Much headway has been made in the U.S. in developing a Single Point of Entry resolution regime with a layer of total loss-absorbing capacity (TLAC) that would facilitate recapitalization and enable an orderly resolution. However, significant challenges remain, especially on managing resolution on a cross-border basis. Third, bank leaders still have much to do to rebuild the trustworthiness of their industry. Long after the financial crisis, conduct failures have persisted. We need financial firms to foster cultures that are intolerant of bad conduct and that are attentive to incentive structures that may encourage such behaviors. So, let me begin with the good news. The U.S. financial system is much more resilient now than it was a decade ago on the eve of the financial crisis. This progress reflects a number of initiatives―some focused on the ability of firms to absorb shocks, and others oriented at reducing structural vulnerabilities within the financial system that spanned the activities of firms and their counterparties. Changes made to capital and liquidity requirements in the U.S. and globally have made banks more resilient and robust. The major U.S. banking organizations today have much more capital, much higher-quality capital, and much larger liquidity buffers than prior to the crisis. On the capital side, we have taken a belt-and-suspenders approach. The Basel III risk-weighted capital standards framework has been significantly strengthened―a stronger belt―and a supplemental leverage ratio requirement has also been imposed on large banks and bank holding companies to restrain overall leverage―the suspenders.
Much progress has been made in making the U.S. financial system safer and less prone to 2/3  BIS central bankers' speeches  panics. Still, there is more to do before we can say that we have ended “too big to fail.” This is work that we absolutely must complete. In particular, U.S. bank holding companies must do more to make their organizations resolvable under either Title I bankruptcy or Title II resolution. This requires having clean parent holding company structures, less corporate complexity, and essential service and support operations that are able to continue to operate even when the parent company becomes non-viable. Also, while there has been significant progress in terms of developing a workable resolution regime—the Single Point of Entry regime established under Title II of the Dodd-Frank Act—we still have to ensure that this regime can be safely utilized on a cross-border basis. This requires fully implementing the TLAC framework, and defining more explicitly the expectations and responsibilities of the different supervisory and regulatory oversight bodies that would have to work together internationally. In particular, this includes how liquidity would be provided to an insolvent firm during the early stages of resolution, so that the firm’s operations could be wound down in an orderly way without destabilizing the global financial system. Finally, I would like to address the issue of bank culture and conduct. Although there has been considerable effort here, there is still much more to do. Banks must restore their trustworthiness.