Though E. Gerald Corrigan left his post as head of the Federal Reserve Bank of New York five years ago, he says his "capacity to find things to worry about is undiminished." At the International Monetary Conference in Vienna last month, Mr. Corrigan, now a managing director for Goldman, Sachs & Co., discussed some of his current worries for the banking system. The following is excerpted from his speech.

Asset price inflation in equity prices and real estate is a potential source of instability for financial markets. Let me very carefully elaborate on this point because market corrections, even if large, should not be a source of major, much less systemic concern, but rather are a natural and healthy part of overall market dynamics.

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