Fed supervisory job key to monetary task - Bernanke
WASHINGTON (Reuters) - U.S. Federal Reserve Chairman Ben Bernanke argued on Thursday the Fed must retain its regulatory powers, telling lawmakers that supervising banks helps it set monetary policy and will help guide its pullback of extraordinary support for the battered economy.
"The Federal Reserve's participation in the oversight of the banking system significantly improves its ability to carry out its central banking functions," the Fed wrote in a report that Bernanke submitted to the top lawmakers on the Senate Banking Committee.
Congress is debating far-reaching overhaul of financial oversight after a devastating global crisis. Most observers agree that lax supervision of financial activities played a supporting role in bringing on the meltdown.
The Senate Banking Committee is considering stripping the Fed of its regulatory powers, arguing it should concentrate on its functions on calibrating borrowing costs to ensure stable growth and price stability.
In a report to Banking Committee Chairman Christopher Dodd and the panel's top Republican, Richard Shelby, Bernanke said the Fed's supervisory functions will help policymakers determine when and how to withdraw the unprecedented support it put in place to protect the financial system and pull it out of a deep recession.
"Information from the supervisory process will help policymakers to assess overall credit conditions and the stability of the financial sector, and so to time appropriately the shift to reduced policy accommodation," he said.
Bernanke acknowledged "significant shortcomings" by regulators, including by the Fed, in the period before the financial collapse. He said the Fed is trying to plug gaps and broaden its supervision to take into account risks across the financial system.
The Fed should not be the only agency responsible for the soundness of the broad system, but should play a central role in policing it, Bernanke said.
"The Federal Reserve is well suited to contribute significantly to an overall scheme of systemic regulation," he said.
(Reporting by Mark Felsenthal; editing by James Dalgleish and Jeffrey Benkoe)
- Tweet this
- Share this
- Digg this
- Pro-independence Scots narrow gap to victory ahead of vote - poll
- Polls say Scotland will spurn independence, but are they right?
- Ukraine accuses Russia of 'undisguised aggression' as rebels advance |
- Golf-U.S. PGA Tour Deutsche Bank Championship scores
- Low-carb diets may beat low-fat options for weight loss, heart health