William C Dudley: Panel remarks at The Clearing House Annual Conference Panel remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at The Clearing House Annual Conference, New York City, 18 November 2015. *  *  *  Dianne Dobbeck, Robert Fitchette, Charles Gray, Joyce Hansen, HaeRan Kim, Kristin Malcarney and Joseph Tracy assisted in preparing these remarks. It is a great pleasure to have the opportunity to speak here today alongside my fellow Reserve Bank presidents, Loretta Mester and Dennis Lockhart. Today’s event comes almost exactly two years since I delivered a set of remarks at NYU School of Law that covered various aspects of what we know as the “too big to fail” problem. In view of some significant milestones that have occurred over the past two years, I would like today to briefly review my sense of the work that has been accomplished on this critical issue, and the work that still remains to be completed. As always, what I have to say reflects my own views and not necessarily those of the Federal Reserve System. Broadly speaking, the regulatory reforms that the U.S. has adopted since the crisis have been designed to address the risks posed by large financial institutions in two related ways. First, our reforms are designed to reduce the probability that large financial institutions will fail by requiring those institutions to be more resilient to stress.
To the extent size is a proxy for productivity, this is also as we would expect.18 During expansions, more productive firms hire more, and lose fewer, of their workers than less productive firms (Charts 14a and 14b). Other patterns in the data less obviously fit the facts, however. Despite jobs flows picking up, pay growth has until reasonably recently remained slow and low. Meanwhile, productivity growth has remained 18  For example, Bernard et al (2014) and Wales et al (2018). 13  All speeches are available online at www.bankofengland.co.uk/speeches  13  stubbornly subdued despite a seven-year jobs recovery. So has the jobs ladder broken? Have its rungs been removed? To understand these developments, it is useful to break the decade down into phases. Charts 14a and 14b: Hire and quit rates by firm size Hire rate  Quit rate  7%  2.5%  1.0%  Small firms (< 50 workers) Medium firms (50-499 workers) Large firms (500+ workers)  0.9%  6%  2.0%  0.8% 5%  0.7%  4%  0.6%  1.5%  0.5% 3% 2% 1%  0.4% Small firms (< 50 workers) - LHS  0.3%  Medium firms (50-499 workers) - RHS  0.2%  Large firms (500+ workers) - RHS  0.1%  0%  1.0%  0.5%  0.0%  0.0%  Sources: ONS LFS and Bank of England calculations. Notes: Charts show four-quarter moving average of hire and quit rates.