The chairman of the House Financial Services Committee, Rep. Barney Frank [ D-MA], said Tuesday he hoped to begin writing legislation by early May on overhauling how the federal government regulates the nation’s financial system. A goal of regulatory reform is to create a systemic risk regulator responsible for monitoring financial markets and institutions in order to head off the kind of high-stakes practices that contributed to the economy’s current miseries.
White House spokesman Robert Gibbs said President Barack Obama wants both financial regulation reform and a new “resolution authority” to deal with giants such as American International Group Inc. that get into complex financial trouble. He said the authority would be used to “break apart, unwind and finally resolve the issues that we face with systemic risk.”
The Fed is frequently mentioned as best able to handle that general oversight role, but lawmakers from both parties questioned whether the Fed which controls monetary policy and can direct federal funds to distressed markets, should get a larger oversight role.
Damon Silver, associate general counsel for the AFL-CIO, said the union believed systemic oversight should be done by a coordinating body of regulators chaired by the chairman of the Fed. But he said authority for consumer protection in financial ser5vices should rest in an agency that is separate from bank regulators.
Source: Campaign for America’s Future, 3/18/2009