Ben Bernanke adds to critics of shadow banking
10 April 2012 Stone Mountain
Image: Shutterstock
Federal Reserve chairman Ben Bernanke called for new steps to limit the reach of shadow banking.
Following in the footsteps of Michel Barnier, the EC Commissioner responsible for internal market and services who decried the industry in March, Bernanke underscored the view that shadow banking was partly responsible for: “the heavy human and economic costs of the crisis.”
In a speech in Georgia, Bernanke talked about of new updates to the Dodd-Frank rule, and the Federal Reserve’s Comprehensive Capital Analysis and Review (CCAR), in which the 19 largest bank holding companies in the US were evaluated under a very severe hypothetical stress scenario.
He added that, whilst these regulations were effective, there were gaps in the regulatory structure that allowed “systemically important” nonbank financial firms to avoid strong oversight.
Bernanke concluded: “Unfortunately, data on the shadow banking sector, by its nature, can be more difficult to obtain. Thus, we have to be more creative to monitor risk in this important area. We are developing new sources of information to improve the monitoring of leverage.”
Following in the footsteps of Michel Barnier, the EC Commissioner responsible for internal market and services who decried the industry in March, Bernanke underscored the view that shadow banking was partly responsible for: “the heavy human and economic costs of the crisis.”
In a speech in Georgia, Bernanke talked about of new updates to the Dodd-Frank rule, and the Federal Reserve’s Comprehensive Capital Analysis and Review (CCAR), in which the 19 largest bank holding companies in the US were evaluated under a very severe hypothetical stress scenario.
He added that, whilst these regulations were effective, there were gaps in the regulatory structure that allowed “systemically important” nonbank financial firms to avoid strong oversight.
Bernanke concluded: “Unfortunately, data on the shadow banking sector, by its nature, can be more difficult to obtain. Thus, we have to be more creative to monitor risk in this important area. We are developing new sources of information to improve the monitoring of leverage.”
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