Fed Chair Discusses Regulatory Policy
Fed Chair Ben Bernanke recently discussed financial regulatory and stability issues that have taken prominence following the nation's mortgage lending crisis that has affected individual home buyers, lenders, and the nation's economy since 2007.
"The recent experience, including the broader turmoil we have seen in the financial markets, will have—indeed, is already having—important consequences for U.S. regulatory policy," he said.
Regulatory actions intended to curtail the system's turmoil
System relies on discipline, oversight
In some cases, though, that system is not enough. Bernanke remarked that losses and writedowns taken at financial institutions since last August demonstrate that, in this instance, market discipline and regulation did not limit leverage nor risk taking enough to preserve financial stability.
"Working collaboratively with regulators both here and abroad as well as with the firms themselves, the Federal Reserve has redoubled its efforts to strengthen the capital positions, liquidity reserves, and risk-management practices of the institutions for which we have supervisory responsibility," Bernanke said.
Progress achievable on important fronts
"In the longer term," he said, "it is up to the Congress to determine whether still broader reforms are needed. Making that determination will raise a host of complex and challenging issues, but the stakes are commensurately high."
July 30, 2008