Fed wants to keep oversight
By Jeannine Aversa |
March 22, 2010, Monday
|
Print Edition
Print Edition
UNITED States Federal Reserve Chairman Ben Bernanke made a fresh pitch on Saturday to retain oversight of small banks, contending that what the Fed learns from that role helps it assess the overall health of the entire US financial system.
Bernanke, in a speech to the Independent Community Bankers of America's meeting in Orlando, Florida, argued against a Senate proposal that would scale back the Fed's banking duties.
Close connections with community banks give the Fed a better understanding of the nation's financial risks, including problems in commercial real-estate and small-business lending, according to Bernanke's prepared remarks.
A Senate bill to overhaul financial regulation would strip the Fed of its power to supervise state-chartered banks and bank holding companies with assets of less than US$50 billion. That would leave the Fed overseeing only 35 big bank holding companies. The legislation, written by Senator Christopher Dodd, a Connecticut Democrat, is set to be debated today by the Senate Banking, Housing and Urban Affairs, which he leads.
Critics have blamed lax regulation at the Fed and at other agencies for contributing to the financial crisis.
Financial instability can undermine small banks, not just big ones, Bernanke said. Small banks contributed to the problems of the Great Depression of the 1930s, he noted.
Small banks have expressed support for continued regulation by the Fed and have made arguments similar to Bernanke's.
Dodd's proposal would mean major changes to the Fed's system of 12 regional banks. For example, Fed banks in Kansas City, Missouri, and St Louis no longer would have any banks under their supervision.
Bernanke, in a speech to the Independent Community Bankers of America's meeting in Orlando, Florida, argued against a Senate proposal that would scale back the Fed's banking duties.
Close connections with community banks give the Fed a better understanding of the nation's financial risks, including problems in commercial real-estate and small-business lending, according to Bernanke's prepared remarks.
A Senate bill to overhaul financial regulation would strip the Fed of its power to supervise state-chartered banks and bank holding companies with assets of less than US$50 billion. That would leave the Fed overseeing only 35 big bank holding companies. The legislation, written by Senator Christopher Dodd, a Connecticut Democrat, is set to be debated today by the Senate Banking, Housing and Urban Affairs, which he leads.
Critics have blamed lax regulation at the Fed and at other agencies for contributing to the financial crisis.
Financial instability can undermine small banks, not just big ones, Bernanke said. Small banks contributed to the problems of the Great Depression of the 1930s, he noted.
Small banks have expressed support for continued regulation by the Fed and have made arguments similar to Bernanke's.
Dodd's proposal would mean major changes to the Fed's system of 12 regional banks. For example, Fed banks in Kansas City, Missouri, and St Louis no longer would have any banks under their supervision.
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