Bernanke: Regulators challenged in spotting risk
By JEANNINE AVERSA AP Economics Writer May 5, 2011 1:50PM
Federal Reserve Chairman Ben Bernanke speaks at the 47th Annual Conference on Bank Structure and Competition at the Hotel InterContinental, 505 n Michigan. Wednesday, May 5, 2011 | Brian Jackson~Sun-Times
Updated: June 7, 2011 12:34AM
Regulators must better understand threats to the financial system to be able to prevent another crisis, Federal Reserve Chairman Ben Bernanke acknowledged Thursday.
“These are difficult challenges, but if we are to avoid a repeat of the crisis and its economic consequences, these challenges must be met,” Bernanke said in a speech to a banking conference in Chicago.
Bernanke said they are making progress implementing the financial overhaul law passed last year. It directed the Federal Reserve and other regulators to improve oversight of banks and Wall Street firms, with the goal of averting another crisis like the 2008 financial meltdown.
Bernanke said increased coordination among regulators should reduce duplicative or conflicting regulations.
But regulators face a delicate balancing act, he said. They must improve oversight of financial companies, while also not stifling innovation that can support economic growth and job creation.
“No one’s interests are served by the imposition of ineffective or burdensome rules that lead to excessive increases in costs or unnecessary restrictions in the supply of credit,” Bernanke said.
Republicans, who solidly opposed the financial overhaul legislation, have said the law goes too far and could make it harder for U.S banks to compete globally. Some are seeking to reduce funding for agencies set up under the law and limit the scope of new rules. The General Accounting Office says the law will cost nearly $1 billion to implement this year.
Democrats say the law is needed to help ward off future economic meltdowns.
Bernanke did not discuss the economy or economic aid efforts in his speech or in a brief question-and-answer session afterward.
Last week, the Fed signaled that it will end on schedule a $600 billion Treasury bond-buying program. The Fed said economic growth and hiring has improved enough to close down this economic-support program in June. The program is aimed at lowering rates on loans and boosting stock prices to get Americans to spend more.