So, this panel is on consumer protection and housing and is chaired by Sandy Bronstein. Sandy until very recently was the director of the Division of Consumer and Community Affairs here at the board, a division that thrived under her leadership. Sandy was also the director of that division under Ned's tenure. And so, both she and her staff worked closely with Ned on consumer protection issues, in which as I mentioned earlier, Ned was deeply interested in. Earlier in her career, Sandy was on the front lines of community development here in D.C., leading and working in several organizations. With that introduction, Sandy, the floor is yours. Thank you, Dan. Good afternoon, everybody. And I just want to say it's a real privilege to be here. As Dan mentioned, I retired from my job here at the Federal Reserve Board after 27 years, which for the Fed, I was still rookie. You wouldn't believe how long people stay here at the Fed, it just still amazes me. But I retired and I still, I feel very privileged that I was able to come back and do this and that the board was very generous in allowing me to do this because it means a lot to me personally. I worked very closely with Ned when he was here at the board and he was a real champion of consumer protection and community development here at the board and something that we certainly had never really had before, not in the way that Ned did it. And you know, he was a very hard act to follow. So he means a lot to me and to my division and many, some of whom are still with the board and are here today because he was so important to us. So we're going to do a little something different on this panel. We don't have PowerPoints, which I know to the researchers, which was very hard for Bob Avery to deal with because you know, it's like I think I, therefore I am and for economists I have a slide or data, therefore I am. So we don't have PowerPoints. We had a very interesting conference call a few weeks ago to prepare for this panel. And one of the things about this panel is every one of us up here had personal relationships with Ned Gramlich. And our conference call ended up being, we talked substance and we're going to talk substance today. So we also ended up telling a whole lot of Ned's stories of our real life experiences with him, which were just wonderful. We were supposed to have an hour long conference call and of course it ran over. And some of those stories we plan to share with you today. So I'm going to start out, I'm really pleased to have the people here and on the end over here is Bob Avery, who formerly was a staff person here at the Federal Reserve Board when Ned was here. He's now at FIFA. And we've got Eric Belsky, who's from Harvard, from the Joint Center for Housing at Harvard and Ned worked closely with them and he'll talk about that. And I have Ken Wade, who is the former, he's now with Bank of America, but he's the former director of NeighborWorks America, which was an organization on which Ned sat on their board of directors when he was here at the Fed and we'll talk about that. So I'm going to, the way we're going to do this is we, rather than have everybody get up and say a piece like everybody else has done, we're actually going to have a conversation and have you listen and then at the end we are going to take questions. To start out, I just want to say a little bit about Ned Gramlich when he first came to the board. It was, I had been here for quite a while and Ned was really a very different kind of governor than we had ever had before. So one of the things that was interesting earlier today, Bob and I were talking offline and we said all the people who have preceded us at this conference have been colleagues of Ned. And although we kind of, our colleagues, we, Bob and I are the only ones so far that have gotten up who actually worked for him. We're staff members, which is a little bit different, although Ned tended to treat us like colleagues, but he still was our boss. So one of the things that here at the board, when I first came to the board in the late eighties, the governors who by the way sit in that building across the street on the second floor, that area was kind of Mount Olympus is how the fed culture was. And the governors in those offices, you know, you didn't really go up there unless you were like summoned. And when you did show up in those offices, usually it was to get some pronouncement from a governor and it was kind of, and everybody was governor this, governor that, except for chairman this, chairman that.  And then Ned came in. And one of the first things he did was when we first met with him is that he told us, I don't like that governor stuff, just call me Ned. And I have to say for a lot of staff here at the board, it was very disconcerting at first because we were not used to that, but we grew used to it. And now, luckily, it's become more the standard here at the board. And it's, you know, people who are more recent to the board wouldn't understand what it used to be like, but Ned was really kind of the forerunner of wanting to have staff be more collegial with him. He wanted us to present opposing viewpoints. He wanted us, if he had a pronouncement to make, he wanted us to take issue with it and tell them why we disagreed and argue with him. And that was something very, very different for at least us. I know in our division, and I think others around the board. So anyway, that was something I just wanted to bring up, which was, you know, like I say, Ned here at the board, it was just a breath of fresh air. So I'm going to start by putting a question to Bob Avery, who I said also was staff here at the board. But Bob, by the way, was in a different division than me. Bob is an economist, and he was in the research division. And so, Bob, can you talk a little bit about the types of research that Ned was interested in doing related to consumer matters, not the monetary policy, economic stuff, but related to consumer matters? And like, did he have a particular or overall research agenda for the consumer area? And, you know, did he talk to you guys about that? Let me just add before I answer that, I'm just one other anecdote about Ned and governance and creating a climate for staff that I'm not sure I fully understood or appreciated at the time, but I'm, as I age, much more. And I think it's important for schools of teaching public policy to think about how do you create a climate where you get good government employees, good government staff work. How do you do that? What are the necessary things to do? And let me give you one example, and I'll get to the other question in a second. We were required to consult, we had a congressional report we had to do, and my colleague Glen Kanner and I were supposed to consult with two members of Congress who were at the ideological different ends of the spectrum. We were supposed to consult with both of these people, and they were both very powerful and intimidating people. So we went down with Ned to the Hill, and we consulted with them, and then one of these people, and I won't say which one, I started to argue with the person and take issue with what they were yelling and telling us to do the study in this particular way. And as we left, Ned said, don't do that. Just sit there and the way he put it, take it like a man. He said, they've got a different agenda, and it's not about this study. They want you to do, they already know the answer they want, and they want you to produce their answer. And there's no amount of arguing you can do with them that makes any difference. He said, the anecdote to that is to do the right thing. If you try to cater to what they want for optics or whatever reason and end up doing the wrong thing or shading it, now you've left yourself open to legitimate criticism that you didn't do the right thing. He said, my job is to protect you from those people. Your job, Avery, is to do the right thing. And you stick to your part, I'll stick to my part. Now one final thing to add to that, later on, some totally different environment, we were meeting with Michael Barr, in his younger age, younger years, some totally different thing. And maybe some heated discussion with Michael, and I got kicked by Grandma under the table. So I thought, I must have violated the Grandma rule.  And we're walking out, and I said to Ned, why did you kick me? I didn't think Michael was, you know, was not nothing political there. And he says, oh, did I kick you? He said, it was so boring in there. I must have fallen asleep. I just inadvertently kicked you. So I'll talk a little bit more. But when we first got here, Ned called Glenn Cannerney, his rigor police. And I took that as a compliment, but I'm not sure he did. But in any event, he said, here are the policies. Here are the rules that we're going to visit over the next half a dozen years. I want you guys to start research. When we get to those rules, I want you to have already done research on those things. So that when we get to them, you're already, we've already got some stuff. And then we spent time, particularly when he was focusing on the CRA, and I'll talk about that a little bit later. But he laid out an agenda saying not what answer he wanted, but what were the kinds of things that he felt we needed good evidence in order to do good rulemaking. And he wanted us to start in that process and empower us to do that. So there was a significant agenda. And I'll go over maybe a little bit later, but with some specific item. But he clearly came in with a game plan of having the policymaking be data driven and have based on research. Eric, I'm going to turn to you for a second. In your work at the Joint Center, I know that your staff, you and your staff have conducted a lot of studies over the year. And I'll give you a little plug. You put on a fabulous biennial conference with research on housing. And I know that Ned was a big supporter of your efforts over the year. And I think while he was around, he used to participate in pretty much all those conferences. Because I always went to them and he was always there too. So can you tell us a little bit about your interaction with him and the support that he gave to the work that you guys did? So first of all, I would also say it's an honor and a privilege to be here honoring Ned. I think to anyone who met him was just a remarkable individual that you very quickly bond with and want to have an opportunity to spend more time with. He did come to many of our conferences and would engage in those conferences in a very active way. And I guess the way I would describe my impression of Ned is that he was just an incredibly inquisitive person. He just sat there with lots of things he wanted to know, lots of things he wanted to understand. And he had formulated, I think, as Bob said, a lot of questions in his minds that he felt needed to be answered before he could really, in good faith, reach conclusions and take what were going to be significant public actions. Because of course I knew him when he was a governor of the Federal Reserve. So he was just a very deliberate person, but also a very inquisitive person. And I would say intellectually playful as well. So the idea that he would always want you to and would invite you to poke holes in what he might be saying to give him ideas about what other people might say that I had heard that might disagree with what he was saying. So it was always a give and take back and forth. And as you know, and it shows up in this wonderful book that he did, which I think we'll end up talking about on Subprime Mortgage Lending, that he mentions in the final chapter of paper that was presented at one of these conferences. And it was a paper written by a law school professor, Duncan Kennedy, that was entitled, Why Don't the High Rotors Put the Low Rotors Out of Business? And he was just literally captivated by this paper, as I think many of you know. And he came up to me afterwards. He said, there's something in here. I really need to get a handle on it. I really need to understand this. And the fundamental question was in a world in which many, many, many businesses' interest is to do the right thing, to comply with laws, to serve customers in fully responsible and responsive ways. And you have other companies that are not behaving in that way. Why don't the ones who behave in that way band together? They should be doing better in the marketplace and more sustainably. And figure out ways to create standards that you could enforce. And I think with a leaning towards, he'd like to see this be industry standards that were industry-led and that industry would comply with. And if you didn't, it would be very obvious because you wouldn't get certifications or you would fall out of certification. And then I think he also had the thought about, why aren't they more supportive of some regulations that basically endorse the things that they are already doing but would prohibit certain practices that they aren't that others are. And I think that really kind of for me encapsulated a lot of what he was like in terms of really wanting to engage with a concept, really trying to figure out how it applied to what he himself was trying to do, his interest in understanding how industry could organize itself to do the things that he felt made sense for the industry to do. But he also was a person who would pick up the phone when he had a question and he would call. And when he was working on his book, he was very intensely trying to figure out if he had reviewed the right literature. He really did not want to leave a stone uncovered. And he actually described his enjoyment in working on this book because there were so many contradictory points of view that were ostensibly supported by very detailed data and evidence. And he loved the idea of rolling up his sleeves and deciding which evidence really made sense to him and really ought to inform his thinking and his policy judgments. And then of course, he was a decisive person. So he reached a lot of conclusions. But I think many of us remember him despite all those remarkable contributions. And his book is an amazing contribution. It's just an incredibly warm human being. I'm looking at Paul Weichu came. We renamed a fellowship that we have that we work with NeighborWorks on, the Edward Gramlich Fellowship. And we had a 10th anniversary. We asked Paul to come and speak. And Paul is relating stories about here he was as a governor and he's rolling around with my kids on the floor at a dinner. That's something you just wouldn't expect a person to do in that circumstance. And that's what he was like. He had a playful nature intellectually and I think a deep appreciation for people. I love the fact actually that all three of you are mentioned in the acknowledgments of his book and in very flattering ways. Thank you. Ken, I'm going to turn to you. And I think one of the interesting things is Ned's work in connection with NeighborWorks America. So for those of you who don't know about this, let me explain a little background. One of Ned's responsibilities as a governor here at the Fed is that somebody from the board of governors sits on the board of directors of NeighborWorks. The NeighborWorks board is made up of the regulatory agencies in HUD. So when Ned came in and was told he was going to be the consumer governor, this was one of the duties that was assigned to him. And he was fine with that. And what was really interesting is that as it turned out, so Ned's parents lived in upstate New York and if I get this wrong, looking at Ruth Gramley because I know she'll correct me. But anyway, very interesting story and one of these things small world in coincidences is that Ned's parents lived in upstate New York. And Ned's father, for years, was involved with a local housing organization in upstate New York, the town where they lived. And Ned knew that, but he never paid a lot of attention to what it was or who the parent organization was. So it turns out that Ned sitting on the board of NeighborWorks, NeighborWorks was the parent organization of this organization in New York where Ned's father had been involved for years. So my understanding is Ned's father was thrilled to hear that Ned was now on the board of directors of the parent group. And also for Ned, it was a very personal connection to the work he did with NeighborWorks. And there used to be, there was always a term to being chair of that board. And I know Ned did at least two terms. They didn't want him to leave being chair of the board. He got so involved in the organization. But let me turn over to Ken. Can you talk a little bit about Ned's work with the organization? And also you might tell people a little bit more about NeighborWorks first. Sure, sure, thanks. And I'm honored to be here. And at this conference sponsored by two institutions that Ned felt very deeply about. Obviously, University of Michigan and then here at the Fed. As Sandy said, and I'm going to be clear, I'm not speaking as a Bank of America representative. I'm here in a role that I had at NeighborWorks when Ned served on the board. And NeighborWorks is a congressionally charted national nonprofit. It gets an annual appropriation from Congress, but it's not a federal agency. But it has a lot of the characteristics of a federal agency. It has to testify at appropriations hearings and go through the normal federal budgeting process. And it has this statutory board made up of the regulator to the banking sector. And around NeighborWorks, we would typically say that someone would come to Washington for a very important presidential appointment. And when they showed up here, they were told, oh, yes. And by the way, you're on that NeighborWorks America board. And most of our prior board members had no idea what it was we did or how it connected to the local communities that we serve except for Ned. His father was on the board of one of our local affiliates in Rochester, the Rochester Neighborhood Housing Services. And for years served on the board there and all of the organizations that were affiliated with NeighborWorks had a local board. They were independent nonprofit organizations that raised their own resources locally, but they were all part of this network of community-based organizations. And in the early years, NeighborWorks created these organizations from scratch where nothing existed prior. And in the early years, they were all called Neighborhood Housing Service of this place or that. But since that time, they admitted preexisting organizations that had their own names. So it's a much more diffuse organization in terms of name, but all of them use NeighborWorks in their name in some way, shape, or form or in their branding. And one of the things about Ned's contribution, I mean, he was highly regarded by the staff at NeighborWorks in his role as chair, but we always used to try to get all the board members out to visit the local communities. And Ned was always very eager and interested in going out and seeing how this stuff worked at street level because many of these organizations were lenders and had their own loan funds. So they actually loaned money to people in their local communities. And many of them developed affordable housing as well. So obviously there was an intersection between what Ned had done historically in academia and in the policy world with his role on the board of NeighborWorks America where he could see some of this playing out in practice. So one of the things that I wanted to cover a little bit was actually connects to what Eric was talking about with the paper with the high rotors and low rotors. And I was at that conference, I remember that well because on the plane on the way home, Ned talked about, I was with him and he talked about that quite a bit. But didn't he take some of that to NeighborWorks because obviously they were a high rotor and talk about how ways that you could be more competitive with the private sector. I mean, one of the things that we did do at NeighborWorks we had initiated on the Ned's leadership a home ownership initiative which was one of the early efforts to demonstrate that you could responsibly loan to low and moderate income individuals and have them become homeowners. Some of the early work that NeighborWorks did was primarily around home improvement lending but this was expansion into actual creation of homeowners. And then in addition to that as a result of that work NeighborWorks along with probably the Center for Responsible Lending, I don't know if Mike was here. Yeah, was here. I think NeighborWorks and probably CRL were probably the two national organizations that began to raise the alarm about predatory lending. And that was driven by the work that our local affiliates were doing in their local communities, what they were seeing playing out in particular Ned's sometime in Chicago with our Chicago affiliate. They had done an extensive study kind of block by block looking at the effects of who was lending in their market what kind of loans were people getting and what was happening to them over time. And we think that helped inform Ned about the concerns and the challenges around this segment of lending that was going on. In the very early years it obviously didn't pose the kind of systemic challenge that it became in later years and I don't think any of us in that early period thought that it would become something that would almost bring down the world economy. But at the end of the day it was something that clearly was playing out and Ned was concerned about it. So as a result of that he also encouraged us to set up the Center for Foreclosure Solutions which was again one of the early attempts to try to get a handle on the growing foreclosure problem at the time that was principally playing out in lower income communities around the country. Yeah, go ahead. Yeah, I jumped in on this. I don't remember the exact, I remember two episodes. One was early on after having some conversations with Ned about this issue of high rotor and low rotor. Ken, you asked, I think it was Bill Apgar and myself to go to a meeting and we were in some hotel in Washington talking about strategic planning and the conversation turned to this issue that you had all these actors in the community that you had already identified as doing things that you felt were not in the interest of the community. And then it was kind of critical to figure out how to position yourself because in the end all the good work you were doing was gonna be problematic because if these things led to high levels of foreclosures it was gonna have all these significant negative externalities. And I remember at some point then a couple years later having another conversation with Ned and he was basically really focused on that. He was focused on this issue of what happens if we get these concentrated foreclosures. What is it gonna mean for communities and how do we avert what is essentially and later was described in a Federal Reserve paper on housing came out a couple of years ago as dead weight loss. So essentially you create a situation in which if you were able to avert these foreclosures you would be preventing a lot of damage that didn't necessarily need to be done. He's really focused on that. He was also very focused when we got into around the 2005-2006 period again I think to say that he was thinking ahead of where other people were thinking on this would be an understatement. But he was really interested and he would, I think he had incredible resource at the Fed. Nevertheless he would never miss an opportunity to tell you what he thought you might study or should be studying. And he said, where is this capital coming from for all this kind of lending? Because it looks like a lot of it's gonna be a problem and I know they're charging higher interest rates so he had an interest in that. And he said, who are the nature of the players really who are doing this? And even more kind of how do they service loans? What are they up to? And he said, you know you ought to study that. We didn't quite have the tools or resources to study it. I remember getting a lot of data and information around 2006 people come to my office with the shares of loans that met some of these categories of subprime lending or of another category of loan product. He was very concerned about which exposed people to pay bit reset risks. And I remember looking at this number and I'm saying these numbers can't be right. I'd never seen this data source before as an industry data. You know lo and behold it was completely right. But he had the hunch, I think having been out in the ground and doing the kind of work he was doing at NeighborWorks to sort of see that this was likely actually going on before a lot of the data was even available made widely available. I think that's right. My recollection is his pushing NeighborWorks to set up the foreclosure prevention center basically when the tsunami hit, your organization was about the best positioned in the country. Nobody could deal with the true tsunami but you were better positioned than pretty much any other organization to deal with a lot of the issues, right? Right, right. And one of the first things that Congress did to respond to the foreclosure crisis actually was to appropriate money for foreclosure prevention counseling. And one of the things that they had to decide was what means would that money get out to the communities? And they thought about HUD and they thought about other places. And at the end of the day, they ended up choosing NeighborWorks to be the conduit for that funding. And that was because of the early work that NeighborWorks did under Ned's leadership to kind of describe what the issues were related to the challenge that we were facing at the time and NeighborWorks, because it had a network, was able to get the money out on the street fairly expeditiously and was able to make an initial contribution to try to deal with the foreclosure crisis. And I didn't wanna say as well that Ned's contribution being recognized at NeighborWorks for what he had done, not only did NeighborWorks rename the fellowship that we do in collaboration with the Joint Center for Housing Studies at Harvard, but the boardroom at NeighborWorks is named the Ned Gramlich boardroom. And that just goes to show what contribution he made at the institution at NeighborWorks and how people fell about it. We wanna collect some of these because I'm also aware of the Ned Gramlich award that the Opportunity Finance Network gives out now every year because I'm on the board of that. And many things have been named in his honor. And I failed to mention as well, Ned was my boss too. Because as the CEO of NeighborWorks America, he was chair of the board and some might say that one of the things that he made a falling down on is that he was the board chair when I was appointed. I don't know. And but no, we had a great relationship. I had already been at NeighborWorks, but he was the board chair when I was appointed CEO. Well, and we have that in common because he was head of our committee when I was made division director. So he may have fallen down there too. So I wanna go back to, circle back to Bob for a second on CRA and then we are gonna come back to the subprime stuff because I wanna get Eric to talk a little bit about the book which is so important. But first I wanted to talk a little bit. One of Ned's major projects here at the board during his tenure was a very massive rewrite of CRA regulations. And I know for me, this was a really prime example of where Ned felt it was so important to have data to be used for policy reasons which is the purpose of this whole conference. And before I turn over to Bob to talk about how that worked and how the data they did influenced the policy that came out on CRA, I do wanna tell this one anecdote about Ned and data. So one of the things that our division did a lot of, Ned did a lot of public speaking during his tenure at the board. And he did quite a bit of public speaking on consumer protection matters and on community development matters. He was a great spokesperson for our issues. And so as a result of that, our division wrote a number of speeches for him and a lot of them actually were written by Carolyn Welch who's here today. So Ned would always, we wrote Governor's speeches before, but Ned from the day he came in always insisted when we would write a speech for him that we collaborate with Glenn Canner and Bob Avery and Raphael Bostick was here then too, as he used to call them the ABC group, Avery Bostick Canner, the ABC group in order to get data for the speech, we talk about the topic and then we'd go to them and say, okay, here's what we're writing, what can you give us? And so Ned used to say to me when he would give us a speech, you know, a speech commission, don't forget, talk to the ABC group, get some data.  And that was a direct quote, pardon my language, but that's a direct quote. So he used to say that to me all the time, you gotta have data in there.  And we gave t-shirts to Ned and Ruth and you know, I don't know if you still have them and I was gonna, I have one, I was gonna bring it and show it as a thing today, but I didn't, but I just thought I had to tell that story. That was it, that's a classic Ned Grammick story. But with that, do you wanna talk about the data use in CRA and as it informed policy? You know Sandy, before I do that, I was reminded as a 30 year staffer, I forgot to say that these are my views and not those of FHFA or the Fed or anybody else. So now I said that. Ned left here in 2005 and I think when we had originally talked with him when he first came, the CRA was clearly a very much on his mind. And that's the community, now you probably all know what it is, the Community Reinvestment Act. And it's an interagency act that means that all the four banking agencies kind of had to agree or technically they didn't, but they, good if they did agree on how the rules would work. They started in 2002. And Ned, I think it rolled along and they did what this is sort of standard interagency rulemaking. And it became 2003 and 2004. And we had comments and lots of things and there's no rules. And it gets into 2005. And Ned senses there's a problem here because there's nothing emerging as a consensus. And the OTS is decided it's gonna go its own way. Well, this is not the way regulatory this is supposed to work. The issues were as follows. There was a, we had a large bank test and a small bank test. And the cutoff was $250 million. And the small banks felt that it was way too low. And that it was a regulatory burden that really they were applying to the large bank test. And it should have been a higher level. And they were pushing for a billion dollar cutoff. And that was OTS that already decided that was the right answer. The OCC and the FDIC and I won't speak for them but one interpretation would be is they saw this as an advocacy battleground between the community groups and the banks. And they were kind of wanting to satisfy each one and they hadn't figured out how to do that. The community groups wanted to get more teeth into CRA and do other things. And they also didn't want to raise the threshold. Sort of an auxiliary issue there was how to treat rural areas. The theory was written initially as an urban law. And really the question had become sort of apparent it wasn't working so easily it didn't really apply to rural areas and what was the right policy. So Ned sensed this lock jam. Nothing was coming out. And he said called Glen and IN and said we have to, I don't want to do it as advocacy I want to make it data driven. I want to figure out what's right here. Is this threshold set at the right spot? Is there evidence that it should be at a different spot? Is it right? Who is right? What benefits truly the community and getting the funds to the community? Can we work on that? So what we did is we devised this. What I think in retrospect was a pretty good process. One of the things we did is we took every single bank that had ever, the banks grow and they grow from being under 250 million to being over 250 million. So they would transit through this threshold. We looked at all of those transitions and said did their behavior change? Was it something magical about 250 million dollars that all of a sudden they became a different kind of institution and being subject to this larger test, whatever how it was applied would in fact impact them in different ways. We found no evidence of that. We also looked at the banks just below 250 and the banks just above. And again, we could really not see any difference. We looked at all kinds of different measures of that. But then we did something that I thought was really, really novel. Ned said, you know, we have all these examiners out there and they don't, you know, they go into these banks every day and they're committed to the mission. Let's ask them about this threshold and find out what they think. And they've never been asked. That's not the way policy policy has been topped down not bottom up. So we contacted Fed examiners, went out to the reserve banks and somebody in Sandy's division did effectively what amounted to a survey. And the examiners came back and they basically said, you know, we don't, a $250 million bank isn't a large bank. They really aren't, we, when we examine them and we give them ratings, we really treat them like small banks. We treat a $300 million bank, we treat a $500 million bank. It really isn't until you get up into the high, close to a billion dollars that it's realistic by based on what they do that you should treat them in a different way. And so effectively they were saying that threshold is really at the wrong spot, that these banks aren't at the right level. They really, a billion dollars isn't gonna do any social harm. We're already treating them as though they're a billion dollars. And Ned then realized that he had political capital, that if he was willing to concede to the OTS and to the bankers that he would go for a billion dollar cut off, how could he leverage that win, which would make them very happy, into doing something that would truly benefit the cause, if you wish, of supporting communities. And the area he focused on was the rural areas. So he wanted us to take a hard look. Again, all this was data driven. How does it apply in the rural areas? Is there some evidence that the way it's working in the rural areas really doesn't work very well? And he focused on this band of banks, particularly that we're gonna win because they were gonna lose the, lose, they would become small banks, no longer large banks. What teeth might we have with those banks to not completely let them go and become small banks? Did they play a critical role? We focused on the rural areas and what we did is looked at banks who spanned urban and rural. They operated in both markets. Did they treat the rural markets differently than they treated the urban markets? They're both in both sets of markets. Did they allocate their loans in the same ways they got deposits as they had branches and so on and so forth? All kinds of different measures and ways of looking at that. And overwhelmingly, it suggested in all but one area that rural markets were better served rather than worse served. The critical area that emerged was community development. That all else equal, banks were less likely to do community development lending in their rural areas than in their urban areas. And it suggested that was a particular problem. And part of it, as we probed and pushed, became structural, was reflective structural. It's the way census tracts, CRA allocates according to geography as well as income of the people. They're just are far fewer the ways to find low income census tracts in rural areas than in urban areas. It's just tracts are much bigger. You aggregate over, poverty areas are smaller. They're more scattered. In a typical state, about 43% of the census tracts in rural areas are below 80% of the median income of the whole state. About 30% of urban tracts are below the median income, are below 80%. Their median income is below 80% of the median income of the whole state. But that's not how CRA works. You compare one rural tract with all other rural tracts. And so it's a different standard. Not the state as a whole, but the population of urban tracts. Under that standard, only 15% of rural tracts are qualified as low income, even though statewide really it should have been 43. So Ned said, can we come up with a scheme that would really expand the coverage in the rural areas, make more areas eligible for CRA credit because bankers like certainty. They like to know you have a five year project. Is this project gonna count? Having it know in advance that if it's done in this area, it's gonna count is gonna, that examiners are telling us you need that kind of certainty to get loans. So we came up, we explored all kinds of different ways to do this and we came up with a scheme that involved treating tracts that it had population loss. We looked at the CDFI definitions. You always like to look for something that's already been adopted by somebody else. And we came up with tracts that had population, areas that had population loss, areas that had high poverty rates and areas of high unemployment. And we made the added in middle income tracts that had gone through this additional degree of distress. We were up close to 40%. Ned, we put all this evidence together and Ned had us create a Federal Reserve bulletin article which had the pretense of kind of an objective research over here and he went back to the other agencies and said, you know, we've actually, I've got these economists and it turns out they've done a lot of work on this. And here's the evidence and we come in and we presented to them as objective people that had no advocacy. And the other agencies hadn't done that. And that turned out to be compelling. And if you look at the regulations that were actually adopted at the very end of his tenure, they reflect the findings that I just went through. And to me, if I look at my years as a staffer, that was kind of the highlight. It was when it all worked. It was all done in the right way. And in the end of the day, the policies that we adopted were, in my view, based on the evidence we had, appropriate good policies. They weren't done by treating advocates and kind of compromising. They were done truly trying to sift out where it matters and where it doesn't. And I, to me, that's the model. If we could all emulate that, it would be a great world. Thanks, Bob. I love that story. And yeah, that was, you're right. Anyway, I want to turn to Eric back to you to talk a little bit about one of Ned's last areas of focus. It was after, well, he started while he was here, but really after he left the Federal Reserve was really looking at subprime. And of course, he published his book after he left here. And I will say, I was also the recipient of many phone calls when he was writing the book. As was Jim Michaels, who's here. I remember one day, this was kind of funny to me, is it was a Sunday afternoon and I was just at home and my phone rang and I pick it up and it's the operator from the board here at the Fed. And I thought, oh my God, what could have happened? Like the operator, the board's calling me on a Sunday afternoon at home. And she told me, she was sorry to bother me, but Ned Gramlich had called the board because he lost my home phone number and he really needed to talk to me and it was urgent. And here's his phone number and could you call him as soon as you can? And it was just so funny to, and she was like protecting my privacy. She wouldn't even give, she had my home phone number, but she wouldn't even give it to a former governor of the Fed. Because so, which has said something, I guess, about privacy, but of course I called him and it turned out he had questions. He was writing his book and he had questions about the subprime stuff and some legal questions because I think what happened that Sunday afternoon is I answered some of them and then I had to call Jim Michaels at home on Sunday afternoon to get the answers for the rest of them. But anyway, do you wanna talk a little bit about the book? Let me start by just reflecting on Bob's story there. I mean, it's just amazing to me because here I am and I'm still learning from that by hearing stories and examples of things that he did and just this intensity about data and facts and trying to come up with informed policies you can see in there. But I love that he also said, I wanna go ask examiners. This should be a more 360 degree view and I want qualitative information, I want quantitative information and it seems very consistent with him and just a very thoughtful thing. Also the way that he did adjust his views of the world continuously in this Bayesian way which we heard over our keynote speaker. He always was trying to adjust and readjust his thinking based on what he found. Just really interesting. It's really a challenge to summarize this book and the reason I say it's a challenge is it is classic, Ned also, not only for being so gracious in the acknowledgments but it's a very slim book. It's under a hundred pages and it's gonna take me 400 pages to describe the fifth section of this 100 pages. He's just so spare in the way he described things that the unpack it actually takes a little bit of time but the book is very interesting and it's very readable and so I still assign it to students in my graduate courses and they still tell me how remarkable a book it is for being so clear yet so penetrating and so on point and as it turned out incredibly prescient but he builds out a whole argument about how the finance system emerged and how we end up with subprime mortgages and starts to speculate about what might happen given the remarkable amount of lending that had gone on and what might be coming next and what are some of the policy prescriptions you might wanna put in place to deal with it and so let me just summarize very quickly and say first of all he thought of it as a multi-pronged approach. It wasn't gonna be something that you could address through any one intervention and he felt that many, many different organizations, many different industry aspects of the industry, angles of the industry, different participants in the sector would really need to do a whole host of things to address what had already happened and where it was likely to go. So of lenders he asked that they do a better job of policing their own industry. He was, as I said, still captivated by the idea that a higher-minded firm should take action to prevent competitors from getting on the field or being able to stay on the field by promulgating and enforcing their own standards. He also very presciently from my perspective said that he felt it would take what he called a one full cycle of the subprime lending and the style of lending that went on before the market would enforce its own discipline. And of course the conversation we have right now is that the market pendulum has swung so far in the other direction because it's imposing so much discipline and there are so many efforts now by industry through its trade organizations to come up with standards that might help restart and restore confidence in investors and in asset-backed securities market which was the secondary market on which subprime mortgages traded. So that was one, that was of lenders, of borrowers. He basically said, look, you have to better understand and educate yourself about risk. And community-based organizations really have to redouble their efforts and government has to provide funding to try to encourage people to just better understand the choices that they make and the risks they may be taking. And of community-based organizations he again felt that they should focus on financial education, helping borrowers to make prudent choices. But he also felt that they should call out lenders that were not doing the right thing and that that was one of their responsibilities that if they saw lenders taking advantage of vulnerable populations to draw public attention to it. Regulators, he asked that they strengthen their efforts at supervision and find ways within existing laws to limit practices that threaten the equity of homeowners. He especially was captivated by the Homeowners Equity Protection Act which was an act as part of the Truth and Lending umbrella that was intended to address what were a series of abuses that were detected in the early 90s as a law I believe was in 1994, man. And that was the first law that really started talking about verifying ability of people to repay which is something that has now become kind of the lingua franca of the post-Dodd-Frank era because ability to repay is now the law of the land and verification of it but it was only for loans that met fairly high spreads above standard rates. And so the threshold was quite high to be called a high-cost loan. And he speculated as to whether there ought to be some kind of middle tier that maybe you call higher priced loans that wouldn't have quite the level of restrictions that are placed on the higher, the high-cost loans, the ones that were above this very high threshold and wouldn't be as strong in terms of discouraging the ability to securitize them. And the short story out of all these things is all these things have occurred. Before Dodd-Frank went into effect, the Homeowners Protection Act, Equity Protection Act regulations were tightened and a lot of these suggestions that he made right here at the board were acted upon maybe not with every detail but the contours absolutely. Of lawmakers, he asked that they consider eliminating what he called a hole in the supervisory safety net but today we would call extending more of the reach of regulation. And in fact, he was very explicit about the supervision to the shadow banking sector. And this is a topic that's still actively debated but certainly the Dodd-Frank laws and the regulations at the primary market level extend to all the financial players and actors in the marketplace, although supervision not so. He specifically called for demanding that taxes and insurance always be escrowed and that arm borrowers be qualified at the fully indexed rate even if they got a discounted rate. For someone who lives and breathes this all the time, it is just amazing to me, this is pretty much what happened. And this part of the book must be 15 pages long. He spoke about the importance of taking care to properly assess Barr's ability to repay repeatedly throughout the book and in this particular section. He warned in another section that the nation should avoid a quote domino effect that forces large and unnecessary losses on households through unnecessary or premature foreclosures. And as I said, there was a paper later that was very influential by the Federal Reserve that pointed out that this wasn't just a problem for households but very clearly for communities because of the negative externalities or the costs imposed by these poor lending practices on A, every other borrower in that community because property values fell and B, because that affected their loan performance, a lot of lenders who didn't offer these kinds of loans. So I found that incredibly again, concise, well put. Givens an experience with NeighborWorks, he was really interested in the role of community-based organization. So he goes on at some length about those, counseling for prudent choices, providing quality loans to borrowers at scale. I think he always felt the best way to crowd out this behavior was to have easily accessible loans to borrowers of these similar backgrounds but borrowers that were done, loans that were done with product features that didn't expose these people to the same risks. He basically felt in reviewing the evidence that it was possible to lend to these people through what we would now call home ownership done right. All these things were things that he talked about. He talked about helping people deal with the inevitable raster foreclosures and helping counsel borrowers in trouble so that they could avert foreclosures. So every aspect essentially of this has been implemented. So let me just tick through them very quickly. Industry is attempting to police itself better as I mentioned. They're trying to establish stronger standards and areas around mortgage-backed securities, collateralized mortgage obligations. They, community-based organizations have expanded. Many of the programs and neighbor works started with were added to in the middle of the crisis. The nation did mount a concerted effort to avert foreclosures through the home affordable mortgage program or HAMP and the home affordable refinance program, HARP, which sounds a little bit better than HAMP. I always felt that HAMP was not the greatest acronym ever invented, but HARP sounds good. These were all things that he suggested because he was really concerned about the negative impact of foreclosures and its collateral damage. FHA has just announced it's launching a program to provide reductions in insurance premiums for borrowers who receive counseling and further reductions if they continue to perform with their loans. These are things that Ned would have wanted to have seen and would have been proud to have seen occur and I would suspect even though it was all written in his book, take no credit for any of them. I had a regulation flowing out of Dodd-Frank, as I said. The Fed did issue stronger rules around higher priced mortgages and consumer disclosures as well. One makers did act to strengthen consumer protections in the mortgage space through Dodd-Frank. So it is really amazing to think that this book came out in 2007 when he was asking all of these questions. It was 2006. The problem, this is probably not the right metaphor, wasn't really a twinkle in anyone's eye to that great extent. A couple of organizations, as Ken mentioned, were wary of what was going on, but he was hard at work thinking about these things, putting this book together and it still is a remarkably relevant, fresh exposition of the issues. Thank you very much. I want to just open it to my panel if anybody has any closing or last remarks they want to make, and then we're going to open to questions from the audience. So anything, Bob, you want to add, Ken? Anything, Eric? One last thing I would say is I've read so much of Bob, the ABC's work, sometimes AB, BC, AC, and all the combinations, that in a sense, the legacy of the attention paid to those issues in terms of forming an understanding of how these regulations actually worked in a way that was very clearly, carefully studied, very well identified, sound judgments, went into the conclusions. It's just been a real important bedrock for a lot that has followed. So while I'm up here, I'd just like to, one of many people, plus you shared data with us that led us to some studies that were very valuable in terms of looking at banking organizations. I actually have to say something. I'll say something more generic. How do you, I'm a pretty difficult person to manage. I spent 15 years in academe as well as the board. And I, one of the things I've learned is how do you take people like me who are sort of borderline or just, you know, hard to, my good researchers instinctively, rebellious, doubtful Thomas, and Davis, Dave can all resonate with us. So take some notes, Dave. And what Ned did, I realized, sometimes it's like the lobster in the pot.  And that's a brilliant skill.  What do you think about this? Now, never would be Sandy and I, what we would have said something, but he would take people and you felt empowered. You felt that what you did, he didn't have to follow what we came up with in the CRA, but he listened to it and he took it under advisement. And that is a staffer.  You want to have your work looked at, given credibility. And then the next time you're gonna work extra hard because you know it's not wasted. If it's not looked at and it's thrown away and it's as though this decision had already been made, you don't put the energy in the next time. Ned Gramlich just did this in a way that I've, as I said, in retrospect, I realize how brilliant he was at this and how much better we were as staffers because of the way we were governed. We thought it was all us, it wasn't, it was Ned. Okay, questions from the audience, please raise your hands. Yes? So, to bring this current, my question would be about Ta-Nehisi, I'm sorry if I'm mispronouncing his name, Coates recent article in the Atlantic, which makes the case for reparations. And one of the things he really emphasizes is our legacy of institutionalized discriminatory housing policy and essentially theft. So I was wondering, first of all, if there was any comment about that. And then the second thing was, I know all of us were reading about essentially kind of kangaroo courts through the foreclosure process. And has that improved? Where does that stand today? Thank you. So I don't know, does anybody else wanna, Ken, do you want to, and I'll make some comments. I could say a little bit about the foreclosure price practices, given that I'm at an institution that has a fair amount of that work, both ahead of it and behind it. Early on in the foreclosure crisis, and this was obviously one of those neighbor works, I think there weren't a lot of tools to address the foreclosure crisis. And so I think there were a lot of things that probably in hindsight, had they been available, we could have saved more homeowners. Now as the crisis evolved though, and it became driven primarily by the downturn in the economy, there's not a good loan modification on someone that doesn't have any income. And that began to happen more and more as the crisis morphed into being driven by not just because people had a bad loan, but because there were a lot of people out of work. And those were tougher situations to deal with. So I think there were a lot of tools to modify loans that are out there today. I think all lenders have learned a lot of lessons. The government's got some things in place that didn't exist early on. I don't know that they were necessarily kangaroo courts as they were rules being enforced based on the way the rules existed at the time. And I think that's kind of what played out early on in the crisis. I don't know about the reparations thing. I'll let Eric deal with that one. I don't really have a point of view on it, but I do think that when you look at the issues of foreclosure, clearly it was described here as a tsunami. It was an incredible amount of loans going bad. And the business model that this servicing industry was based on wasn't really structured to withstand that level of stress. The amount of funds to do the job that you would expect and hope that they would do in many cases wasn't available. Clearly there's been a lot of attention to improving the information technology and tools to do loan modifications in a way that is verifiable, that is consistent. There's still issues about how consistently when someone calls with a problem, they're able to deal with a single point of contact and things like that. There was also of course a very large attorney general settlement with many of the largest banks. And not only was a large part of that doing a much better job and a more meaningful job on modifications, but also had a monitor monitoring this who has kind of looked at the quality now of those practices. I would just add to that. I can't speak on behalf of the Fed. I'm not here any longer, I retired. But when I did work at the Fed, I was involved in, we also, in addition to the attorney general settlement, you know, it's public information that we also did some major settlements with banks. And we're working on a large project through our supervisory people to make sure that practices were changed. There were a lot of problems with the foreclosure practices in the banks. No question about that. But I know that unless things have changed drastically in the two months since I retired, I know that we are still diligently monitoring what's going on in the banks and making sure that they fix the things that were wrong in the institution. So that's also being done by the regulators. Bob, did you have anything to add to that? Okay, questions? Other questions on anything? No? Oh, David. Are you gonna talk about how difficult Avery is to supervise? That's probably a violation of personnel rules or something. I had the privilege of reading Ned's last speech on his behalf at Jackson Hole in 2007. And the closing section of that speech basically amounted to an exhortation from Ned to federal regulators and others to fix the housing finance system. It was a really interesting argument. It was partly based on the idea that it was simply the right and necessary thing to do for a whole range of reasons. But given that Ned knew that he was speaking at that point to mainly monetary policy makers, the emphasis that he put for that audience was that it was important to fix the housing finance system in order that monetary policy, the tool of monetary policy could be exercised the next time around without undue concern for the collateral damage that it might do to homeowners, to communities, to community development and so forth. And so in order to enable the exercise of monetary policy, it was important to fix the housing finance system. So I have a very broad qualitative question for all four of you. How far have we gone in realizing Ned's, in responding to Ned's exhortation to fix the housing finance system so that monetary policy can focus on its assigned task? That was a great question.  Yeah, I'm not, again, it's an interesting question, David. I mean, we set out to gather the data that we should have had in 2005 and six, just as part of that system. And I'm not quite, don't quite have it yet. It's five years after the crisis, so I will have it. But in simply regulating Fannie and Freddie as if they were two big thrifts, which is a part of the structure, when our head of supervision left a couple months ago, he told me he thought he was about halfway there. And that's just part of, those should have been the easy things that you're regulating, changing the supervision of a large institution. There are very embedded forces who have a stake in the system as it was, maybe as it is, and it must be much, I'm not a politician, but it must be a lot more challenging than it looks. And others can have other views, but I don't sense that we have really got to the very heart. I don't even think we really know why anybody in this room can really answer why that employment rate doubled in six months. And if we don't understand that, I'm not sure we know what we need to fix. So I'm more pessimistic that we haven't, we don't have that understanding yet. So I'm more of an optimist. So I'd say, number thing first, I think it's a great question. Part of the answer to the question is, the mortgage debt on residential real estate in the United States is over $10 trillion. That's with the T, I once said, I wonder how many times you could get to the moon and back in one of my classes, and this is the internet age, and someone figured out the length of a dollar bill while I was talking, which I don't know is so good, and said, try Jupiter or something like that, which is $1 trillion to get to Jupiter with dollars or something. So 10 trillion is a big number. It's a huge part of the total capital market. And so disruptions that emanate in this space are inevitably gonna have enormous consequences. And because we're sourcing that capital and still are globally, it's gonna have huge global consequences. There's other aspects of this in terms of the fact that wasn't just in the US that there was this excess liquidity funding, it's way into residential real estate often with some degree, but not to maybe this degree of relaxed standards. I think the one thing obviously has happened is there's been a lot of regulation and the jury's out as to how effective the regulation ultimately will be in preventing certain practices or discouraging them enough so that you don't have that rising tide of risk. There are a lot of capital markets and things that have gone into place to increase transparency, as you know, around clearing houses and being clearer about what's happening is credit default swaps because it wasn't just what was happening in the primary market. I talk about the origination of risk and then the multiplication of risk literally in the capital markets through the way these things were put into sophisticated securities, synthetic securities based on credit default swaps. So I think progress is being made in that area still again, the game is afoot. I think the reality though is there still are a lot of financial institutions that operate within the space that don't have the same degree of supervision as banks do and they therefore do still run the risk of having some systemic importance. So I think that aspect and that angle of it is still kind of in progress and then of course there's Vanity Man, Freddie Mac and we're totally stalled on Vanity Man, Freddie Mac. There was some hope that there would be a bipartisan bill that would be put on the floor in the Senate. It's still not clear it won't be but there's some discouragement around whether or not it will. And because they are currently backstopping such a huge proportion of the market until we have a sense of where they may head, it's really hard to know how and whether we've corrected some of the really fundamental institutions that are still embedded in the housing finance system. But I think Ned was right that a lot of the practices that were first observed in low income communities but certainly were not exclusively the province of low income communities. In fact, a lot of these loans with payment reset risks were actually more heavily affected people with higher incomes and higher communities that these things do have, and we now see with great clarity potential monetary policy implications and systemic implications. And I think a lesson's been learned there. There's attention to systemically important institutions that I think we've moved down a path but it's still a little unclear how effective all these things will be and there's a lot of undone things that eventually we'll have to get done. I would just say that also coming out of the crisis, making sure that we learn the right lessons from what occurred is important too. So one of the things that's being sorted out is how broadly will home ownership be available on a go forward basis? There are some who've learned the lesson that we can't loan to those people because it doesn't work. There are others who say, yes, you can if you do it right. And so I think that's one of the issues that still to be sorted through. It's one of the things that's got GSE reform kind of tangled up and I know CRL is working very closely with some folks on that but there are studies out there and this is where research has come in. NeighborWorks has one out there. Freddie Mac has one that demonstrates that low income borrowers who have access to high quality counseling perform 30% or so better than people who don't get counseling. I mean, obviously you can, there are ways you can do this and connected to one of the earlier panels. If we are gonna take a shot at this income equality issue, there's no bigger wealth creating vehicle in America for lower income folks than owning a home. That's still the case today. And unfortunately, if we don't get that right, we're not gonna be able to address some of those other problems either. A lot of attention is being paid to that, right? And I think across all investors in financial institutions. Yeah, I agree. I had made myself some notes earlier things and I think they've been covered by Eric and Ken. I would just mention that in terms of the housing markets being fixed, we don't yet know, we know that there's been a lot of new regulations promulgated that were done to address the excesses of the crisis. But these regulations are all fairly new and we still don't know the results of the implementation. And one of the things I was concerned with is what Ken was talking about. Some of them could have a negative effect on affordable housing and people being able, credit access and things like that. So I agree and until the Fannie and Freddie thing is sorted out, no, it's not fixed yet. Let me add one thing just to channel Ned. When the private label market started, it was applauded, Ned applauded it, that the private sector had the incentives to go out and find the loans that were, that they would bring people to home ownership and part of his book addresses this issue. A cost-benefit analysis profit motivates and people finding credit-worthy borrowers. That's a system in which everybody benefits. I think the jury is still out on that and I think Ned would say that. How many people got homes in 2004 they're still in those homes and wouldn't have been able to afford it otherwise other than the fact that there was a private label market that a lot of the rents in the sub-prime market were greatly diminished over that period of time because of competition. And I think you could take the view that until the private label market comes back which it hasn't, which it doesn't exist, you're really not gonna end up serving that community that maybe one lesson I think Ned might say is that government with all of its rules and everything else isn't the most efficient mechanism to find out that very unisyncratic difficult to underwrite but still profitable borrower that's in those communities. And until we get driven by the profit motive, get those private companies in there, we're really not gonna serve those communities as well as we could. Okay, yes, we're gonna end this. Thank you very much.