CongressionalHearings/Dodd-Frank/CHRG-111shrg57923/CHRG-111shrg57923--30.txt Now , we have a lot of information that is already about the financial markets that is widely disseminated and we would be talking about adding additional information on top of that . CongressionalHearings/Dodd-Frank/CHRG-111shrg57923/CHRG-111shrg57923--30.txt Mr. Liechty , '' Well , I think that for the large -- when people approach the financial markets , they typically approach from the statistical perspective . CongressionalHearings/Dodd-Frank/CHRG-111shrg57923/CHRG-111shrg57923--30.txt But what you hope you will find is when the system gets to a point where there , in essence , are bubbles that could be collapsing and what might trigger those bubbles , how you respond to that is going to be very carefully thought about , and is going to have to be very carefully thought about by the systemic regulator and the other regulators when they have that information . CongressionalHearings/Dodd-Frank/CHRG-111shrg61651/CHRG-111shrg61651--14.txt But since the early 1990s , we have developed a lot more system risk focused on the existence of these very big banks . CongressionalHearings/Dodd-Frank/CHRG-111shrg61651/CHRG-111shrg61651--14.txt I strongly support the Volcker Rules , as everybody is starting to call them , in terms of the principles they put forward . CongressionalHearings/Dodd-Frank/CHRG-111shrg61651/CHRG-111shrg61651--14.txt I think I would suggest to you that you consider imposing a size cap on banks relative not to total normal assets or liabilities , which is the Volcker proposal , because that is not bubble-proof . CongressionalHearings/Dodd-Frank/CHRG-111shrg61651/CHRG-111shrg61651--14.txt If we allow our biggest banks to continue to build on these unfair market advantages and the lower funding costs , we will head in the same direction . CongressionalHearings/Dodd-Frank/CHRG-111shrg61651/CHRG-111shrg61651--14.txt So the big four banks now have more than half of the mortgage market in this country and two-thirds of the market for credit cards . CongressionalHearings/Dodd-Frank/CHRG-111shrg61651/CHRG-111shrg61651--14.txt This reflects , in addition to what has happened in the financial crisis and the bailout and the rescue , it reflects the underlying concentration of these financial markets . CongressionalHearings/Dodd-Frank/CHRG-111shrg57923/CHRG-111shrg57923--39.txt But what I did n't see and could n't see and could n't understand was how what was happening in the housing sector was going to lead to the collapse in the financial sector . CongressionalHearings/Dodd-Frank/CHRG-111hhrg56776/CHRG-111hhrg56776--3.txt Last year , the House passed our financial services reform legislation that substantially preserved the Fed 's power to supervise these financial institutions . CongressionalHearings/Dodd-Frank/CHRG-111hhrg56776/CHRG-111hhrg56776--3.txt Interest rates fixed by the Federal Reserve is price fixing , and it should have no part of a free market economy . CongressionalHearings/Dodd-Frank/CHRG-111hhrg56776/CHRG-111hhrg56776--3.txt Proponents of preserving robust Fed supervision authority cite three main points to support their position that the Fed should retain broad supervisory powers . CongressionalHearings/Dodd-Frank/CHRG-111hhrg56776/CHRG-111hhrg56776--3.txt Despite this intense on-site presence , the New York Fed and the SEC stood idle while the bank engaged in the balance sheet manipulations detailed in the report . CongressionalHearings/Dodd-Frank/CHRG-111hhrg56776/CHRG-111hhrg56776--3.txt This hearing was called to examine the potential policy implications of stripping regulatory and supervisory powers over most banks from the Fed , especially the potential impact this could have on the Fed 's ability to conduct monetary policy effectively . CongressionalHearings/Dodd-Frank/CHRG-111hhrg56776/CHRG-111hhrg56776--3.txt The Senate bill recently introduced by Senator Dodd , however , would strip the Fed 's authority to supervise all but approximately the 40 largest financial institutions . CongressionalHearings/Dodd-Frank/CHRG-111hhrg56776/CHRG-111hhrg56776--3.txt Once the change of attitude comes , when that inflated money supply decides to go into the market and prices are going up , once again the Fed will have difficulty handling that . CongressionalHearings/Dodd-Frank/CHRG-111hhrg56776/CHRG-111hhrg56776--3.txt Under Senator Dodd 's proposal , the Fed would supervise 40 or 50 large banks , and the other 7,500 or so banks would be under the regulatory purview of other Federal and State banking agencies . CongressionalHearings/Dodd-Frank/CHRG-111hhrg56776/CHRG-111hhrg56776--3.txt This raises serious questions regarding the capability of the Fed to conduct bank supervision , yet even if supervision of its regulated institutions improved , it is not clear that oversight really informs monetary policy . CongressionalHearings/Dodd-Frank/CHRG-111hhrg56776/CHRG-111hhrg56776--3.txt Third , proponents say that the Fed 's supervisory activities provide the Fed information about the current state of the economy and the financial system that influences the FOMC in its execution of monetary policy , including interest rate setting . CongressionalHearings/Dodd-Frank/CHRG-111hhrg56776/CHRG-111hhrg56776--3.txt I have tried to keep an open mind about the role of the Fed going forward , and hope to use today 's hearing to get more information as we move forward to discussions with the Senate , if the Senate ever passes a bill . CongressionalHearings/Dodd-Frank/CHRG-111hhrg56776/CHRG-111hhrg56776--3.txt By contrast , the regulatory reform legislation passed by the House in December represented a large expansion of the Fed 's regulatory role since its creation almost 100 years ago . CongressionalHearings/Dodd-Frank/CHRG-111hhrg56776/CHRG-111hhrg56776--3.txt As Congress looks at ways to reform the country 's financial infrastructure , we need to ask whether bank supervision is central to central banking . CongressionalHearings/Dodd-Frank/CHRG-111hhrg56776/CHRG-111hhrg56776--3.txt Let me see if I can try to use some of the chairman 's time and my time to kind of frame this hearing in a way that we will kind of get a balanced view of what folks are saying . CongressionalHearings/Dodd-Frank/CHRG-111hhrg56776/CHRG-111hhrg56776--241.txt And more -- and secondly , in respect to the subject of this hearing , would countercyclical underwriting requirements be easier to implement in the context of consolidated Fed supervision ? '' CongressionalHearings/Dodd-Frank/CHRG-111hhrg56776/CHRG-111hhrg56776--241.txt And , simply put , what this means , when a housing bubble begins to develop , you turn up the downpayment that 's required . CongressionalHearings/Dodd-Frank/CHRG-111shrg57923/CHRG-111shrg57923--38.txt Mr. Horne , '' I have known that there has been a national housing problem since the first time that our partners -- we have over 900 data partners that we work with . CongressionalHearings/Dodd-Frank/CHRG-111shrg57923/CHRG-111shrg57923--38.txt Now , we have large amounts of information regarding derivative data , regarding all sorts of different kinds of financial instruments , but it is only segments of the market . CongressionalHearings/Dodd-Frank/CHRG-111shrg57923/CHRG-111shrg57923--25.txt I want them to have a safe , secure financial system that gives them the same opportunity as I had when they grow up and get into the real world and start providing for a family . CongressionalHearings/Dodd-Frank/CHRG-111shrg57923/CHRG-111shrg57923--25.txt I will echo what Allan has said , what Dr. Mendelowitz has said , about in the importance in terms of political pressures that the institute is able to act in a way that it feels is in the best interest for the country .