2023 Financial Markets Conference - Old Challenges in New Clothes: Outfitting Finance, Technology, and Regulation for the Mid-2020s

Keynote Address: Gary Gensler

The Monday afternoon keynote featured Gary Gensler, chair of the Securities and Exchange Commission, and Richmond Fed president Tom Barkin.


Tom Barkin: Welcome back everybody and thank you so much for making the time today. I'm going to turn it over to Gary relatively quickly. Just a few words of background. I think everyone knows him. He's been the chair of the US Securities and Exchange Commission since April 2021. Before that, he was professor of the Practice of Global Economics and Management at the Massachusetts Institute of Technology's Sloan School of Management, the former chair of the US Commodity Futures Trading Commission, undersecretary of the Treasury for domestic finance, assistant secretary of the Treasury, and a partner at Goldman Sachs. Gary will speak, and then we'll have opportunity for Q&A. Gary, take it away.

Gary Gensler: Tom, you're so kind. As is customary, I'm just noting that my views are my own as chair of the Securities and Exchange Commission, and I'm not speaking on behalf of my fellow commissioners or the SEC staff.

The story goes back in 1871, Mrs. O'Leary's cow kicked over a lantern. You've heard the story. Her barn was enflamed, the fire spread quickly through the wooden buildings of Chicago, 2,100 acres burned. In the following years, Chicago rebuilt itself with new rules and an upgraded fire department to limit the risks of flames raging across their community.

Those Chicagoans understood this wasn't just a simple accident of a cow and a lantern. It was about building materials and incentives related to the city's infrastructure. It was about fire prevention and firefighting equipment. Building codes and fire departments, though they do come at a cost and though they need to be updated from time to time, have made the community more resilient for 150 years. Finance, too, has seen its share of fires starting in one barn that go on to engulf entire communities.

Finance is about the pricing and allocation of money and risk throughout the economy. Of course, you're a room full of economists. You know that. There are those who have money who want to invest it, others who need money to fund good ideas or get through life's inevitable challenges. There are those who have risk but don't want to bear it, and others willing to take on that risk. Finance, in essence, sits in the middle, like the neck of an hourglass whose grains of sand are money and risk. Finance is a network that relies on trust.

Since antiquity, though, finance has tended towards centralization, concentration, and economic rents. That's whether it was the Medicis back in the 15th century, or J. P. Morgan, the man, not the company, a century ago. That's because financial intermediaries benefit from scale, network effects, and access to valuable data.

Such intermediaries don't just sit passively passing the sand through the hourglass. They become important market participants themselves. One would say "nodes on the network." They retain and transform money and risk. They seek profits from arbitraging differences in pricing of money and risk. They actually even create forms of money, whether it be deposits, money market funds, or funding in the repurchase markets.

They of course retain risk related to valuation, rates, liquidity, funding, maturity transformation, leverage, correlations, operations, and others. Such intermediaries also tap the capital markets, and when they tap the capital markets in times of stress those intermediaries may lose funding if the counterparties and investors question their market-based, or even mark-to-market, solvency.

This is just the nature of finance. Just as we can't repeal the laws of physics and nature, risk in finance always will be there. As former Secretary of the Treasury Bob Rubin used to say, "Markets go up. Markets go down."

History is replete with times when fires in one corner of the financial system, or at one financial institution, spread to the broader economy. When this happens, the American public—bystanders, just like those Chicagoans who saw their homes burn—inevitably get hurt. Such fires, though too many to name, have started from both the banking and the nonbanking sectors. In fact, it's even said that that Chicago fire in 1871, along with another in Boston, helped fuel a bank run, possibly contributing to the Panic of 1873.

Decades later, the Panic of 1907, J.P. Morgan stood there to try to help it out, but ultimately President Wilson's reforms went on to establish the Federal Reserve with authorities in essence as a building code regulator, but also as a form of a fire department and lender of last resort. The 1929 crash and ensuing Great Depression led to Roosevelt's reforms, standing up the Federal Deposit Insurance Corporation, deposit insurance itself, and the Securities and Exchange Commission.

In the early 1930s, in the town of Bedford Falls, New York, there was a run on Bailey Brothers Building and Loan. You remember it. George Bailey explained to the panicked crowd, "The money's not here. Your money's in Joe's house and a hundred others." Tongue in cheek a bit, but fortunately Jimmy Stewart saved the day as all told in It's a Wonderful Life. They captured that essence of the risk. Of course, there was the financial fires of the 2008 crisis: eight million plus people lose their jobs, millions of families losing their homes, and small businesses across the country folding. This led to numerous updates in the building codes and fire departments for finance, as embedded in the Dodd-Frank Act.

Economists have written extensively on the causes and contagion of financial fires. Such financial stability haute literature often highlights herding, network interconnectedness, and regulatory gaps. Herding, of course, is when multiple individual actors make similar decisions. In times of stress, otherwise uncorrelated actors can suddenly become correlated, like those cows stampeding in City Slickers. Given that greed and fear both are basic emotions in the markets, herding occurs both for the bulls and the bears. Whether it be a breakdown in risk management, such as the subprime mortgage market prior to the 2008 crisis, or a breakdown in confidence such as in bank runs, herding has contributed to many a financial fire.

Finance is complex. It's also an interconnected, global network, with many transmission channels. During the financial crisis, Andy Haldane, then at the Bank of England, compared the financial network to tropical rainforests: at the same time robust and yet fragile. The Great Chicago Fire of 1871 also exposed regulatory gaps, both in building codes and fire preparedness. Finance, time and again, has seen its share of regulatory gaps. Such gaps can occur when financial regulations don't treat like activities alike. Market participants may then arbitrage such differences here in the US and between countries, and gaps also emerge when technologies provide new ways of intermediating, transforming, and creating money and risk. In these instances, regulators often fail to keep pace.

Now, where does the SEC fit into all of this? We were established as a direct result of one of these financial fires. Congress gave us a mandate to protect investors and promote the public interest. In so doing, they understood that we also had to oversee those intermediaries at the neck of the hourglass: stock exchanges, clearinghouses, broker-dealers, investment advisers, et cetera. Congress enhanced the authorities in the wake of subsequent financial market fires, giving us greater authority about government securities, clearinghouses, private fund advisers, auditing, and on.

Promoting financial resiliency goes to the core of the SEC's three-part mission. It's the essence of fair, orderly, and efficient markets. In normal times, it helps promote trust. In times of stress, it protects investors and issuers alike. Thus, I'm proud that the SEC has taken up a number of projects to enhance resiliency in our markets. Let me just name five very briefly.

First, in the spirit of building codes, I'd start with the foundation of our entire capital markets, the $24 trillion Treasury markets. We've seen jitters over the decades in these markets, whether it was in the early 1980s when a dozen securities dealers failed, to the problems in 2019 in the repo markets, and the dash for cash in 2020. Just this March, we saw Treasury markets experience the greatest volatility in 35 years. Such jitters matter, as the Treasury markets are interconnected to the entire market. They're embedded in money market funds, short-term funding markets, integral to monetary policy, and they are of course how we the people fund our government.

Further, many hedge funds are receiving the vast majority of their repo financing in the non-centrally cleared market. This might create greater risk in times of stress, particularly when large, interconnected hedge funds achieve high leverage from banks and prime brokers in the Treasury markets. Thus, working along with their colleagues at the Treasury and the Federal Reserve, the SEC has put forth a number of reforms in the markets. Projects include broadening central clearing, registering the dealers, regulating the trading platforms, and promoting transparency.

Second: clearing. They've lowered risk since the late 19th century. Given that they sit in the middle of the capital markets, though, it's imperative that we continually look to update rules regarding both clearing, and the clearinghouses themselves. Thus, earlier this year we finalized rules to cut in half the settlement cycle in securities markets, which lowers some of the risk. We also proposed rules to strengthen the clearinghouse's governance and use of service providers, and this Wednesday, two days from now, we're considering proposals regarding the contents of clearing agencies' recovery and wind-down plans.

Third, given the fire of 2008, but also earlier sparks at Long-Term Capital Management, Congress understood the importance of shining a brighter light of transparency on a significant and growing part of the nonbank market. Private funds, now over $25 trillion in gross assets under management, surpass the $23 trillion US banking sector. Could I say it again? Private funds in the US, all told, are larger than the entire commercial banking sector. Private funds participate in nearly every sector of our capital markets, connected through the use of leverage provided by banks and broker-dealers. Thus, we recently adopted rules requiring, for the first time, that private fund advisers make current reports of events that may indicate significant stress. In addition, working with the CFTC [Commodity Futures Trading Commission], we proposed enhancing the periodic reports for large hedge funds.

Fourth: money market funds and open-end funds. In times of stress, we've seen financial stability sparks emanating from these funds. In 2008, one money market fund "broke the buck." You recall it. If it weren't for extraordinary fire department action—I mean the Federal Reserve, the FDIC, and Treasury—things could have gotten a lot worse. We saw related issues during the onset of the COVID pandemic.

Money market funds and open-end bond funds, by their design, have a potential liquidity mismatch between investors' ability to redeem on the one hand, and then of course the funds' securities' lowered liquidity on the other hand. Thus, we've put out proposals intended to address these structural issues and enhance liquidity.

Fifth, nearly 40 years before that cow and that lantern, I'm talking now way back in the 1830s, it may not surprise any of you that the first known cyberhack actually related to finance: telegraph lines in France. Almost 200 years later, the financial sector increasingly relies on complex, interconnected, and ever-evolving information systems. Those who seek to harm these systems have become more sophisticated in their tactics, techniques, and procedures. Thus, the Commission has made a number of proposals to enhance cybersecurity practices and incident reporting around the financial sector.

Before I close, I want to address some risk on the horizon, some in the near term, some possibly further out. The economy is adjusting to a rise in interest rates more significant than in decades, and of course ongoing geopolitical risk. With such a transition of inflation and rates, it's appropriate to stay alert to financial stability issues. As the Federal Reserve's recent Financial Stability Report noted, areas of concern include "vulnerabilities related to valuation pressures, borrowing by businesses and households, financial-sector leverage, and funding risks." That's what your conference, in part, is about. The Federal Reserve also noted that "hedge fund leverage remained elevated."

Further, I think it's important to think out over the horizon. Of course, this week and the next few weeks, we're thinking about the debt limit, and it goes without saying that it would be quite a raging fire if the US Treasury were to default. I want to touch briefly on three things over the horizon: moral hazard, the digital economy, and artificial intelligence.

There are tradeoffs of any governmental interventions into the markets, so-called fire departments coming to the rescue to forestall the spread of a financial fire. Moral hazard, though, arises when official sector support, the fire department support, in times of stress potentially incentivizes greater risk-taking by individual actors in the private sector. Further, generally not all the costs to the economy of any individual market participant's failure are borne by that particular participant. You know it. How do you internalize those externalities? Thus, risk appetites and management may change in a way that's adverse to financial stability. Every time the fire department comes in, there is this debate.

Two, as it relates to the rise of the digital economy. I'm not talking about the generally noncompliant crypto markets—that's for another day, another speech—but as it relates to the rise of the digital economy. We've already seen the effects of fintech and social media on significant parts of consumer finance and investing, significant amounts of the mortgage market. Fintech has originated outside of banking, a lot of robo-advisers and brokerage apps and the like. It's possible, particularly in light of the higher rate environment, that we might see consequential changes to the entire deposit and banking landscape.

Looking further out, the use of predictive data analytics and artificial intelligence might be the most transformative technology of our time, and the least talked about at this conference. This transformation is happening throughout our economy, and finance is no exception. AI already is being used for call centers and account openings, compliance, trading algorithms, sentiment analysis, and yes, robo-advisers and brokerage apps. Such applications can bring significant benefits. It also has the potential to heighten fragility as it could increase herding, interconnectedness, and regulatory gaps. Existing financial sector regulatory regimes, built in an earlier era of data analytics, are likely to fall short in addressing such systemic risks posed by broad adoption, not just of deep learning but also of generative AI.

Financial history tells us sparks will fly from time to time. We know that. One never knows when a cow may kick over a lantern, or even go rogue and misbehave. Risk in one financial institution may burn through the system. The SEC has an important role to help protect for financial stability and promote markets that are more resilient to fires. This is why the SEC's resiliency projects are so important. We're focused on strengthening the building codes of finance to better protect our clients, the American public. Tom, over to you.

Barkin: Thanks, Gary. Very good. We've got a bunch of questions from the floor, and others feel free to add on. Why don't I start with the most recent fire? Given the risk that short-selling of regional bank stocks can trigger a deposit flight that may destabilize that bank, how should we think about the cost versus benefits of a short-selling ban? I saw last week that the SEC said it was not contemplating such a ban. I'd just be curious: why not?

Gensler: I'll start with the fundamentals. Finance itself, that intermediation of money and risk in our economy benefits from robust debates, if you wish, in the capital markets between those that want to express a position to go long and those that want to sell or go short. It brings greater liquidity and what's called "price discovery" to the markets, and to have that is really the core of our capital markets. We at the SEC are merit neutral. Folks can go long or short as long as those markets work, are fair, orderly, and efficient, and we guard against fraud manipulation.

It's accurate. We're not looking at such a ban. One, they haven't worked in the past, Tom. The economic literature ... many of the papers that could be written about the chance bans in the past, not just in the US or elsewhere, is they tend to drive to lower liquidity. They don't necessarily support asset pricing. Often, these expressions to sell something are then expressed elsewhere, either in derivatives markets, options and swaps, or just people selling. In addition, I would say they really say to the public when they've been put in place—whether here in the US or elsewhere, they're usually very short-term temporary bans that don't work—they also say to the public that the official sector is not confident in the fair, orderly and efficient markets.

Barkin: Okay. You mentioned the debt ceiling in passing. I've got a bunch of questions about that. Where do you see the biggest risk over the potential failure to reach a deal on the debt ceiling? And, how do you think about what I imagine would be pretty likely impacts on markets and the economy?

Gensler: As I said in my remarks, it would be quite a raging fire. I as chair don't have any direct role in those discussions. I want to make sure that's understood. As the chair of an agency overseeing markets, we've already seen some pricing stress around short-term bills, Treasury bills, and the like. A little bit of change is in, actually, the sovereign credit default swap spreads. If we were actually to go over—it's sort of unimaginable, but if we were to go over the X-date—I think that you'd see breakdowns all through the market. It would be, of course, most directly in the US Treasury market, money market funds, the hedge funds, and other market participants in the repo markets.

Each of the markets I just mentioned are ... well, the Treasury market's $24 trillion, but there's a $5.8 trillion money market field. There's well over $5 trillion of funding in the repo markets. All would be affected, and then credit spreads inevitably would widen, funding for businesses and homeowners across the country would widen out. It'd be one heck of a mess, Tom.

Barkin: Got it. Next question: Do you worry about the Fifth Circuit decision to, in its interpretation, strengthen the constitutional right to a jury trial? Will this limit the SEC's ability to exercise its delegated power? I'm not familiar with that decision. There's also been a bunch of Supreme Court decisions about agency power and rulemaking. I'd just be curious, your impressions on one or both of those.

Gensler: Well, let me step back. Everything that we do as an agency is based upon the authorities Congress has given us, whether it's after financial fires or promoting, of course, our three-part mission about investors and issuers, and ensuring that markets work for those investors and issuers. It's the authorities that Congress gave us, as well as how the courts interpret those authorities.

In essence, we live in a market, it's called a judicial market, and we operate within that market. Whether it's the Fifth Circuit, the Supreme Court, or any other circuit court opinion, we look at those closely and we bring 700 to 800 enforcement actions a year. Of course, we look at it very closely so that we stay within our authorities and the law there.

Barkin: Okay. Can you comment at all on the dispute with Coinbase, about rules on crypto, and why doesn't the SEC want to publish rules for that market?

Gensler: Because, Tom, the rules have already been published. To make it quite direct, this is a field that has been operating largely noncompliant. Our agency has put out rules about what it is to be an exchange, what it is means to be a broker-dealer, what it is means to be an adviser, or custody assets, and how to register a securities offering. Those rules are in existence, and there's nothing about a new technology that makes it nonconsistent with the public policies that Congress has laid out. As Justice Thurgood Marshall wrote, Congress painted with a broad brush.

The definition of a security, something called an "investment contract," is one of over 30 terms, but it's an important term, investment contract. Congress looked at that and said, if the public is investing money, anticipating profit based upon the efforts of others in a common enterprise, that's a security, an investment contract. We've looked at the intermediaries in the middle, back to my remarks. There are financial intermediaries in the middle, nodes in the network, and they need to come into compliance if they've got securities on their platforms.

Barkin: You flagged risks associated with the digital economy and AI. What's your view on the appropriate regulatory frame for these developments? Is ChatGPT a risk to financial stability, for example?

Gensler: I think that we're in one of the most transformative times, certainly in my life, even every bit as transformative as the internet itself, with predictive data analytics. I was a bit of a math guy, and so forth, but the way that math has been used and the sheer power, the computational powers of computers, and the data input all combined together strikes me as quite transformative. It's going to transform, and already has started to transform, the fields of radiology, voice recognition, pattern recognition, and yes, finance. As we do that, I think it's appropriate to think through: Where will we have more concentration and interconnectedness? How many generative AI base layers are we going to have in the US? Is it going to be 2? 3? 4? I don't know. That's yet to be discerned, but it's probably going to be highly concentrated, and then front-ends built upon that.

There's a network interconnectedness. There's also something about artificial intelligence models. They talk about explainability, or opacity. We've seen financial crises over the decades that come from this, whether it's the opacity in the mortgage market and the credit default swaps market that was a part of the 2008 crisis, whether it's other opacities that we've seen. The explainability of the models themselves, the network interconnectedness. It's quite possible the crisis of 2027 or 2032 is we were going to go, "Oh my, we were all relying on the same mortgage data aggregator provider. We were all relying on the same underlying base level for some underwriting or sentiment analysis level." It's just basic network economics coupled with this remarkable technology.

What do we do about it? I think first, we've got to really engage and talk about it. We at the SEC are taking up a project around conflicts related to predictive data analytics, but that's separate and apart from this sort of model risk management. It's the risk of all of the system together, relying on concentrated data aggregators, concentrated generative AI, that is likely to appear pretty quickly.

Barkin: Got it. A couple pointed questions here. One is: Are the issues in the banking system that we're seeing this cycle at all a product of inadequate disclosures on mark-to-market, accounting mismatch of assets versus liabilities, economic mismatch, poor risk management, poor regulatory, or all of the above? Where would you put the blame?

Gensler: [laughs] Well, look, I leave it to my colleagues. I know that the Federal Reserve put out a report. I know that the Federal Deposit Insurance Corporation put out a report. I think that my colleagues are testifying a couple of times later this week, in the House and the Senate.

I'm just going to think about our remit here at the Securities and Exchange Commission. I think that accounting, which we've overseen since the 1930s, auditors that we've overseen since Sarbanes-Oxley after another financial fire around Enron 20 years ago, credit rating agencies, that we also have responsibilities for, for the last 15 or 16 years. The gatekeepers of auditors and credit rating agencies, and then more specifically to accounting, I think there's a benefit from the discipline of mark-to-market accounting. It might be that I grew up at an investment bank, and there's a rigor, it's a discipline, that the accounting field has debated off and on for 25-30 years, at least. It's about 30 years of different debates around it, and certainly working with our colleagues at the banking agencies, we stand ready to engage in that further discussion.

There is actually, though, Tom, a fair amount of disclosure right now that the mark-to-market loss is in an available for sale securities book, mark-to-market losses and the hold-to-maturity securities book, and even footnote disclosure for public companies around some of their valuation methodologies. Evaluations in their loan books are already disclosed. Again, when things like this happen, it's appropriate for an agency like ours to learn from it, learn from the fires, and see how we might update the building codes, even if that might be about the disclosures of public companies in this space.

Barkin: You mentioned credit rating agencies and auditors: anything there worth looking at?

Gensler: Just that they're an important part of our oversight and authority, and it's something that we generally do. I would note that, as it relates to credit rating agencies, Congress, when they gave us authorities, ensured that the rating agencies are independent. We do not get involved in their methodologies or their ratings themselves.

They are registered with us. We do inspect them and ensure that they're following their own methodologies, but it's their methodologies and we have authorities around conflicts. The auditors, you're probably familiar with as an important set of authorities after some of the financial fires of Enron and WorldCom, and Senator Sarbanes and Mike Oxley put together that bill 21 years ago.

Barkin: Got it. Another pointed question on cryptocurrencies: Do you have 20/20 hindsight that the SEC fell behind in enforcement regarding cryptocurrencies?

Gensler: I don't know, Tom. I think we brought about 140 cases, 80 or so before I was so honored to be in this job. So my predecessors, and the rest subsequently. I think this is a field...it's interesting, but we don't know who Satoshi Nakamoto is yet, who she or he or they were. It's a field that was built off of a concept to not use centralization, even though finance since antiquity has tended towards centralization. To be decentralized, lack of authorities or sort of anti-commercial bank, anti-central bank, worldwide, a bit off-the-grid sort of approach. Yet, it very much relies on the law when they go bankrupt and they're in bankruptcy court, and you know what we've seen.

There is this field that arose where the investing public, 24 hours a day, 7 days a week, around the globe—this is not just a US market. It's largely an international market—is investing their hard-earned money, hoping for a better future. In there lies the core of what a security is as Thurgood Marshall wrote about and I mentioned earlier. It's a false narrative to say that these things are that decentralized. They tend towards centralization. If there's 12,000 or 23,000 tokens, you can find some group of entrepreneurs in a website and a Reddit channel and a Twitter channel around most of these. Again, without prejudging any one of them.

Then the intermediaries: just as Congress said that we had to oversee broker-dealers and exchanges and clearinghouses for other securities, you'd want us to do that here. You saw a series of actions that we've taken in that regard, but again, we stand ready to help those intermediaries come into compliance. I would say that their business models, though, tend to be built on noncompliance. Their business models tend to be built on taking customer funds, commingling it, and having...they're rife with conflicts, Tom. We wouldn't let the New York Stock Exchange also operate directly on the exchange as market makers, as a hedge fund, and comingle all these things, or to have a token themselves and to raise money off of their own token, borrow against the token, and not even give public disclosure in a proper way.

All we call upon in our rules for the tokens: register and have full, fair, and truthful disclosure, and the intermediaries to have ... register, of course, deal with the conflicts and ensure that they have the time-tested rules against fraud, manipulation and the like. Otherwise, it's going to be problematic.

I would note, these recent banking issues in March and so forth, out of the however you want to count it, the four banks that failed, two of them had significant crypto books. The third one had a significant stable coin issuer, put their deposits there and it actually led to sort of a depegging, it was called, for the second-largest stable coin operator. There was even some interconnectedness in crypto markets and crypto actors with at least three of these banks.

Barkin: Good, good. Next question: Do you have concerns with institutions that are not directly involved in lending, but are involved in things like custody and risk management software that help manage risk for trillions in financial services?

Gensler: If I can broaden it out, one of the challenges for the building codes, if I can keep using that analogy, and the fire departments is that a lot of services are provided for the registered financial entities. Whether it's for banks, broker-dealers, exchanges, clearinghouses, and this is a good part of our economy that there's a lot of outside service vendors providing services, whether it's cloud services, pricing services, model services, on and on, or the clearinghouses, the exchanges, the advisers, the broker-dealers.

In the banking area, Congress addressed this multiple decades ago, where the regulators could actually have some authority with regard to companies providing services to banking. That's not the case with the market regulators, either the Commodity Futures Trading Commission or the SEC. I don't think it's there for the Federal Home Loan or the FHFA either.

That's the authorities, but we did put out some proposals in the last year with regard to outside service providers and investment advisers, and outside service providers and clearinghouses. Really, it's about the clearinghouses and the investment advisers, and their relationship with those outside service providers. Looking a little forward, if I can come back to artificial intelligence, in that field there is going to be more and more reliance on probably a short list of data aggregators, a short list of artificial intelligence or generative AI providers, that will provide the base layer. Then so much of finance will be built on top of it. There'll be some dependencies and fragility that comes from that.

Barkin: All right, this has been great. I know we're at time. Maybe one final question. The theme of this conference is "old challenges in new clothes." You've had a long experience in financial and regulatory sectors. What old market challenges are you seeing appear again, and would you suggest we be spending our time on while we're here today?

Gensler: Well, thank you. I feel pretty young, Tom, but I got it. I think that there are similar or old challenges of when...I think of it as when asset values go down and we've had rate increases in Europe and the US, around the globe, of 350-500 basis points. When rates go up, certainly in the bond markets valuations go down. You usually have the three things that come together around leverage, lack of transparency, and complexity.

We saw that last November in a corner of the markets around pension funds and a program that most people didn't even know existed: liability-driven investments, or LDIs, and the gilt market. Let me just say, we saw it in the gilt market last November. We've seen it time and again over the decades. When you have movements and valuations, you have the nodes in this financial system network, in essence you have herding when people run from them and their counterparties and their investors sort of withdraw a bit.

The other old thing I'd say is in good times we would often see lowering of risk management. I highlight that in my prepared remarks and elsewhere about the risk management between banks and broker-dealers providing prime brokerage relationships to the macro hedge fund community, and those relationships and so forth.

In terms of new clothes, we live in a digital economy and what do we have? Four or six, maybe, streaming apps in the country, because it becomes highly concentrated. The top 10 money market complexes have 80 or 85 percent market share. You can see that concentration. The top 10 deposit institutions, maybe it's only 50 percent. History tells us that you'd probably get to more concentration, but in a digital age we could also see changes of how quickly herding, the cows stampeding, so to speak, in City Slickers, can arise. I think that those are things that we in the official sector have to take into mind.

Barkin: Hugely helpful. Thank you for your time today and for joining us. We really appreciate it.

Gensler: Thank you so much, and you all be well down there.