would like to call the Financial Stability Oversight Council meeting back to order.
The Council meets today two years after enactment of the strongest financial reforms in generations.
As we approach the anniversary of the Dodd-Frank Wall Street Reform and Consumer Protection Act this Saturday, it is worth remembering why these reforms are so important.
The financial crisis that took hold in 2007 and 2008 caused devastating damage to the American and global economies. In the United States, it caused tens of thousands of failed businesses, millions of jobs and foreclosed homes, trillions in lost wealth. We have made a lot of progress in repairing the damage, but we are still living with the economic costs of the crisis.
This financial crisis had many causes, but among the most significant was the fact that our financial system had outgrown the safeguards and protections we put in place after the Great Depression.
Risk built up where it was harder to see and where we did not have the tools to contain it. A wide variety of financial firms were able to provide loans to consumers without being subject to effective protections against fraud and abuse. And the government lacked the tools it needed in the event of a financial crisis.
We needed comprehensive reform with a new set of tools and tougher safeguards. And that is what these financial reforms provide.
The members of this Council have made a great deal of progress in building a safer system.
The CFPB has worked to simplify and improve disclosure of mortgage and credit card loans so that consumers can make better choices about how to borrow responsibly.
We have forced banks to raise more than $400 billion in capital, to reduce leverage, and to fund themselves more conservatively, so that they can provide credit to support economic growth even in the face of future economic storms.
We have negotiated new, much tougher global capital requirements, with even higher requirements on the largest banks. To complement these important safeguards, we are in the process of negotiating global liquidity requirements for banks and global margin requirements for derivatives.
We have established the ability to put all the largest financial firms under increased supervision and enhanced prudential standards, through designations by this Council, whether they are banks or nonbanks.
The SEC and the CFTC are filling out the remaining pieces of a new comprehensive oversight framework for derivatives, which will, among other things, provide new tools for combating market abuse. Last week's adoption of a swaps definition will trigger the effectiveness of more than 20 key rulemakings and marks a key milestone in the implementation of derivatives reforms.
The FDIC has designed an innovative approach for protecting the financial system and taxpayers from the failure of a large financial company, providing a new model for countries around the world. Last month, nine of the largest banks submitted their "living wills," which provide each company's contingency plan for an orderly bankruptcy.
These are complex reforms--because our financial system is complex, because we want to target damaging behavior without damaging access to capital and credit, because we want them to provide enduring protections as the market evolves, and because they often have to be coordinated with multiple agencies in the United States and many others around the world. These realities have in some instances necessarily slowed the pace of rule writing. Even so, 93 percent of the rules with deadlines before July 2 of this year have been finalized or proposed.
These reforms will require major changes in the way our financial system works, and as the Council's annual report recognizes, they are already helping to make our system stronger. And credit to the economy is expanding and is more broadly available at lower cost than when the law was passed.
If you need a reminder of why these reforms are important, then take a moment to reflect on the number of people still out of work, at risk of losing their home, or struggling to finance a growing small business. And if those reminders are not enough, consider the failures of MF Global and Peregrine Financial, the risk management failures at JPMorgan, the abuses surrounding LIBOR, or the financial threats from Europe.
This work is not done. We still have unfinished business. The Council's report, which we release today, highlights a number of challenges ahead.
We still have work to do to provide the enforcement agencies with the resources they need to do their jobs.
We need to put in place additional reforms for money market funds.
We need stronger protections for customer accounts in a range of different types of financial institutions.
And we need to fix the broken housing finance system.
I want to give a brief introduction to our agenda today.
First, in a closed session earlier today, the Council voted to designate eight financial market utilities as systemically important. As a result, these critical market infrastructure entities will be subject to heightened risk management standards.
The designated firms are now being informed of this decision, and they will be identified to the public later today.
Second on our agenda, we will consider the Council's 2012 annual report. This document, required by Dodd-Frank, gives the public an important window into developments across the financial system and provides recommendations to help strengthen that system.
Third, and finally, we will consider a report on contingent capital, which can serve as an additional shock absorber for banks.
In closing, I want to thank the members of the Council and their staffs for their work implementing reform.
Special thanks is due to the staff who prepared the annual report and contingent capital report that we are voting on today and to those who helped the Council make its decision to designate an initial set of financial market utilities.
Before we begin with the agenda, I want to give the members of the Council the opportunity to make opening remarks.