Smaller banks may also be finding opportunities to reclaim consumer and business customers from nonbank competitors who have pulled back as the securitization markets have dried up. A decomposition of changes in loans held on bank balance sheets across banking organizations in the three size groups provides a glimpse into how diverse the portfolio changes were across banks in the fourth quarter of 2008.
The current economic performance is very welcome – but it is important to be pro-active in mitigating pro-cyclical dynamics and building up buffers to limit the costs of future downturns. As I have outlined, both regulatory policies and fiscal policy have essential roles to play in macro-financial risk management. 3/3  BIS central bankers' speeches