Fed Chairman Urges More Stringent Rules for Big Banks

(May 12, 2011) — As part of discussions over the Dodd-Frank financial law, Federal Reserve Chairman Ben Bernanke and other regulators have expressed efforts to encourage more stringent rules for “systemically important” financial institutions to guard the economy from another 2008 financial crisis-type collapse.

In testimony delivered to the House Committee on Banking, Housing and Urban Affairs, obtained by the Associates Press, Fed Chairman Ben Bernanke stated: “Our goal is to produce a well-integrated set of rules that meaningfully reduces the probability of failure of our largest, most complex financial firms, and that minimizes the losses to the financial system and the economy if such a firm should fail.”

According to Bernanke, larger financial firms — big banks and others, such as Wall Street firms, hedge funds and insurance companies — should face more stringent rules to make sure they can overcome the volatility to the economy.

Bernanke testified along with the heads of the Commodity Futures Trading Commission (CFTC), the Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Corporation (FDIC), as well as other key regulators. The Fed will permit the public, banks and other interested parties to comment on the proposed regulations before implementing them in January 2012.