On the first question, yes, we were picking up the pressures on liquidity. We saw some cracking, but it never broke. There were some counterparties that were skittish, but we never saw the type of accelerated withdrawals or running that came to mark Bear Stearns. We were watching it very ...

Pat, do you have that?

There are definite differences among dealers. I don’t have the Bear Stearns cut, but we did a cut recently, and there are very clearly differences among dealers. As we know, the share of less liquid assets being financed by tri-party has been growing over the last— pick a number ...

About $150 billion.

I would defer to my colleagues in Markets, but I would just give one anecdote. Over the past few weeks, in particular, when Lehman announced its second-quarter results, some observers in the market stated that Lehman might not have come through this period if the PDCF had not been there ...

It may be too fine a distinction, but we didn’t say “no” to anyone when they came in. When they came in and stayed for a month and a half or two months, then we started to say “no.”

I guess a couple. We’re saying that we’re looking at the capital position. I think Governor Kohn was careful to say in his testimony that we’re looking at capital in relation to near-term earnings prospects. That gives us kind of a short window, but we know from ...

Things moved pretty quickly at the end.

No.

The SEC is working on a post mortem. They have promised to share it with us when they’re done. They have folks—I wouldn’t say forensic accountants—in there looking at that, trying to piece together what happened. So we did not have the exact numbers.

How much runs—exactly.

Under fixed-income finance, for example, under the secured funding, there’s liquid and less liquid. Those are 20 percent and 50 percent. Those would have been approaching 100 percent.

You would have a lot higher numbers on secured funding. You would have the numbers coming much closer to the illiquid, 100 percent, and you would have a—

Yes.

We left it somewhat in their hands, saying that it’s going to be short of a full run.

Correct. We went back to the firms and asked them to give us the information cut this way because it’s not readily available from any public information that we have. We also asked them to give us, under a severe test scenario, what their assumption was. Based on the ...

This is gross leverage, so it is just equity—in this case, a ratio of equity over total assets—a very blunt measure.

Page 6 gives us a more current view. In the left-hand panel is the tier 1 capital ratio for the four largest securities firms. As I think ...

Thank you, Mr. Chairman. We’re now in the handout. Why don’t we start on page 2, and I’ll give you an overview of where we are headed this morning, at least from my section. First I’ll talk a bit about the objectives and the approach of ...

I would also agree that your general point about banks being more exacting in their stress testing is a good one because it’s something we and other supervisors, to be honest with you, continually look at, and many times the response that banks get internally from either owners or ...

You know, when people debate whether to have supervision with a central bank or not, one of the key arguments is that only we can bring to bear the resources of the entire central bank and also provide input from the supervision side. So clearly, that’s something I think ...

Well, I would just comment on the first point that you made in terms of silos. I guess we would fully agree we’re having a great time here, so we would love to see more interaction between supervision and the FOMC.

The top panel of exhibit 12 sets forth the question we sought to address—namely, to what extent did regulatory incentives contribute to or fail to mitigate weaknesses exposed by the recent turmoil? In doing so, we defined the term “regulatory incentives” to encompass both regulatory capital and financial reporting ...