CongressionalHearings/Dodd-Frank/CHRG-111shrg54533/CHRG-111shrg54533--89.txt Having the Federal Reserve become the systemic risk regulator for all large financial institutions concentrates enormous power in one agency . CongressionalHearings/Dodd-Frank/CHRG-111shrg52619/CHRG-111shrg52619--177.txt While this area deserves further consideration , we urge Congress to approach this issue carefully in order to maintain appropriate transparency and loss recognition in the financial services industry . CongressionalHearings/Dodd-Frank/CHRG-111shrg56376/CHRG-111shrg56376--233.txt Representative Wright Patman , populist chairman of the House Banking Committee , sought to prevent increased concentration in banking and the broader economy . CongressionalHearings/Dodd-Frank/CHRG-111shrg52619/CHRG-111shrg52619--171.txt --------------------------------------------------------------------------- Based on the results of these and other efforts , the Federal Reserve is taking steps to improve regulatory requirements and risk management at regulated institutions . CongressionalHearings/Dodd-Frank/CHRG-111hhrg53021/CHRG-111hhrg53021--348.txt Federal Reserve Programs The Federal Reserve has implemented a number of programs designed to stabilize financial markets since the onset of the crisis . CongressionalHearings/Dodd-Frank/CHRG-111shrg56415/CHRG-111shrg56415--246.txt In fact , a Letter to Credit Unions that promotes best practices of member business lending is currently in process . CongressionalHearings/Dodd-Frank/CHRG-111shrg53085/CHRG-111shrg53085--213.txt A change in federal regulatory culture is essential Consumer advocates have long noted that federal banking agencies give insufficient attention to achieving effective consumer protection . CongressionalHearings/Dodd-Frank/CHRG-111shrg52619/CHRG-111shrg52619--211.txt --------------------------------------------------------------------------- State regulators play an important role in protecting the safety and soundness of the state credit union system . CongressionalHearings/Dodd-Frank/CHRG-111shrg51395/CHRG-111shrg51395--119.txt This is an issue that Congress should address in any legislation authorizing a SRR or enhancing the powers of the Federal Reserve . CongressionalHearings/Dodd-Frank/CHRG-111shrg54789/CHRG-111shrg54789--174.txt Again , as the Administration 's own proposal States , 94 percent of the high cost mortgages occurred outside the regulated banking sector . CongressionalHearings/Dodd-Frank/CHRG-111shrg56376/CHRG-111shrg56376--231.txt While the Fed and the OCC became increasingly enamored of Basel II over the past 10 years , the FDIC suffered repeated criticism for their stick-in-the-mud insistence on the leverage ratio . CongressionalHearings/Dodd-Frank/CHRG-111shrg54533/CHRG-111shrg54533--11.txt Within the system , the Board and the Reserve Banks share responsibility for supervising and regulating certain banks and financial institutions . CongressionalHearings/Dodd-Frank/CHRG-111shrg53822/CHRG-111shrg53822--88.txt The policy question facing Congress is whether it makes sense to extend FDIC bank resolution processes to other financial institutions . CongressionalHearings/Dodd-Frank/CHRG-111shrg53822/CHRG-111shrg53822--84.txt With a few additions to their existing holding company authority , the Federal Reserve would seem well positioned for this important role . CongressionalHearings/Dodd-Frank/CHRG-111shrg52619/CHRG-111shrg52619--21.txt Independent NCUA regulation has enabled credit unions to perform in a safe and sound manner while fulfilling the cooperative mandate set forth by Congress . CongressionalHearings/Dodd-Frank/CHRG-111shrg54533/CHRG-111shrg54533--91.txt We propose to enhance the Federal Reserve 's authority over market infrastructure to reduce the potential for contagion among financial firms and markets . CongressionalHearings/Dodd-Frank/CHRG-111shrg54533/CHRG-111shrg54533--3.txt By design , the board and the reserve banks are not directly accountable to Congress and are not easily subject to congressional oversight . CongressionalHearings/Dodd-Frank/CHRG-111shrg52619/CHRG-111shrg52619--206.txt If consumers lack confidence in their institution or are unable to maintain their economic responsibilities , the institution will undoubtedly suffer . CongressionalHearings/Dodd-Frank/CHRG-111shrg53176/CHRG-111shrg53176--160.txt The Federal Reserve Board -- Many people believe the Federal Reserve Board -LRB- the `` Fed '' -RRB- is the most logical body to serve as systemic risk overseer . CongressionalHearings/Dodd-Frank/CHRG-111shrg54533/CHRG-111shrg54533--96.txt The SLC includes representatives from the Conference of State Bank Supervisors , the American Council of State Savings Supervisors , and the National Association of State Credit Union Supervisors . CongressionalHearings/Dodd-Frank/CHRG-111shrg54533/CHRG-111shrg54533--93.txt The Chairman noted that the SEC is working towards improving its risk-based oversight , including extending that oversight to investment advisers . CongressionalHearings/Dodd-Frank/CHRG-111shrg54533/CHRG-111shrg54533--93.txt We have proposed that the Federal Reserve act as the consolidated supervisor of the largest and most interconnected financial firms . CongressionalHearings/Dodd-Frank/CHRG-111shrg54533/CHRG-111shrg54533--93.txt Treasury worked closely with the SEC and CFTC to propose a comprehensive framework for regulation of derivatives that is consistent across both SEC and CFTC jurisdiction . CongressionalHearings/Dodd-Frank/CHRG-111shrg54533/CHRG-111shrg54533--93.txt The Council is required to report to Congress each year on these risks and threats and to coordinate action by individual regulators to address them . CongressionalHearings/Dodd-Frank/CHRG-111shrg55278/CHRG-111shrg55278--113.txt The reason we have money market funds was that Fed regulation Q restricted the interest that the public could earn . CongressionalHearings/Dodd-Frank/CHRG-111shrg52966/CHRG-111shrg52966--77.txt Under the Bank Holding Company Act , the Federal Reserve Board has statutory authority to impose and enforce supervisory requirements on those entities . CongressionalHearings/Dodd-Frank/CHRG-111shrg52966/CHRG-111shrg52966--77.txt The Federal Reserve has developed written guidelines for Reserve Bank staff to follow and a Redemption Request Decision Memo for Reserve Banks to complete when processing and analyzing redemption requests . CongressionalHearings/Dodd-Frank/CHRG-111shrg56415/CHRG-111shrg56415--81.txt Capital and Reserve Levels Perhaps the most critical tools for dealing with and absorbing credit losses are substantial levels of capital and reserves . CongressionalHearings/Dodd-Frank/CHRG-111shrg51303/CHRG-111shrg51303--174.txt To mitigate these risks , the Treasury provided equity capital to AIG and the Federal Reserve provided liquidity support backed by the assets of AIG . CongressionalHearings/Dodd-Frank/CHRG-111shrg55278/CHRG-111shrg55278--125.txt With respect to time expended by the Reserve Bank members of the Federal Open Market Committee , the President of the New York Reserve Bank devotes significant attention to AIG . CongressionalHearings/Dodd-Frank/CHRG-111shrg56376/CHRG-111shrg56376--142.txt Mr. Carnell , '' Mr. Chairman and Members of the Committee , our current bank regulatory structure is and remains a source of serious problems . CongressionalHearings/Dodd-Frank/CHRG-111shrg56376/CHRG-111shrg56376--142.txt The result was a failure to deal effectively with troubled thrifts , much larger losses to the Deposit Insurance Fund . CongressionalHearings/Dodd-Frank/CHRG-111shrg52619/CHRG-111shrg52619--167.txt These standards must apply across all jurisdictions and issuers , otherwise gaps create competitive pressures to reduce standards , as we saw with mortgage lending standards . CongressionalHearings/Dodd-Frank/CHRG-111shrg54675/CHRG-111shrg54675--94.txt From the outset of the credit crisis , the Federal Home Loan Banks have engaged to ensure liquidity to the financial system . CongressionalHearings/Dodd-Frank/CHRG-111shrg56376/CHRG-111shrg56376--127.txt The Treasury Proposal would make these types of firms subject to the Bank Holding Company Act and supervision by the Federal Reserve Board . CongressionalHearings/Dodd-Frank/CHRG-111shrg54789/CHRG-111shrg54789--71.txt So under the legislation , the traditional preemption by national banks would not be available and States could set higher rules for products and services . CongressionalHearings/Dodd-Frank/CHRG-111shrg51303/CHRG-111shrg51303--169.txt To date , the Federal Government has committed to provide approximately $ 170 billion in loans and equity to AIG . CongressionalHearings/Dodd-Frank/CHRG-111shrg51395/CHRG-111shrg51395--128.txt My testimony today will seek to answer the second question at three levels : 1 How should Congress strengthen the regulatory architecture to better protect investors ; 2 . CongressionalHearings/Dodd-Frank/CHRG-111hhrg55814/CHRG-111hhrg55814--389.txt We 're also pleased to see that the Federal Reserve would be given a strong role in the regulation of systemically important financial companies . CongressionalHearings/Dodd-Frank/CHRG-111shrg56376/CHRG-111shrg56376--229.txt There is scant information that suggests the Federal Reserve or FDIC 's on-site activities , were instrumental in stemming the current crises or bank failures . CongressionalHearings/Dodd-Frank/CHRG-111shrg56376/CHRG-111shrg56376--229.txt This would leave 8 financial regulators at the Federal level and 50 bank regulators , 50 insurance regulators and 50 securities regulators at the State level .