US regulators working on ways to track financial system fault lines: Bernanke
06 May 2011
US regulators are strengthening their ability to identify fault lines in the financial system, rather than focusing exclusively on specific companies, Federal Reserve chairman Ben Bernanke has said.
"The financial crisis demonstrated clearly that supervisory and regulatory practices must consider overall financial stability as well as the safety and soundness of individual firms," Bernanke said at a conference on Thursday.
Without commenting on the outlook for the US economy or monetary policy, Bernanke said, in his prepared remarks, that the Fed had set up an internal working group to oversee the largest financial firms that would build on successful approaches used during recent bank stress tests.
During those examinations Fed economists, bank supervisors and other experts worked together to review industry practices and links between firms to identify any possible risks to the larger financial system.
According to Bernanke, the government must avoid imposing burdensome rules on financial companies as it carried out the biggest regulatory overhaul in seven decades.
"No one's interests are served by the imposition of ineffective or burdensome rules that lead to excessive increases in costs or unnecessary restrictions in the supply of credit," Bernanke said during a speech in Chicago yesterday. He was speaking at the 47th annual conference on bank structure and competition.
