For example, in the capital insurance scheme, participating institutions pay “systemic-risk insurance” premiums to insurers in good times, and get capital from them in bad times when a systemic risk materializes. Since what we are preparing for is macro-systemic risk, the trigger should be a macroeconomic event.
In the Federal Reserve Board's most recent Senior Loan Officer Survey, conducted this past April, more than 10 percent of the surveyed institutions reported having eased their underwriting standards for residential mortgage loans. Only one of the surveyed lenders reported having tightened standards.