Bernanke, Regulators Testify On Financial Reform Implementation

WASHINGTON — Federal Reserve Chairman Ben Bernanke and other top regulators said Thursday their agencies are working vigorously to put into effect the sweeping overhaul of U.S. financial rules and are closely coordinating with each other.

Bernanke said the Federal Reserve is working with the Treasury Department to develop ways for regulators to best detect financial dangers that could damage the economy. "It is essential that the (overhaul law) be carried out expeditiously and effectively," Bernanke testified at a hearing of the Senate Banking Committee.

Deputy Treasury Secretary Neal Wolin said, "We are moving as quickly and as carefully as we can."

The regulators said they will collaborate in the Financial Stability Oversight Council, a powerful assembly created by the new law and headed by Treasury Secretary Timothy Geithner. The council, which has its first meeting on Friday, is charged with keeping watch over the entire financial system.

At the same time, Bernanke, Federal Deposit Insurance Corp. Chairman Sheila Bair and other regulators affirmed the importance of their independence and the value of having divergent views within the council. Unlike the Treasury Department, which is part of the Obama administration, the others are independent regulatory agencies.

"Coordination's going to be extremely important," Bernanke said. But he also said that independence "is very important for a lot of good reasons," such as providing "multiple sets of eyes."

Bair said "there will be differences." Mary Schapiro, chairman of the Securities and Exchange Commission, said the regulators already have had "lots of rigorous debate behind the scenes" on several issues.

The new law, enacted in July, toughens government oversight of Wall Street and banks, provides stronger protections for consumers and gives the Fed and other regulators new powers to restrain risky financial practices. It's aimed at preventing another financial crisis like the one that struck with force two years ago and plunged the country into a deep recession.

The agencies are charged with writing scores of new rules to put meat on the bones of the overhaul law. As sweeping as the law is, Congress left much of the substance of the new rules to the discretion of regulators. The rule writing, just under way, already has drawn intense lobbying from financial industry interests.

Bernanke also said 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, big hedge funds and insurance companies – would be subject to tougher regulations.

The law includes a process for shuttering big, complex financial companies using money from investors and loans from Treasury.

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AP Economics Writer Jeannine Aversa contributed to this report.

Comments

[JoeLeland]

01:35 PM on 10/29/2010

THE FEDERAL RESERVE BANK IS A PRIVATE COMPANY.
Article 1, Section 8 of the Constitution states that Congress shall have the power to coin (create) money and regulate the value thereof. Today however, the FED, which is a privately owned company, controls and profits by printing money through the Treasury, and regulating its value.
The FED began with approximately 300 people or banks that became owners (stockholders purchasing stock at $100 per share - the stock is not publicly traded) in the Federal Reserve Banking System. They make up an international banking cartel of wealth beyond comparison (Reference 1, 14). The FED banking system collects billions of dollars (Reference 8, 17) in interest annually and distributes the profits to its shareholders. The Congress illegally gave the FED the right to print money (through the Treasury) at no interest to the FED. The FED creates money from nothing, and loans it back to us through banks, and charges interest on our currency. The FED also buys Government debt with money printed on a printing press and charges U.S. taxpayers interest. Many Congressmen and Presidents say this is fraud (Reference 1,2,3,5,17).
Who actually owns the Federal Reserve Central Banks? The ownership of the 12 Central banks, a very well kept secret, has been revealed:
Rothschild Bank of London Warburg Bank of Hamburg Rothschild Bank of Berlin Lehman Brothers of New York Lazard Brothers of Paris Kuhn Loeb Bank of New York Israel Moses Seif Banks of Italy Goldman Sachs.

[grills]

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[Keren Or Shalom]

07:13 AM on 10/02/2010

_______________________________

Our Economy is in Shamble

The consequences, the Great Depression and history tells us, will necessarily be a Formidable Chaos:

Social and political turmoils, and military adventures.

Neither supranational bodies nor governments can propose a plausible solution.

What is Politically Correct is Mathematically Wrong!

_______________________________

- Do you feel that your ideology pushed you to make decisions that you wish you had not made?

- Well, remember that what an ideology is, is a conceptual framework with the way people deal with reality. Everyone has one. You have to -- to exist, you need an ideology. The question is whether it is accurate or not. And what I'm saying to you is, yes, I found a flaw. I don't know how significant or permanent it is, but I've been very distressed by that fact.

- You found a flaw in the reality...(!!!???)

- Flaw in the model that I perceived is the critical functioning structure that defines how the world works, so to speak.

- In other words, you found that your view of the world, your ideology,
was not right, it was not working?

_______________________________

It is our responsability to create a meaningful increment of jobs, revenues and investments:

We urgently need the only plausible solution that is offered to us:

An Innovative Credit Free, Free Market Economic Ideology

It is your duty to insure your own security and economic survival!

_______________________________

Credit Free Economy
More Jobs, No Debt, No Fear.
Prosperous, Fair and Stable.
http://post-crash.com

_______________________________

[themodernleader]

07:59 AM on 10/01/2010

   Instead of printing money to put people back to work producing value, Bernanke is cooking up another trillion dollar free money lunch for the crooked financial bunch.  This is sheer madness.  Our currency will be worthless. Our middle American savings will go up in smoke and then we will enter times of the indispensible man, the American Caesar.  Goodbye, Constituion for the United States of America.  Hello China.

[themodernleader]

07:52 AM on 10/01/2010

  This financial and economic system must be discarded and rebuilt trom the ground up. Through and through it is filled with corrupt rules, regulations and personnel.  Thew Federal Reservwe is hiding bad loans that will bring itself down when they are revealed, as surely as they must be. 

[Tackora]

12:18 AM on 10/01/2010

The losses of life savings, jobs and houses of hard working people does not seem to bother you either, Mr. Bernanke. It is truely maddening that Obama reappointed you. An appropriate position and residence would be in a different federal facility for you.

[Tackora]

12:13 AM on 10/01/2010

The enormous losses in life savings and the pertainind hardship of ordinary people does not seem to bother you either, Mr. Bernanke. It maddening that Obama reappointed you. You should reside in a different federal facility.

[omobob]

12:04 AM on 10/01/2010

"Congress left much of the substance of the new rules to the discretion of regulators. The rule writing, just under way, already has drawn intense lobbying from financial industry interests". Enter Goldman Sachs. Good by meaningful reform.

[Byron Ellis]

10:24 PM on 09/30/2010

The problem with Bernanke, Geithner, and the Fed is that they were incapable of foreseeing the economic crisis and late in priming the economy. As a result of inflation targeting (IT), they maintained a restrictive monetary policy from 2003 to 2008. It was this restrictive policy combined with high energy prices that reduced real income and effective demand. See http://www.jethroproject.com/Recessions.pdf for a clear indication of how flat monetary policy precedes recessions. However, some pundits have argued that the Fed reacted timely in 2008 by increasing excess reserve in the financial system. In reality, the Fed was more than five years late. Furthermore, of the more than $1 trillion dollars they put in the system, $600 billion went to foreign banks and for the first time they started to pay interest on reserves, so banks had no incentive to provide credit to Main Street. Moreover, the injection of reserves was not helpful because it did not expand the money supply M1; to expand the money supply banks have to make credit (loans) available to borrowers. And, even today banks are reluctant to provide credit. Thus, given the policy of Bernanke, the economy and employment will not expand at the required space to achieve full employment during the remaining Obama administration.

[vino22]

03:27 AM on 10/01/2010

So with that satement it is safe argument for the American people to demand the end of this private bank that prints our currency. They didnt react timely. They manipulated the markets with their central planning..I dont htink we have had any restrictive policy since 71

[Byron Ellis]

11:34 AM on 10/01/2010

Check this Fed graph http://research.stlouisfed.org/fred2/series/M1 to see the flatness of the M1 money supply and the subsequent recession. what do you think after viewing the graph?

[vino22]

10:02 PM on 09/30/2010

I just dont understand why a private bank can have control over our lives with legislation our congress gave them

[Byron Ellis]

10:29 PM on 09/30/2010

It is not a private bank, rather it is an independent government agency. If it was not independent, politicians in power would be tempted to manipulate monetary policy to achieve high levels of employment close to elections. Thus, leading to numerous booms and busts.

[vino22]

03:22 AM on 10/01/2010

Where did you read that at? The federal reserve is about as fedral as fedral express. It is a private bank with shareholders.. Their is about 10 and it isnt the American people...maybe google it, but it is no government agency

[pastgone]

09:52 PM on 09/30/2010

They're not getting to the problem! No one's talking about the problem! It's so frustrating. It's like trying to improve the text of a book by changing the typeface--and everyone just goes along with it, like it makes any sense.

The problem is housing costs in the US. The problem is that during the Bush administration, the Fed allowed housing costs to rise dramatically--amazingly--ridiculously--nationwide. You remember. It happened in your neighborhood.

A very, very significant amount of this nation's wealth is contained in it's real estate. A very, very significant amount of this nation's debt is secured by it's real estate. A very, very significant amount of this nation's securities are packages of mortgage debt instruments. This has always been true.

But this entire system depends on house prices rising gradually and no more than about 5% a year. When housing prices doubled in a three to four year period--(1) a lot of people made a lot of quick money, and (2) a VERY dangerous nationwide economic problem developed--for many reasons--but mostly, because prices that rise that fast and that far are BOUND to fall just as fast and just as far.

And they did.

So the security for the mortgage debt--the houses--no longer were adequate to pay off the mortgages. This led to lots of problems for regular Americans, and it also pulled the rug out from under Wall Street mortgage-backed securities.

And that's how our economy fell.

[Byron Ellis]

10:35 PM on 09/30/2010

Not true real estate investment is less that 5% of the gross domestic product. The problem was not housing, the problem is inadequate real income. And, the Fed is aware of this. That is why in the fourth quarter of 2008 they significantly increase excess reserves. However, the increase in reserves was disingenuous, since they created a disincentive for banks to lend; they began paying interest to banks on their excess reserves.

[omobob]

12:09 AM on 10/01/2010

Agreed. The problem still exists. Reform is meaningless. The same players are already making money and handing out bonuses while others look form work. Look for a new round of fore closers as bank accounts, savings, 401Ks run out, leaving a whole new group of Americans tapped out.

[falbergsawco]

06:44 AM on 10/01/2010

Agreed again. And I don't think a privately-run central banking system has worked out very well: we're systemically insolvent now and there's not much they can do to fix it besides giving their ill-gotten gains back to the investors they snookered. And you know they won't do that.

I think the problem goes deeper than just our bankng system; it exposes the roots of our entire capitalistic economy, the corporate entity itself. The idea of chartering private groups of investors to conduct business with limited personal liability, while exceedingly successful in world-wide financial competition, has shown itself also capable of creating entities so large they threaten the sovereignty of the American People and the economy itself. Corporate entities, as currently sanctioned, combine the power of unlimited growth potential, immortality, and Constitutional protections originally meant to protect the innocent from unjust prosecution. We created a new species of monster and now lost our ability to control it. It now owns the government; and it remains to be seen whether it can buy the People, too.

At some point, before the Federal Reserve Banks fail, the Government will have to overthrow the Financial Aristocracy or the People will have to overthrow the Government. The easiest, most direct approach, of course, would be for the People to overthrow the Financial Aristocracy through some form of "financial dis-obedience". Suggestions?