To this day, I can probably tell you as much about Benito Juarez, journalist-turned-jurist-turned-president Jose Maria Iglesias and other Reformistas as I can about Houston or Lamar or Washington or Lincoln.1 Alejandro and Rosa Laura, seeing you tonight has revived school-day memories of some 53 years ago! It is a delight and honor to be with you. I will do two things tonight. First, I will give you an update on the performance of the Texas economy and what lies ahead. Second, I will give you my personal view of what the Federal Reserve’s Open Market Committee – the FOMC – announced after our meeting last week. Then, time permitting, I will be happy to avoid answering any questions you might have. An update on the Texas economy The economic performance of Texas since December 2007 – the beginning of the U.S. recession, according to the National Bureau of Economic Research – can be summarized with the chart being projected on the screen denoting employment growth in the 12 Federal Reserve districts. The Federal Reserve Bank of Dallas and its branches in Houston, San Antonio and El Paso administer the business of the Eleventh District (depicted by the red line), which includes Texas, northern Louisiana and southern New Mexico; 96 percent of the economic production of my district comes from the 25.7 million people of Texas. In 2011, Texas created 211,600 jobs. We now have more people at work than we had before we felt the effects of the Great Recession in the United States.
MAS is involved in the discussions on both the capital and liquidity proposals and supports the broad thrust of these initiatives. As MAS’ regulatory framework has generally been regarded as conservative, we are in a good position to comfortably adopt these more stringent standards. However, we are aware that more regulation on its own is not a panacea. It would be undesirable for the regulatory pendulum to swing towards extreme conservatism and for over-prescriptive rules to severely restrict financial innovation. MAS will adopt a balanced approach and will work closely with and consult all stakeholders in implementing the new regulatory standards. Role of industry participants Supervision has to work in concert with effective risk governance in the financial institutions. The Boards and senior management of financial institutions must take ownership and responsibility to manage risks. A report issued by the Senior Supervisors Group 2 in March 2008, on observations on risk management practices highlighted many risk management practices that improved the resilience of financial institutions during a crisis. Let me highlight three areas. First, effective capital planning. Banks need to conduct a thorough and comprehensive assessment of their levels of capital. These have to be “forward-looking”, taking into account the nature and level of the bank’s risk, not only under “normal” business conditions, but also  2  The Senior Supervisors Group comprises senior financial supervisors from seven countries (United States, Canada, France, Germany, Japan, Switzerland, United Kingdom). It is chaired by William L. Rutledge from the Federal Reserve Bank of New York.