Bernanke: Fed is working to implement financial overhaul
The Federal Reserve is working closely with other regulators to
implement the biggest overhaul of financial rules since the Great
Depression, Fed Chairman Ben Bernanke said Wednesday.
The law, signed by President Barack Obama in July, beefs up
government oversight of Wall Street, provides stronger protections
for consumers and gives the Fed and other regulators new powers to
clamp down on risky financial practices. It's aimed at preventing
another financial crisis like the one in 2007 to 2009 that plunged
the country into a deep recession.
Bernanke provided the progress report in prepared testimony for a
hearing Thursday at the Senate Banking Committee. The testimony was
made available on Wednesday.
Specifically, the Fed is working with the Treasury Department to
develop ways for regulators to best detect financial dangers that
could hurt the economy. And, the Fed is helping Treasury identify
companies that are so big and so interconnected that their failure
could take down the entire financial system. Those companies --
which are likely to include Wall Street firms, hedge funds and
insurance companies -- would be subject to tougher regulations.
At the same time, the Fed is transferring many of its consumer
protection responsibilities to a new watchdog agency created by the
law. The Bureau of Consumer Financial Protection is housed within
the Fed and bankrolled by the Fed, but Bernanke has no authority
All told, the Fed has identified 250 projects associated with the
law. A new position was created to coordinate all those projects,
To be more open, the Fed will post information on its web site
information about its communications with banks, trade
associations, academics, consumer groups and others regarding the
writing of new rules under the law.
Written by: Jeannine Aversa, AP Economics Writer