In remarks delivered today, William Dudley, President and CEO of the Federal Reserve Bank of New York, provided his assessment of the Federal Reserve’s response to the financial crisis and the road ahead for the economies of the U.S. mainland and Puerto Rico.

In Mr. Dudley’s assessment, the Federal Reserve’s unprecedented intervention in the economy “prevented the collapse of the financial system and a significantly deeper and more protracted recession.” However, in his estimation, there is a great deal of work remaining for the Federal Reserve, especially with regard to smaller banks. In this regard, he expressed his concern for those banks with large commercial real estate exposure.

Mr. Dudley also called for regulatory reform, stating that it is “essential to prevent this type of financial crisis going forward.” The reforms mentioned included, a resolution mechanism for the smooth winding down of large, complex financial firms, higher capital requirements for large banks, bigger liquidity buffers, and changes to ensure that compensation practices are consistent with safety and soundness financial stability.

In assessing the current state of the Puerto Rican economy, Mr. Dudley stressed the importance of greater financial education of the public, as well as improved statistical systems for policy makers.