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I would like to begin by thanking our exceptional speakers who have gathered for this conference I think you'll agree with me that each man and woman on their own right is a rock star in the financial industry I'm I think I've know how ed Sullivan used to feel when on Sunday night he would say right here on our stage and now I look out and I see some of the students asking who was Ed Sullivan and why does that matter to me well it's precisely you to whom this conference is directed as the person next to you with the gray here who ed Sullivan was we will not be dispensing answers today rather will be sharing wisdom there is no course at boston university nor at any other university that i'm aware of called experience the closest thing you get to it is to absorb the wisdom and the experience of others soon the difficult problems we address today will be yours to solve listen to how the Giants of the industry adjust the problems in their time it'll serve you well filter what you hear today through your own set of values and make sure when you're a desk dressing those problems you ensure that the financial system serves the economy and not the other way around the office of the comptroller the currency was born out of crisis a civil war raging that needed to be paid for sadly many of our government commercial and not-for-profit institutions to date today have bought upon themselves the opprobrium of our citizens one more reason why in my estimation and enduring institution like the OCC flawed as its actions in recent years may have been is worthy of recognizing on its 150th anniversary remarkably free from scandal staffed by dedicated and committed examiner's by controllers who were modeled public servants in their day two of whom are with us today I believe Jerry Hawk and Jean Ludwig I don't know if they're in the hall right now but please greet them when they are in the hall and thank them for this service you would do do us all a favor of course I would be remiss if I did not mention that Massachusetts is bursting with pride over the current comptroller Thomas J curry I was happy to call Tom my friend when he served during many years as commissioner of banks in Massachusetts and I'm proud but not surprised at all at the job he's doing and leaving his mark on Washington tom has been controller for less than a year as is his style he took the first part of that year to learn the staff learn the traditions learn the structures learn the issues it was difficult because in the middle of that there was something thing you may have learned about it or read about called the London whale it was also something going on called mortgage servicing and a mortgage underwriting now tom is challenging and changing not only the agency he manages but the industry he supervises in his own quiet way he has thrown down the gauntlet to his own agency and to the industry to up its game examiner's senior managers of banks boards of directors of banks know and more will soon know that there's a new sheriff in town while he may be understated under estimating him is not a wise choice Tom recently described himself as quote half boring close quote let me talk to you about boring for a minute last week my dear niece Joanna underwent a heart transplant surgery she was in for seven hours when the doctor emerged from surgery he said that was boring boring took on an entirely new connotation for me at that moment Tom may be boring or only boring as he brags but he is at the same time dynamic defective methodical and tenacious we are fortunate to have him as the United States Comptroller of the currency at this perilous time a few days ago we asked each of you to submit questions and and many of you did we've distributed those questions to the moderators you'll be the moderate moderators have their own question and there will be questioned as I indicated after each panel I have my own questions and that I'll be listening to not for answers but for guidance we begin the program by asking the same question Jerry Corrigan did 30 years ago in his seminal piece which i think is for distribution outside our banks special sheila bair and rain adder have their own views on this question but what I want to know is if banks are special if they truly are special then is shareholder value the primary driver for how we evaluate the conduct of those institutions and the management's and directors of them Jean Ludwig and John Reed will talk to us about the separation of banking from other activities what I want to know is whether the separation of banking and other activities is just a romantic throwback or whether it's a fundamental guiding principle particularly in light of you may have read of Alibaba the largest e-commerce Enterprise in China and therefore the world also a giant financial enterprise in China about to do a massive IPO in the US this is Dodd and Frank after lunch we'll discuss their eponymous law not everyone is happy with that law but the current political environment in Congress seems to preclude corrections to it or even discussion of amendments what I want to know is whether that law is workable in its current form flawed from foam particularly it in light of the fact that the consensus seems to be that the too-big-to-fail problem is still with us speaking of too big to fail tim Pawlenty and Tom Honda have divergent views on this major policy matter what I want to know is whether capital requirements have gone from being a tool for ensuring the safety and soundness of financial institutions to being a tool for regulating the size of institutions our final panel poses the very question of the future of banking itself cam fine will give us that perspective from the standpoint of community bankers Sharon Bowles and thank you sharon for making the extra effort to come all the way from the UK to be with us today will give us her perspective on globalization and Karen Shaw petrol will peer over the horizon to describe how banks will adjust to the age-old problem of disintermediation what I want to know is whether community banks long-term are winners or losers faced with massive burdens of regulation compounded by the added funding costs compared with two they're too big to fail competitors what I also want to know is whether the banking Union is what going to work and the joined at the hip nature of the sovereigns and the banks is going to be separated and finally what I want to know is whether the specialness of banks can withstand the challenges of peer-to-peer lending crowdsourcing Bitcoin shadow banking and the like you no doubt have your own questions so have them ready because there's going to be plenty of opportunity to explore them a Glenn I'd like to thank the distinct distinguished speakers that have agreed to be on this program you may be asking yourself well why would these distinguished people come out on a raw Monday morning in New England to join us and I can assure you it is not because of any municipal honorary I'm I'm reminded of the soliloquy at the end of the Broadway show Jersey Boys some of you may remember it where Frankie Valli of the Four Seasons reflects upon what it is that drives him to go on stage night after night and he says and I quote I'm like that bunny on TV I just keep going and going and going chasing the music trying to get home well I can't speak for the presenters here today but I'm going to guess that the their reason for being here is a lot like that trying to leave the world a better place than how they found it trying to get home and now my friends and colleagues it gives me great pleasure to present to you the 30th Comptroller of the United States Thomas J curry Khan thank you for those great welcoming remarks and the kind introduction and to you ladies and gentlemen let me extend a very warm welcome to an event we like to say is a hundred and fifty years in the making but what really made today possible is the hard work over the past year of both the OCC and Boston University staff responsible for its planning and execution and to them I extend my sincere appreciation and gratitude and of course we are exceedingly grateful to our program participants for who are taking time from their busy lives to share their thoughts on the future of financial services generally and the national banking system in particular I'd also like to extend a special thanks to Jean Ludwig for graciously agreeing to fill in for paul volcker on short notice I also have the distinct pleasure of welcome you to the city that I've long called and continue to call my home it is where I learned the basics of bank supervision and where I had the honor of serving as the Commonwealth's Commissioner of banks it's also fitting that we are able to meet today in a building named for a bank supervisor john hines who served as a reform mayor of boston later served as the massachusetts commissioner of banks and I'm delighted to see so many friends and associates for my time in Massachusetts here today our avowed reason for being here of course is the hundred and fiftieth anniversary of the national banking system and the OCC as its federal supervisor why the system was created has been a matter of some dispute you will hear it argued that President Lincoln and secretary of the Treasury salmon chase embraced that system as a short-term expedient for the quick cash it was expected to bring into the beleaguered wartime treasury but this is Lincoln we're talking about a remarkable leader who could keep one I on the practical needs of the day and the other on his vision for the future he understood that a vibrant economic system required sound banks and that public confidence in those banks required uniform national rules and strong national supervision by investing their political capital in that vision Lincoln and his allies built a financial system whose basic structure has endured since 1863 the structure endured not only because it was well suited to American habits and values being a mix of large and small banks under both state and national supervision but because its regulators and supervisors continuously adapted the system to meet the needs of the future business and finance have changed greatly since the days of Lincoln and the national banking system has evolved to keep pace I think there's one other reason the system has stood so well for so long it's because the OCC recognized in its earliest years under its first Comptroller a set of guiding principles that turned out to be as revelant relevant in the age of the Internet as they were in the days of the Telegraph and horse-drawn wagon that first comptroller of the currency indiana's you McCulloch had his hands full in 1863 standing up his office and approving or denying applications for the new national bank charter by the end of the year nearly a hundred and fifty banks had been authorized but those new national bankers wanted to know what was expected of them beyond the specific requirements laid out in the law in response to their questions McCulloch who was perhaps the most esteemed banker of his generation took pen in hand and drew a list of responsibilities and expectations that came with the national charter his words were a compilation of the principles of sound banking McCulloch cautioned against speculation acid concentration and fictitious capital he demanded that all loans be quote secured beyond a reasonable contingency above all he wrote national bankers must quote pursue a straightforward upright legitimate banking business never be tempted by the prospect of large returns to do anything but what may be properly done under the national currency act banking was a business founded on confidence and character in McCulloch 'he's time and it is still today since becoming comptroller i've made a point of presenting a copy of makalah's advice to every banker who visits us in Washington and I'd like each of you to have a copy as well and I believe they are available at the registration tables and I hope that you will take the opportunity to read and ponder what this great if perhaps underappreciated financial statement has to say to us today I think you will find it will be of real value I've wondered at times what McCulloch would think of the current state of the system that he helped bring into being and how he might have recommended we commemorate our hundred and fiftieth anniversary I suspect he would not be surprised to find a hundred and fifty years after taking office as comptroller that both the OCC and the national banking system are flourishing and continuing to play a vital role in supporting our nation's economic life and as for the agency's hundred and fiftieth well I'm guessing that he would have encouraged us to read his advice to bankers and then get back to work anniversaries are usually given over to self-praise but that is not what we chose to do this year we dedicated our 150th anniversary year instead to taking a hard look at ourselves and seeing what insights we could glean from our history that might make us better custodians of Lincoln's legacy and therefore better bank supervisors to cite just one example last year the OCC as senior supervisors from Australia Canada and Singapore nations whose banks showed particular resilience during the financial crisis to participate in a review of our large and mid-sized bank supervision programs this peer review was conducted under the direction of Jonathan Victor a name that is probably familiar to most of you from his tenure at the OCC the OTS the IMF and the World Bank the victor report provided an independent perspective on how we manage supervision and it made a number of constructive recommendations we are now reviewing the report's recommendations and making decisions on how to implement them by definition change is disruptive and often uncomfortable but I am proud to say that the OCC has responded to the prospect of change with the same professionalism and devotion to public service that our people have shown throughout our agency's history our anniversary explorations took us beyond the OCC itself to the larger world in which we operate as we looked for light on how where the industry and regulators are heading to start the ball rolling let me share a few of our takeaways first I think the theory that history moves in cycles has special validity when it comes to bank regulation in few other areas have there been sharper shifts and national consensus on the proper balance between private enterprise and government oversight these shifts reflected our peoples historic ambivalence about banks depending on your point of view either as institutions that must be free to innovate and compete to keep our economy growing growing and strong or as institutions that must be supervised tightly to preserve stability and fairness I am in the camp of those who believe that sound incredible supervision informed by judgment is essential this ambivalence was partly responsible for the cycles of regulation and deregulation that have marked American banking history for example the national banking acts of the 1860s were inspired by a general discussed with the banking abuses of the pre Civil War period while the authors of the Federal Reserve Act were responding to the fact that the money and banking system that they inherited the well suited to the 1860s was no longer adequate to meet the needs of what by then was perhaps the world's most dynamic economy similarly the glass-steagall Act of 1933 and the Banking Act of 1935 were an explicit repudiation of the profligate 1920s when tiny undercapitalized unit banks pleura fur ated large banks in new york city and elsewhere engaged in massive speculation on their own in their client's behalf and cascading failures of both large and small banks helped trigger the Great Depression prompting the creation of the Federal Deposit Insurance Corporation as part of the 1933 law we now find ourselves at another historical inflection point brought on by the financial crisis that began in 2008 clearly the dodd-frank act has strengthened the regulatory system and made the bank's we supervise more safe and sound go on our proprietary trading and investments in hedge funds go on to are the days of originated shoddy loans with the i tent of selling them to investors before they go bad the agencies have new tools to wind down large banks that get into trouble and a new mandate to require more capital of our largest and most systemically important institutions the law works enormous changes in the way supervisors go about their work and the way in which banks do business but even with all the progress how do we stay on course to avoid another crisis previous breakdowns were met with legislative and regulatory responses that seemed adequate to deal with the crisis that had just passed but were not by themselves able to avert future breakdowns the bank and thrift crises of the late nineteen eighty in early 1990s for example prompted two major pieces of legislation that fundamentally reordered the industry and our regulatory structure these two laws cleaned up the industry's accounting mandated hire reserves for the bank and thrift insurance funds and established a system of prompt corrective action among other measures the system that veria and Phi D she established worked well for more than a decade the two laws made important contributions to safety and soundness and they deserve a fair measure of credit for the long period in which bank failures were rare and the nation prospered so what was missing what was lacking in our regulatory structure that allowed the financial crisis to take root I'll cite one factor that is of special significance to those of us at the OCC the difficulty of focusing attention on weaknesses that develop but remain hidden below the surface in good times in the worst days of the crisis everyone understood the need for strong supervision if anything the question asked was why didn't we get tough sooner but in good times when loan losses are low and capital appears strong pressure will mount to relax standards and go easy on emerging weaknesses as they're discovered when the party is going full roar it's easy to believe that will go on forever and nobody understands why supervisors might be eyeing the punchbowl but it is our job as supervisors to lean against the wind it is our job to identify the soft spots that will turn into losses when the economy changes direction and it is our job to direct corrective actions in advance when it is most easy for banks to adjust we all need to remember the lessons of history including those from our very recent past the collapse of bear stearns at the outset of the crisis dates back just six years ago this month but already memories of those traumatic days are growing dim as the events of 2008 and 2009 receded further into the past the role of supervision will become more important than ever although the dodd-frank act is prescriptive in many ways the authors of the law who you'll hear from later today were wise enough to leave the OCC and other federal banking agencies with considerable discretion in deciding how to apply it we have attempted to use this discretion in our rulemaking activities taking pains to ensure that we fulfill the letter and the spirit of the law while also making sure that banks are able to continue serving their customers in a safe and sound manner that is undoubtedly what Congress intended and we are committed to carrying out its will the crisis understood that we as an agency have learned time and again over the course of our 150 years the important role of supervision and examiner judgment as a cornerstone of a healthy financial system of course rules are crucial to safety and soundness as our stress tests capital and the data analytics that help us and evaluate an institution's health but also so our examiner boots on the ground the presence of seasoned professionals who bring the benefit of sound judgment and years of experience to their work that's a truth that's been demonstrated countless times over the last 150 years today is about drawing on the wisdom of the past to help formulate a vision for the future it should be a great program so let's get it underway thank you very much