In a similar vein, supervisors have been attentive to indications that home equity lending standards and risk-management practices may not have kept up with the very rapid growth in this form of lending. Last month, the federal banking agencies issued guidance to the industry that was aimed at reinforcing sound practices for lending and credit risk management.
I encourage bankers to review that guidance and consider its recommendations carefully. Let me conclude with a few thoughts on managing interest rate risk. In the low-rate period that ended last summer, bankers faced a natural temptation to extend maturities in search of more-attractive rates of return.