Speech Vice Chairman Donald L. Kohn At the Office of Thrift Supervision National Housing Forum, Washington, D.C

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Speech
Vice Chairman Donald L. Kohn
At the Office of Thrift Supervision National Housing Forum, Washington, D.C.
December 8, 2008

Restoring Financial Intermediation by Banks: The Role of Regulators

I thought I might use these brief introductory remarks to put some of our challenges as regulators in the broad context of the tremendous shifts in the pattern of financial flows that we are witnessing. Traditionally, funds have been channeled from savers to borrowers in two ways: through financial markets and through financial intermediaries, such as banks and savings institutions. The turmoil in the U.S. financial system during the past 16 months has put both channels of financial intermediation under great strain and, in doing so, has produced a significant financial crisis. Large losses taken by financial institutions and investors, mostly from mortgage-related assets, have increased uncertainty and undermined confidence; these events have caused lenders to greatly tighten credit conditions for households and businesses, which, in turn, have contributed to a downturn in the economy that has reinforced the strains in the financial system.1

Full speech here.