The effects of three natural disasters in the early 1990s were overcome by the middle of the decade, but economic growth cooled again with the regional economic downturn.

These changes would not only make banks more profitable but would allow them to diversify their investments to make them less vulnerable to regional downturns.

"The risk of similar, and perhaps more prolonged, regional downturns should not be ignored," Ms. Shanley wrote in a note to clients.

What began as a regional downturn in Northeast real estate prices has now spread to most parts of the country, Mr. Seidman said.

Foreign investment rose 10 percent in March, compared with figures in the month a year earlier, one of the first monthly increases since the regional downturn scared investors.

The full force of the city's budget problems occurred months after the beginning of the regional economic downturn that helped drive them.

Instead, he cited the regional economic downturn and the drying up of commercial credit.

TransImage opened its doors just as the regional economic downturn was turning its full fury on New York City.

He noted that, given the severeity of the regional downturn, coupled with the deep defense cutbacks, it will take some time for the local economy to fully recover.

These changes would insulate banks from regional downturns and open up new sources of profit.