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.
AP Economics Writer Jeannine Aversa contributed to this report.