President’s Message

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Financial regulatory reform is an enduring topic in Forefront, but our knowledge of and perspectives on the subject continually evolve. In the first issue of Forefront five years ago, we introduced a framework for systemically important institutions. That framework laid a foundation of macroprudential oversight to help regulators understand and manage emerging systemic risks. In this issue, we zero in on a small but critical segment of the financial marketplace whose connection to strengthening financial stability is just now starting to become known. Regional banking organizations, as the segment is called, are defined by the Federal Reserve Bank of Cleveland as banks with assets between $10 and $50 billion.

While we believe that regional banks should not be held to exactly the same standards as the nation's largest banks, we know that they can be systemically important as a group. That is why it is important to understand their role in the financial system and why the health of the financial system could hinge on their success. In this issue, we present some highlights from a unique conference hosted by the Federal Reserve Bank of Cleveland in October, as well as some very preliminary research we've conducted that suggests certain traits might make regional banks more successful.

Also in this issue is an article about the state of student loans and why the Federal Reserve and other policymakers might be wise to watch the trajectory of student loan debt carefully. We talked with experts on the subject at our annual Policy Summit, held in September, and found no shortage of opinions on the way forward. Also from the Policy Summit, we sat down with Eldar Shafir, a behavioral scientist who was a keynote speaker at the conference, to discuss why people are really not rational in the way that economists like to think they are, and the practical significance of that difference.

Finally, I cannot end this message to our readers without a personal note about Forefront's editor in chief, Mark Sniderman. This is Mark's last issue, as he is retiring early this year after 37 years of distinguished service to the Federal Reserve. The Federal Reserve Bank of Cleveland as a whole and Forefront specifically have benefited immensely from his knowledge and guidance on monetary policy, financial stability, and community development issues. Please take the time to read Mark's farewell. And, as always, let us know what you think.

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Meet the Author

Sandra Pianalto

| President and Chief Executive Officer

Sandra Pianalto

Ms. Pianalto has both national and local leadership responsibilities. She participates in the formulation of U.S. monetary policy, and she oversees 950 employees in Cleveland, Cincinnati, and Pittsburgh who conduct economic research, supervise financial institutions, and provide payment services to financial institutions and the U.S. government.

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