I believe that this threshold could be raised significantly without unduly increasing the risk to the broader financial system. Second, policymakers might reexamine the implementation of the Volcker Rule to ensure that it is efficiently achieving its policy objectives. The fact is that most market-making activity has an element of proprietary trading. The market maker that bids successfully often does so based on a view on which way the market might be headed in the near term. Thus, the line between market-making and proprietary trading is not always clear-cut, which makes regulation in this space difficult. Some market participants have argued that the Volcker Rule has contributed to the decline in market liquidity of corporate bonds. Although I view the evidence on this point as inconclusive, it may be worth considering giving greater discretion to trading desks that facilitate client business to intervene when markets are illiquid and volatile. Also, community banks are subject to the Volcker Rule even though they typically do not engage in proprietary trading, or sponsor or retain ownership interests in hedge funds or private equity funds. This seems like an unnecessary burden that drives up compliance costs without a significant corresponding public benefit, so we also should exempt community banks from the Volcker Rule. Third, although CCAR is a vital part of our bank regulatory toolkit, I believe that we should consider changes that might lessen the burden it places on banks. In this vein, the Federal Reserve recently removed the CCAR qualitative assessment for large, non-complex firms.
This is a good example of identifying regulatory burdens that are not worth the cost. We are also considering the implementation of a stress capital buffer that would better align the dynamic stress capital requirements of CCAR with our more static, point-in-time regulatory capital rules. Other potential adjustments include changes to the assumptions about the pace of a firm’s planned dividend and share repurchases, and how a firm in a stressed environment would likely manage its balance sheet and business footprint. The financial crisis provided a vivid reminder that a well-functioning financial system is a necessary condition for a vibrant economy. The efficient intermediation of funding from savers to borrowers supports economic activity and, over time, raises living standards. This means that we need a financial system that is robust and resilient to shocks. Most of the changes that have been implemented since the financial crisis have moved us in this direction, and it is important that any new changes to laws and regulations be grounded in what we have learned. Our central purpose must be to ensure a safe and sound financial system that efficiently provides financing to households and businesses through the ups and downs of the business cycle. Thank you for your kind attention. I would be happy to take a few questions. 1 James Bergin, Dianne Dobbeck, Jack Gutt, Kristin Malcarney, Kevin Stiroh, Joseph Tracy and Emily Yang  assisted in preparing these remarks.