Bernanke on regulation
Ben Bernanke opined this morning on the Fed’s ability (more properly, inability) to regulate non-bank financial firms. A central point of the speech was the need for Congress to give the Fed greater “explicit oversight authority” to regulate clearance, financing, and the credit risk inherent in OTC derivatives contracts. Additionally, the speech addressed the need for having a process to dispose of a failed institution’s assets in an “orderly” fashion. The speech took a very even tack between the costs and benefits of increased regulation; it really made for a great start to my morning.
Given how important robust payment and settlement systems are to financial stability, a strong case can be made for granting the Federal Reserve explicit oversight authority for systemically important payment and settlement systems.