Posted on 09/02/2010 8:17:30 PM PDT by bruinbirdman
“My belief is that a combination of tougher oversight and tighter capital requirements will take away the attractiveness [of being big],” Ben Bernanke told the Financial Crisis Inquiry Commission (FCIC) in Washington DC yesterday.
It has taken Congress almost two years to pass legislation designed to prevent a repeat of a crisis that toppled the country into its worst recession since the Great Depression. The Dodd-Frank law sets out to establish new protection for consumers, equip regulators with greater power to dismantle failing companies, and make it harder for firms to engage in riskier trades thinking the taxpayer will bail them out if they fail.
The question of how to handle institutions that are deemed too big to fail has proved one of the most vexed for global financial regulators. Mr Bernanke said that even without any direct government intervention, “we will see some break-up in the complexity of firms because of the incentives we provide”.
As in Britain, the revamping of regulation in the US has handed the head of the central bank unprecedented powers over the financial system. Mr Bernanke added that the Fed and other agencies will require strong determination to enforce the rules if another crisis is to be avoided.
The FCIC’s investigation into the events of the autumn of 2008 has been running almost a year, and it is due to report its findings to President Obama by mid-December. On what was the FCIC’s last day of testimony in the capital, Mr Bernanke also insisted that he and other officials had done all they could to save Lehman Brothers from collapse.
“I believed deeply if Lehman was allowed to fail, or did fail, the consequences for the US financial system and economy would be catastrophic,” Mr Bernanke said.
Unlike other institutions, including
(Excerpt) Read more at telegraph.co.uk ...
The only reason the Government is worried about “Too Big too fail” anything is because the Government is worried Too Big a Teat will fail impacting Government largess; time to fleece the “people”.
So if they break up, then they won’t be too big to fail, so they can go ahead and fail - is that what you want, Ben.
I just hate the sound of “Dodd-Frank” on anything other than a prison cell door. And then I might feel a teeny bit sorry for Dodd.
“My belief is that a combination of tougher oversight and tighter capital requirements will take away the attractiveness [of being big],” Ben Bernanke told the Financial Crisis Inquiry Commission (FCIC) in Washington DC yesterday.”
Dodd-Frank institutionalized the idea of “too big to fail.”
How about just not bailing them out and promising to bail them out in the future anytime the threaten us?
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