“Reform of financial regulation and supervision should be coordinated internationally to the greatest extent possible.”
Tuesday, March 10, 2009
Federal Reserve Chairman Ben Bernanke has told an elite gathering that a new overarching financial authority should be created by the government and empowered with sweeping new regulatory responsibilities.
Bernanke also coyly indicted to the renowned globalist group that he believes a new international order could be fomented out of the crisis.
“We must have a strategy that regulates the financial system as a whole, in a holistic way, not just its individual components,” Bernanke said in a speech to the Council on Foreign Relations.
“We should consider whether the creation of an authority specifically charged with monitoring and addressing systemic risks would help protect the system from financial crises like the one we are currently experiencing.” he added.
Large firms will require “especially close” oversight in the future, Bernanke noted, adding that regulators need the authority to seize such firms.
“Some of the policies I propose can be implemented and developed under the existing authorities of financial regulators, indeed we are in the process now of doing just that. But in other cases, Congressional action will be necessary to create the requisite authorities and responsibilities.” Bernanke said.
While he didn’t specify which regulator should take that job, he noted that the Fed was first formed to address banking panics and said the initiative would “require” some role for the central bank.
“Effectively identifying and addressing systemic risks would seem to require the involvement of the Federal Reserve in some capacity, even if not in the lead role,” Bernanke said.
“Given how important robust payment and settlement systems are to financial stability, a good case can be made for granting the Federal Reserve explicit oversight authority for systemically important payment and settlement systems,” he added.
Essentially Bernanke suggested that even more power be granted to the Federal Reserve, a private banking institution that has already failed as a regulatory body and led us into the current crisis through it’s engineered inflation of the credit bubble under Alan Greenspan.
Bernanke’s suggestions echo those of Paul Volcker, an Obama adviser and former Fed chairman, who called for a similar regulatory crackdown in January, along with other members of the elite Group of Thirty.
Much to the delight of globalist CFR members, Bernanke also spoke of the international implications of the economic crisis during his speech.
“I also will not say much about the international dimensions of the issue but will take as self-evident that, in light of the global nature of financial institutions and markets, the reform of financial regulation and supervision should be coordinated internationally to the greatest extent possible.” he said.
Bernanke expanded on these comments in a revealing question-and-answer session after the speech.
Commenting on the upcoming meeting of financial heads of the G20 in London, Bernanke stated:
“From the perspective of the G20, the focus should be on the International aspects, obviously, of this crisis. I talked today primarily of what the United States can do and I left implicit, perhaps I shouldn’t have in front of the Council On Foreign Relations, the fact that this is very much an international problem, and it requires international solutions.”
“We need to begin to establish a framework… The better goal for a meeting of leaders would be as much as possible to establish some principles that would guide reforms around the world… they need to work for institutions and for markets that cross borders. We have banks and insurance companies that have subsidiaries in 100 or 120 countries, and there are so many jurisdictions, that dealing with problems in one of those companies is extraordinarily complicated. In order to do that successfully, we need to have agreements, conventions, that will help us work across jurisdictions in an effective and cooperative way.”
The CFR was keen to highlight these comments in it’s write up of Bernanke’s visit.
Watch video of the question and answer session:
Bernanke reiterated that the central bank, U.S. Treasury and other regulators “will take any necessary and appropriate steps” to ensure banks have capital to “function well in even a severe economic downturn.”
“Governments around the world must continue to take forceful and, when appropriate, coordinated actions to restore financial market functioning and the flow of credit,” The Fed chief said.
Bernanke conceded that world is suffering from the worst financial crisis since the 1930s, a remarkable U-turn given that just months ago he described such comparisons as “loose talk” urging that we “put that out of our minds”.
And though respected economists, such as Nouriel Roubini, have stated that those who believe in a second half recovery this year “are delusional”, Bernanke suggested that the downturn could indeed end this year.