition of the term “covered fund,” which, in our experience, is needed. The report suggests that banks with $10 billion or less in total consolidated assets be exempt from the Volcker Rule altogether as should highly capitalized banks and that compliance program requirements be changed to reduce regulatory burden. The report also urges that regulators improve their coordination of the Volcker Rule interpretation and enforcement.
The report proposes that community banks with assets of less than $10 billion be exempt from Basel III capital requirements and possibly the Collins Amendment. It suggests that the definition of “high volatility commercial real estate loan” (to which higher capital requirements apply) be simplified. The report also urges that the Federal Reserve’s Small Bank Holding Company Policy Statement asset threshold be raised from $1 billion to $2 billion. The report further suggests that the current 80-page call report required of all banks be scaled down for smaller banks and that the regulators consider a consolidated examination force. Further, the report proposes that the asset threshold for the CFPB’s ability to repay/qualified mortgage rule for small creditors be raised from $2 billion to between $5 billion and $10 billion.
Advancing America’s Interests and Global Competitiveness
Treasury generally supports finalizing Basel Committee reforms to strengthen the capital adequacy of non-U.S. global banks that have significantly lower capital requirements than do U.S. banks.
Treasury identifies areas in which regulator expectations of boards of directors should be reformed and not crowd out critical functions that boards play. It recognizes that there are more than 800 regulatory provisions that impose obligations on bank boards. Those expectations should not blur responsibilities of boards and management and should not impose a “one-size-fits-all” approach, according to the Treasury. It further suggests that overly prescriptive examiner actions requiring specific remediation, such as matters requiring immediate attention (MRIAs), matters requiring attention (MRAs), and consent orders, might be focused on.
Treasury recommends that the banking agencies conduct “rigorous” cost-benefit analyses. In that context, it suggests that the Community Reinvestment Act examination process and rating system needs to reflect the variety of ways in which banks do business and meet needs of diverse consumers and communities.
Foreign Investment in the U.S. Banking System
Treasury urges that the applicability of enhanced prudential standards to foreign banking organizations (FBOs) be based on their U. S. risk profile, not on their global assets.
Considering this Treasury Report, the Financial CHOICE Act, and bank regulators’ apparent reaction to these developments, it appears that some of the substantial regulatory burden on banks may be lifted.
Feature: 2017 Proxy Season and Corporate Governance Developments
Earlier this month, Ernst & Young’s (“EY”) Center for Board Matters released its review of the developments and trends it has observed during the 2017 proxy season. The review identifies six “key board takeaways” from this year’s proxy season, which include, among other things: the continued rise of proxy access; an emphasis on board diversity and gender pay equity; a revolt against unequal voting structures and virtual shareholder meetings; and an emphasis on investor communications. Headlining this list of developments is the impact of the Framework for U.S. Stewardship and Governance launched in January on a voluntary basis by a group of U.S. institutional investors and global asset managers. EY concludes that the framework indicates that “key investors are not blindly following the recommendations of proxy advisory firms and may also signal increased investor engagement and transparency around corporate governance.”
The EY report also noted that environmental sustainability and climate risk have emerged as key areas of focus for shareholders this season. The New York Times noted that fund managers and other large investors have increasingly raised concerns about how climate change policies might impact the value of companies with fossil fuel assets.
Although asset managers like BlackRock are actively advocating for changes at the companies in which they invest, they are careful to distinguish their involvement from the more confrontational tactics of activist hedge funds. The Financial Times reported that the rise of large U.S. index fund managers “has created a tricky relationship with activist investors who previously served as the policeman in the boardroom.” The index funds tout their emphasis on corporate governance matters as evidence of their focus on “long-term value creation” as a contrast to activists’ focus on short-term measures. However, some experts see the prominence of asset managers in corporate decision-making as potentially harmful for advancing corporate stewardship. Reuters discussed a recent study published by Harvard Law School professors Lucian Bebchuk and Scott Hirst, along with Alma Cohen of Tel Aviv University. The study maintained that the current regulatory framework, which requires asset management companies to bear the costs of any corporate governance issues they raise out of their own fees, creates the incentive for them to “under-spend on stewardship and to side excessively with managers of corporations.”
While they may be ceding some of their power to larger investors, activist hedge funds continue to exert their influence. The New York Times examined the end of “the American era of the baronial chief executive,” citing technological changes along with pressure from activist investors, who have shifted power away from the executive suite. The Wall Street Journal reported that activist investors, in a new tactic, are targeting chief financial officers in their calls for improved performances at companies, since these executive are often charged with increasing efficiency. Faced with the increased pressure, many of these executives find themselves in the uncomfortable and sometimes unfamiliar position of having to push back against the activists. As a result, companies are seeking out chief financial officers who have experience in dealing with activist investors, indicating that activist shareholders remain an influential presence in the corporate landscape.
Banking Agency Developments
Federal Reserve Board
Big Banks Perform Well in Latest Supervisory Stress Tests
On June 22nd, the Federal Reserve Board (“FRB”) announced the results of the most recent round of supervisory stress tests of large U.S. bank holding companies, which found that these institutions have strong capital levels and would retain their ability to lend to households and businesses during a severe recession. The New York Times observed that the stress test results lend support to calls from the industry and the Trump administration to ease banking regulations.
FRB Governor Discusses Regulation and Economic Growth in Senate Testimony
On June 22nd, Federal Reserve Governor Jerome H. Powell testified before the U.S. Senate Committee on Banking, Housing, and Urban Affairs on the relationship between regulation and economic growth. Powell highlighted the need for a resilient, well-capitalized, well-regulated financial system, emphasizing that actions to reduce regulatory burdens must not compromise financial stability.
OCC Will Hold Workshop in Kentucky for Board Directors and Bank Management
On June 23rd, the Office of the Comptroller of the Currency (“OCC”) announced that it will host a workshop in Lexington, Kentucky, on August 7-9, for directors, senior management team members, and other key executives of national community banks and federal savings associations supervised by the OCC. The workshop will focus on duties and core responsibilities of directors and management, discuss major laws and regulations, and increase familiarity with the examination process.
Comptroller Discusses Regulatory Redundancy and Tailored Regulations before Senate
On June 22nd, Acting Comptroller of the Currency Keith A. Noreika discussed ways to promote economic growth and reduce regulatory burden while ensuring proper oversight of the federal banking system in testimony before the U.S. Senate Committee on Banking, Housing, and Urban Affairs. Noreika highlighted opportunities to reduce regulatory redundancy and tailor regulation to fit the size, complexity, and risk of regulated institutions. OCC Press Release.
Agencies Release List of Distressed or Underserved Nonmetropolitan Middle-Income Geographies
On June 21st, the OCC announced that it, along with the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation (“FDIC”), publicized the availability of the 2017 list of distressed or underserved nonmetropolitan middle-income geographies, where revitalization or stabilization activities are eligible to receive Community Reinvestment Act consideration under the community development definition.
Agencies Issue Host State Loan-to-Deposit Ratios
On June 21st, the OCC announced that it, along with the Board of Governors of the Federal Reserve System and the FDIC, issued the host state loan-to-deposit ratios that they will use to determine compliance with section 109 of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994. These ratios replace the prior year’s ratios, which were released on June 17, 2016.
New Comptroller’s Licensing Manual Booklet
On June 19th, the OCC announced the issuance of its “Articles of Association, Charter, and Bylaw Amendments”booklet of the Comptroller’s Licensing Manual. This new booklet consolidates the OCC’s policies and procedures regarding articles of association amendments for national banks; charter amendments for federal savings associations; and bylaw amendments for national banks and federal savings associations.
OCC to Hold Innovation Office Hours in New York
On June 19th, the OCC announced that its Office of Innovation will host office hours for national banks, federal savings associations, and fintech companies from July 24th through July 26th, at the agency’s district office in New York City. Office hours will offer a chance for meetings with OCC officials to discuss fintech; new products or services; partnering with a bank or fintech company; or other matters related to financial innovation. Those interested can request an Office Hours session through July 5th, and must provide information on why they are interested in meeting with the OCC.
FDIC Chairman Testifies on Legislative and Regulatory Relief Recommendations
On June 22nd, FDIC Chairman Martin J. Gruenberg testified before the U.S. Senate Committee on Banking, Housing, and Urban Affairs. Gruenberg offered an overview of the FDIC’s efforts to streamline and simplify banking regulations and made recommendations for legislative changes to reduce regulatory burdens on financial institutions, including increasing the asset threshold for banks eligible for an 18-month examination cycle and creating a new appraisal threshold exemption to reduce burdens for many community banks.
FDIC Offers Regulatory Relief to Financial Institutions to Help Recovery from Severe Storms in Arkansas
On June 19th, the FDIC published guidance for financial institutions on the regulatory relief it will provide to supervised institutions located in areas of Arkansas affected by severe weather and other initiatives to facilitate recovery in the region.
FDIC Appoints New Ombudsman
On June 16th, the FDIC announced that it has appointed M. Anthony Lowe to the post of FDIC Ombudsman and Director of the Office of the Ombudsman. The Ombudsman’s office interacts extensively with bankers, other industry representatives, community groups, and members of the public to answer questions and hear concerns about FDIC policies and regulations. Mr. Lowe, who will be based in Chicago and will assume his new duties July 2nd, replaces the retired Cottrell Webster.
FFIEC Proposes Additional Revisions to Streamline ‘Call Report’ for Small Institutions
On June 20th, the Federal Financial Institutions Examination Council (“FFIEC”) announced its proposal for additional revisions to streamline several “Call Report” schedules. Comments on the proposal must be submitted within 60 days from publication in the Federal Register. Call Report Federal Register Notice.
Treasury Department Developments
Treasury Designates Individuals and Entities Involved in the Ongoing Conflict in Ukraine
On June 20th, the U.S. Department of the Treasury announced that its Office of Foreign Assets Control has reinforced existing sanctions on Russia by designating or identifying a range of individuals and entities involved in the ongoing conflict under four Executive orders related to Russia and Ukraine.
CFPB Report Details Problems with Student Loan Servicers’ Handling of Forgiveness Program for Public Servants
On June 22nd, the Consumer Financial Protection Bureau (“CFPB”) announced the release of a report that highlights complaints from borrowers about student loan servicers mishandling Public Service Loan Forgiveness, which offers people in public service jobs a path to debt forgiveness after 10 years. The report notes that borrowers have experienced delayed access to or denial of loan forgiveness through wrong information about their loans, flawed payment processing, and mishandled job certifications. In response, the CFPB has launched a campaign to help public servants stay on track for federal loan forgiveness. See remarks by CFPB Director Richard Cordray.
FinCEN Offers Fact Sheet on 314a Program
On June 20th, the Financial Crimes Enforcement Network (“FinCEN”) published a fact sheet on its 314a Program, which requires certain financial institutions to search their records and identify if they have responsive information with respect to particular subjects under investigation for engaging in terrorist acts or money laundering activities. FinCEN indicated that 95% of the 314(a) requests it has processed for law enforcement have contributed to arrests or indictments.
Securities and Exchange Commission
Speeches and Statements
Clayton Committed to Pursuing Bad Actors and Reinvigorating the IPO Market
In remarks at the SEC’s Investor Advisory Committee meeting on June 22nd, SEC Chairman Jay Clayton reiterated his commitment to pursuing and punishing bad actors who commit fraud against retail investors and others and to reviving the declining initial public offering (“IPO”) market. Clayton indicated that he has directed staff in the Division of Corporation Finance to develop recommendations for encouraging more companies to pursue public listings.
DERA Director Considers Role of Machine Learning in Regulation
In remarks before the OpRisk North America 2017 Conference on June 21st, Scott W. Bauguess, Acting Director and Acting Chief Economist of the SEC’s Division of Economic and Risk Analysis (“DERA”) discussed the emergence of artificial intelligence, big data, and machine learning in market regulation.
DERA Director Examines Asset Management Activities and Market Fragility
In remarks at the Buy-Side Risk USA 2017 Conference on June 20th, DERA Acting Director and Acting Chief Economist Scott W. Bauguess discussed the underlying economics of concerns about asset management activities and financial stability risks. Bauguess emphasized that changing market conditions not only requires regulators to assess new risks, but also “monitoring and being aware of the new contexts in which the old risks can emerge.”
DERA White Paper Examines Impact of Cash Management on Mutual Funds During Extreme Liquidity Demand
On June 20th, DERA staff published a white paper that examines the contribution of individual mutual funds to the aggregate liquidity demand during episodes of extreme liquidity demand. The paper found that individual funds with low cash levels contribute more to overall liquidity imbalance during these episodes because they face higher investor redemptions and their managers choose to build up more cash reserves.
The SEC announced on June 20th that Robert Evans III will join the agency to serve as a Deputy Director in the SEC’s Division of Corporation Finance. The SEC also appointed Kelly L. Gibson to serve as the Associate Regional Director for Enforcement in the SEC’s Philadelphia Office and Kathryn A. Pyszka to serve as the Associate Regional Director for Enforcement in the SEC’s Chicago Office.
On June 19th, the SEC released the Draft EDGAR Filer Manual Volume I (Version 28), the Draft EDGAR Filer Manual Volume II (Version 42), the Draft EDGAR Form 17-H XML Technical Specification (Version 1.1), the Draft EDGARLink Online XML Technical Specification (Version 20), the DRAFT EDGAR ABS XML Technical Specification (Version 1.7), and the Draft EDGAR Form D XML Technical Specification (Version 9).
Investment Management Updates Money Market Fund Statistics
The SEC’s Division of Investment Management released new money market fund statistics on June 15th. The updated statistics include data as of May 31, 2017.
Commodity Futures Trading Commission
Giancarlo Commits to Strong Enforcement and More Efficient Regulation at Confirmation Hearing
During testimony before the Senate Agriculture Committee on June 22nd in support of his nomination to serve as Chairman of the Commodity Futures Trading Commission (“CFTC”), Acting CFTC Chairman J. Christopher Giancarlo pledged to maintain strong enforcement of CFTC regulations, to use technology to enhance the CFTC’s regulatory efforts, and to find ways to apply existing CFTC rules in ways that are less burdensome. Reuters reported that Senator Pat Roberts (R-Kansas) urged Giancarlo to ease regulations on farmers and energy producers.
CFTC Unanimously Approves Revisions to Delegated Authorities and Technical Amendments
On June 20th, the CFTC announced that it has unanimously approved a final rule on revisions to the Commission Delegated Authority Provisions and Technical Amendments. The final rule establishes new, and amends certain, existing delegations of authority to agency staff. The final rule also makes a limited number of conforming technical corrections to certain agency regulations. The final rule is effective upon publication in the Federal Register.
Revisions to Freedom of Information Act Regulations
On June 20th, the CFTC announced that it is revising certain provisions of its regulations for disclosing records under the Freedom of Information Act (“FOIA”) to comply with the FOIA Improvement Act of 2016. In addition, the regulations would streamline the language of procedural provisions concerning initial determinations and administrative appeals. The regulations have also been updated to incorporate changes in the CFTC’s administrative structure, remove superfluous verbiage, and correct inaccurate text. This rule is effective July 20, 2017. Comments must be received on or before August 21, 2017.
CFTC’s Only Democratic Commissioner to Step Down
On June 20th, Reuters reported that the CFTC will lose its only Democratic commissioner in the next few months, as Commissioner Sharon Bowen announced at a public meeting that she intends to step down. Bowen mentioned that she will try to time her departure around when the U.S. Senate confirms another CFTC member nominated by President Trump. The Financial Times quoted Bowen as saying that the situation at the agency has become “intolerable” since it has been operating with only two out of the usual five commissioners for the past few months. She added that this “makes routine business difficult, but makes important policy decisions almost impossible … [w]ithout a full complement of commissioners to consider the far-reaching implications of our decisions, we are frozen in place while the markets we regulate are moving faster every day.”
Federal Rules Effective Dates
May 2016 – July 2016
Click here to view table.
Exchanges and Self-Regulatory Organizations
Depository Trust Company
DTC Proposes to Establish Swap Margin Segregation Accounts for Deposited Securities
On June 22nd, the SEC requested comments on a proposed rule change filed by The Depository Trust Company (“DTC”) that would provide accounts for the segregation of securities held at DTC that are intended to be pledged as swap margin in conformity with certain regulations applicable to swap counterparties posting swap margin and would allow participants to transfer deposited securities to a Swap Margin Segregation Account of a pledgee designated for the purpose of segregating swap margin. Comments should be submitted within 21 days of publication in the Federal Register, which is expected the week of June 26, 2017. SEC release No. 34-81001.
Financial Industry Regulatory Authority
SEC Approves FINRA’s Proposal to Expedite List Selection in Arbitration. On June 19th, the SEC issued an order approving a proposed rule change filed by FINRA that will amend its arbitration rules to provide that the Director of FINRA’s Office of Dispute Resolution will send the list or lists of arbitrators generated by the Neutral List Selection System to all parties at the same time, within approximately 30 days after the last answer is due, regardless of the parties’ agreement to extend any answer due date. SEC Release No. 34-80973.
SEC Approves ICE Clear Europe’s New Price Submission Process
On June 20th, the SEC approved ICE Clear Europe Limited’s (“ICE Clear Europe”) amended proposal to revise ICE Clear Europe’s CDS End-of-Day Price Discovery Policy to implement a new price submission process for Clearing Members. SEC Release No. 34-80978.
SEC Delays Action on IEX’s Proposal on Auctions, Market Data, and Trading Halts
On June 22nd, the SEC designated August 7, 2017, as the date by which it will approve, disapprove, or institute disapproval proceedings regarding the Investors Exchange LLC’s (“IEX”) proposal to adopt rules governing auctions conducted on the exchange for IEX-listed securities, provide for the dissemination of auction-related market data, and add rule provisions governing trading halts and trading pauses in IEX-listed securities pursuant to the Limit Up-Limit Down Plan. SEC Release No. 34-80998.
Municipal Securities Rulemaking Board
MSRB Releases Complaint Product and Problem Codes Guide
On June 19th, the Municipal Securities Rulemaking Board (“MSRB”) issued guidance on the product and problem codes for use in electronic customer or municipal advisory client complaint logs that are relevant to municipal securities and municipal advisory activities and applicable under Rule G-8. The codes, which the MSRB developed in coordination with FINRA, are based on product and problem codes required by FINRA Rule 4530, but tailored to address municipal securities and municipal advisory activities.
MSRB Emphasizes New Priorities in 2017 Strategic Goals
The MSRB announced on June 19th that it has revised its strategic goals for 2017 to emphasize the importance of data, information, and education in the regulation of the municipal securities market. Among other things, the MSRB will prioritize facilitating industry understanding of and compliance with MSRB rules; expanding the utility of its Electronic Municipal Market Access (“EMMA”) website; and supporting market transparency and regulation through the use and dissemination of municipal market data.
NYSE Withdraws Proposed Amendments to Listing Rules for Companies Without Prior Exchange Act Registration
On June 22nd, the SEC provided notice that the New York Stock Exchange LLC (“NYSE”) has withdrawn its proposal to modify the provisions of its Listed Company Manual relating to the qualification of companies listing without a prior Exchange Act registration and an underwritten offering to permit the listing of such companies immediately upon the effectiveness of an Exchange Act registration statement without a concurrent public offering registered, provided the company meets all other listing requirements. SEC Release No. 34-81000.
Failure to Disclose Financial Information Was Not Material; Company Did Not Mislead Shareholders Regarding Its Business Prospects in Hawaii
A securities class action arose out of a 2014 IPO for shares of Vivint Solar. Plaintiff argued that the district court erred in finding that the complaint failed to state a claim, under the Securities Act of 1933, in alleging that Vivint failed to disclose the financial information from 3Q 2014, and in alleging that Vivint failed to disclose the material adverse effect on its business of the evolving regulatory regime in Hawaii. The Second Circuit affirmed dismissal on June 21st, holding that Vivint’s omissions were not material and that Vivint did not mislead shareholders regarding its Hawaii prospects. Stadnick v. Vivint Solar Inc.
Low Interest Rates Pose Financial Stability Risks
On June 20th, Eric Rosengren, president of the Federal Reserve Bank of Boston, gave a speech at a conference on macro prudential policy in which he said that the era of low interest rates in the U.S. and elsewhere poses financial stability risks and that central bankers should factor financial stability into policy making and in their regulatory supervision. CNBC.