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Speech by President Lorie K. Logan

Opening remarks for the Eleventh District Banking Conference

Dallas Fed President Lorie K. Logan delivered these remarks via prerecorded video at the Eleventh District Banking Conference held at the Dallas Fed.

Thank you all for joining us today for the Eleventh District Banking Conference. I'm disappointed I can't be there in person with you, as I'm in Washington for a Federal Open Market Committee meeting. Nevertheless, I appreciate the opportunity to welcome you all to the Dallas Fed and to open today's conference. As always, the views I share are my own and not necessarily those of my Federal Reserve colleagues.

Our banking supervision team collaborated with our partners at the Texas Department of Banking to develop this summit with three goals in mind.

  • We'll share information about services the Fed offers to banks.
  • As in all of our work, we want to promote open communication and dialog with you.
  • And we will talk with you about some key emerging risks, a particular theme this year.

As you all know well, effectively managing risk is critical to success in banking, and it's particularly important because of the crucial position of banks in our economy.

The Eleventh District includes southern New Mexico, northern Louisiana and all of Texas. Our regional economy is one of the fastest growing in the nation. And integral to that growth is a large cohort of community and regional banks that help provide the resources businesses and families need to succeed, from lending to small businesses as they launch, to being among the first to support local communities after disasters such as this year's hurricane and wildfires. So it's essential for banks to effectively manage risk so they can continue providing these important services to their communities and the economy.

I meet regularly with bankers one-on-one and in roundtables to hear what they're experiencing and how the Federal Reserve can continue to foster a strong banking system. The Dallas Fed also conducts the Banking Conditions Survey every six to seven weeks, in which we ask over 100 executives from banks and credit unions headquartered in our district to share their insights on credit and banking developments and the economy more broadly. I also meet regularly with bankers through our Community Depository Institutions Advisory Council. The council's 11 members represent institutions with less than $10 billion in assets from all parts of our district. The members share feedback on areas of focus, including regulations and exam activities. I bring these insights to my colleagues for our conversations about the Fed's approach to supervision and regulation.

Risk management has been top-of-mind in those conversations with colleagues and bankers over the last couple of years, and I'm particularly focused on operational readiness to respond to any shocks that may occur. To maintain a dynamic banking system, we need all banks of all sizes to be resilient. In particular, well-managed banks have access to a diverse set of funding sources. And in my view, every bank in America should be fully set up at the discount window. This means completing legal documents, pledging collateral and practicing the steps needed to borrow well in advance, so the banks are prepared to use the window if needed. Banks need to be proactive about these preparations. An institution facing a rapid run won't have the luxury of waiting for setup or learning the procedures.

Working together with bankers, the Fed has made substantial progress toward enhanced operational readiness at the window. More than 5,000 depository institutions nationally have signed the necessary legal documents, pledging $3 trillion in collateral. This is up $1 trillion in collateral from a year earlier. And earlier this year, we launched Discount Window Direct, which is an online portal for depository institutions to use to request loans.

If you'd like to enhance your bank's preparations to borrow from the window, or just share feedback on how the window works, we'll have booths just outside the conference room where you can talk with our staff.

The Federal Reserve Board recently issued a request for information on the operational practices of the discount window. You can submit comments directly through the Federal Reserve's website. We're accepting input through the beginning of December. If you have any questions on how to submit feedback, please reach out to someone from our team for more information.

I'm optimistic that with further modernization of our technology and policies, as well as ongoing partnerships with banks, we can ensure the discount window remains a powerful tool for providing the banking system ample access to liquidity.

In closing, I hope today's conference provides an opportunity for open and candid conversations about how we can work together to mitigate risks and maintain a safe and sound financial system.

Thank you to the Dallas Fed's banking supervision team for your work planning for today's conference, in addition to our partners at the Texas Department of Banking. A special thank-you to Commissioner Charles Cooper for joining.

And thank you all again for taking the time to be with us today to discuss these important issues.

Lori K. Logan

Lorie K. Logan is president and CEO of the Federal Reserve Bank of Dallas.

The views expressed are my own and do not necessarily reflect official positions of the Federal Reserve System.