WASHINGTON – In testimony yesterday, Fed Chairman Ben Bernanke expressed support for proposals calling for a “Council of Regulators” that would be charged with monitoring broad risks to the financial system.
Bernanke’s support comes as some have criticized the Federal Reserve for the wide powers it has exercised since the financial crisis in the U.S. began more than a year ago. “We should seek to marshal the collective expertise and information of all financial supervisors to identify and respond to developments that threaten the stability of the system as a whole,” Bernanke told the House Financial Services Committee.
While still in the proposal stage, such a Council likely would include any agency that oversees various financial institutions and other companies, both insured depositories and non-insured institutions. The National Credit Union Administration has not been specifically mentioned as among the agencies to be included. The Council also would be charged with monitoring very sophisticated types of investment vehicles that often are not broadly understood and which can cause significant problems if their value withers.
During his remarks, Bernanke called on Congress to “support a reorientation of individual agency mandates to include not only the responsibility to oversee the individual firms or markets within each agency’s scope of authority, but also the responsibility to try to identify and respond to the risks those entities may pose, either individually or through their interactions with other firms or markets, to the financial system more broadly.”
