The Fed to be the overseer of our nations banking system despite America's protest.

FDIC's Bair says U.S. needs systemic risk council
Wed May 6, 2009 2:18am EDT Email | Print | Share| Reprints | Single Page[-] Text [+]

Featured Broker sponsored link
By John Poirier

WASHINGTON (Reuters) - The United States needs a council of regulators to oversee threats to the financial system, in addition to a regulator to supervise the largest financial institutions, the head of the U.S. Federal Deposit Insurance Corp said.

In testimony prepared for delivery to the Senate Banking Committee on Wednesday, FDIC Chairman Sheila Bair said the Federal Reserve appears to be well-positioned to oversee systemically important firms.

However, she said a council that pulls in the U.S. Treasury, FDIC and Securities and Exchange Commission alongside the Fed should be charged with keeping an eye on system-wide risks.

"A distinction should be drawn between the direct supervision of systemically significant financial firms and the macro-prudential oversight of developing risks that may pose systemic risks to the U.S. financial system," Bair said in the testimony, obtained by Reuters.

To replace the current ad hoc approach, U.S. lawmakers are examining how to wind down financial institutions that have become "too big to fail" -- a designation forcing regulators to rescue them with taxpayer money because their demise could harm the U.S. financial system and the economy.

They are grappling with whether to prevent big firms from becoming too big or break up existing ones that may already be deemed too big for the U.S. financial system.

Another option being considered is whether they should be allowed to grow but impose systemic risk costs under an orderly resolution process.

Bair said in her testimony that the macro-prudential oversight requires many regulatory perspectives ranging from banks, securities firms, holding companies, among others.

"Only through these differing perspectives can there be a holistic view of developing risks to our system," she said.

Minneapolis Federal Reserve Bank President Gary Stern, in separate testimony, said U.S. regulators should tackle systemically important firms through tighter oversight and higher capital buffers and failure to do so could be costly.

"Maintaining the status quo with regard to TBTF (too big too fail) could well impose large costs on the U.S. economy. We cannot afford such costs," Stern said in his remarks.

Bear Stearns, Lehman Brothers, Merrill Lynch, American International Group Inc, Washington Mutual, Wachovia, Fannie Mae and Freddie Mac are among the biggest casualties in the financial crisis stemming from subprime mortgage market.

Bair, whose agency manages receiverships, urged the committee to consider the FDIC's model for a resolution framework for handling troubled institutions of systemic importance.

"While no existing government agency, including the FDIC, has experience with resolving systemically important entities, probably no agency other than the FDIC currently has the kinds of skill sets necessary to perform resolution activities of this nature," Bair said.

She said that no single agency should decide to resolve a systemically important firm which should be given disincentives from growing too large by assessing fees depending on their size and complexity, she said.

She added that systemically important firms should be required to hold larger amounts of capital and liquidity buffers and face leverage restrictions.

Bair said cases of past bank failures had illustrated that taking over a depositary institution can be very complex because of the burdens placed on the parent company that could be forced into a costly bankruptcy proceeding.

As a result, the FDIC should also have the power to wind-down a failed banking depositary unit's holding company, Bair said.

"A realistic resolution regime would send a message that no institution is really too big to ultimately fail," she said.

(Additional reporting by Alister Bull; editing by Neil Fullick)

Views: 48

Comment

You need to be a member of 12160 Social Network to add comments!

Join 12160 Social Network

"Destroying the New World Order"

TOP CONTENT THIS WEEK

THANK YOU FOR SUPPORTING THE SITE!

mobile page

12160.info/m

12160 Administrators

 

Latest Activity

Less Prone favorited tjdavis's video
7 hours ago
Less Prone posted a photo

Social Engineering 101

That's how it goes.
7 hours ago
Doc Vega posted a blog post

A Prelude to WW III ? It Seems There We Are Trailblazing Idiocy into More Blood and Destruction!

They're rolling out the 25th Amendment trying to stop Joe Biden from insanely thrusting the US in a…See More
12 hours ago
Less Prone posted a video

Chris Langan - The Interview THEY Didn't Want You To See - CTMU [Full Version; Timestamps]

DW Description: Chris Langan is known to have the highest IQ in the world, somewhere between 195 and 210. To give you an idea of what this means, the average...
yesterday
Doc Vega posted a blog post

RFK Jr. Appoinment Rocks the World of the Federal Health Agncies and The Big Pharma Profits!

The Appointment by Trump as Secretary of HHS has sent shockwaves through the federal government…See More
Tuesday
tjdavis posted a video

Somewhere in California.

Tom Waites and Iggy Pop meet in a midnight diner in Jim Jarmusch's 2003 film Coffee and Cigarettes.
Tuesday
cheeki kea commented on cheeki kea's photo
Thumbnail

1 possible 1

"It's possible, but less likely. said the cat."
Monday
cheeki kea posted a photo
Monday
tjdavis posted a blog post
Monday
Tori Kovach commented on cheeki kea's photo
Thumbnail

You are wrong, all of you.

"BECAUSE TARIFFS WILL PUT MONEY IN YOUR POCKETS!"
Monday
Tori Kovach posted photos
Monday
Doc Vega posted a blog post

Whatever Happened?

Whatever Happened?  The unsung heroes will go about their dayRegardless of the welcome they've…See More
Sunday
Doc Vega commented on Doc Vega's blog post A Requiem for the Mass Corruption of the Federal Government
"cheeki kea Nice work! Thank you! "
Sunday
cheeki kea commented on Doc Vega's blog post A Requiem for the Mass Corruption of the Federal Government
"Chin up folks, once the low hanging fruit gets picked off a clearer view will reveal the higher…"
Sunday
Doc Vega's 4 blog posts were featured
Saturday
tjdavis's blog post was featured
Saturday
cheeki kea commented on cheeki kea's blog post Replicon Started in Tokyo October 08, 2024
"Your right LP it's insane for sure and hopefully improbable, keeping an open mind. Checking…"
Saturday
rlionhearted_3 commented on tjdavis's blog post Bill Gates Deleted Documentary
Saturday
rlionhearted_3 commented on tjdavis's blog post Bill Gates Deleted Documentary
"The white dude in the center is Bill Gates!!! "
Saturday
Less Prone favorited tjdavis's blog post Bill Gates Deleted Documentary
Nov 15

© 2024   Created by truth.   Powered by

Badges  |  Report an Issue  |  Terms of Service

content and site copyright 12160.info 2007-2019 - all rights reserved. unless otherwise noted