CongressionalHearings/Dodd-Frank/CHRG-111shrg57923/CHRG-111shrg57923--45.txt The NIF would have two key organizational components : the Federal Financial Data Center -LRB- Data Center -RRB- and the Federal Financial Research and Analysis Center -LRB- Research Center -RRB- . CongressionalHearings/Dodd-Frank/CHRG-111shrg57923/CHRG-111shrg57923--45.txt Phillip L. Swagel -- Assistant Secretary for Economic Policy at the U.S. Treasury during crisis -- Brookings Papers March , 2009 . CongressionalHearings/Dodd-Frank/CHRG-111shrg57923/CHRG-111shrg57923--45.txt When the financial markets crashed and the major surviving financial firms teetered on the brink the Federal Government had to determine whether these firms were adequately capitalized . CongressionalHearings/Dodd-Frank/CHRG-111shrg57923/CHRG-111shrg57923--45.txt The Research Center will be responsible for conducting , coordinating and sponsoring the long-term research needed to support systemic risk regulation . CongressionalHearings/Dodd-Frank/CHRG-111shrg57923/CHRG-111shrg57923--45.txt To stave off the consequences of a failure to those already fragile firms doing business with AIG , the Federal Government committed to put almost $ 200 billion in capital into AIG . CongressionalHearings/Dodd-Frank/CHRG-111shrg57923/CHRG-111shrg57923--45.txt The only regulatory authority it would have would be to provide reference data , set data reporting standards , and compel the provision of data . CongressionalHearings/Dodd-Frank/CHRG-111shrg57923/CHRG-111shrg57923--45.txt Although it will take time and substantial effort to stand up the National Institute of Finance , the benefits should far outweigh the cost . CongressionalHearings/Dodd-Frank/CHRG-111shrg57923/CHRG-111shrg57923--45.txt PREPARED STATEMENT OF JOHN C. LIECHTY Associate Professor of Marketing and Statistics , Smeal College of Business , Penn State University , and Founding Member , the Committee to Establish the National Institute of Finance February 12 , 2010 Providing Financial Regulators with the Data and Tools Needed to Safeguard Our Financial System Mr. Chairman and Member of the Subcommittee : We thank you for the opportunity to appear before you on behalf of the Committee to Establish the National Institute of Finance -LRB- CE-NIF -RRB- . CongressionalHearings/Dodd-Frank/CHRG-111hhrg56776/CHRG-111hhrg56776--13.txt Mr. Volcker , '' I appreciate your invitation to address important questions concerning the link between monetary policy and Federal Reserve responsibilities for the supervision and regulation of financial institutions . CongressionalHearings/Dodd-Frank/CHRG-111hhrg56776/CHRG-111hhrg56776--13.txt The Federal Reserve , after all , is the only agency that has financial resources at hand in amounts capable of emergency response . CongressionalHearings/Dodd-Frank/CHRG-111hhrg56776/CHRG-111hhrg56776--13.txt For reasons that I discussed earlier , I do believe it would be a really grievous mistake to insulate the Federal Reserve from direct supervision of systemically important financial institutions . CongressionalHearings/Dodd-Frank/CHRG-111hhrg56776/CHRG-111hhrg56776--13.txt Before addressing the specific questions you have posed , I would like to make clear my long-held view , a view developed and sustained by years of experience in the Treasury , the Federal Reserve , and in private finance . CongressionalHearings/Dodd-Frank/CHRG-111hhrg56776/CHRG-111hhrg56776--13.txt Finally , the committee has asked about the potential impact of stripping the Federal Reserve of direct supervisory and regulatory power over the banks and other financial institutions , and whether something can be learned about the practices of other nations . CongressionalHearings/Dodd-Frank/CHRG-111shrg57709/CHRG-111shrg57709--60.txt According to Chairman Bernanke of the Federal Reserve , bans on proprietary trading for commercial banks may not be constructive . CongressionalHearings/Dodd-Frank/CHRG-111shrg57709/CHRG-111shrg57709--60.txt Mr. Wolin , '' We believe that an important piece of trying to put an end to too big to fail is to constrain the size of financial institutions . CongressionalHearings/Dodd-Frank/CHRG-111shrg57709/CHRG-111shrg57709--6.txt And prior to this time , as I think all on this Committee know and others working in the investment banking world , Chairman Volcker served as Chairman of the Federal Reserve from 1979 to 1987 under Presidents Carter and Reagan . CongressionalHearings/Dodd-Frank/CHRG-111shrg61651/CHRG-111shrg61651--27.txt Further , regulators currently have the authority to ensure that these risks are adequately managed in the areas that the Administration proposes to restrict . CongressionalHearings/Dodd-Frank/CHRG-111shrg61651/CHRG-111shrg61651--130.txt On Tuesday , we heard from Paul Volcker , Chairman of the President 's Economic Recovery Advisory Board , and from Treasury Deputy Secretary Wolin , about the Administration 's most recent regulatory reform proposals . CongressionalHearings/Dodd-Frank/CHRG-111shrg61651/CHRG-111shrg61651--130.txt When I asked about size limits , and how regulators would define `` excessive growth , '' Chairman Volcker paraphrased the late Justice Potter Stewart : `` You know it when you see it . '' CongressionalHearings/Dodd-Frank/CHRG-111shrg57709/CHRG-111shrg57709--129.txt If they get in trouble and it seems to be a viable institution , a solvent institution , you have recourse to the Federal Reserve to handle even rather extreme liquidity needs , and I think that is totally appropriate . CongressionalHearings/Dodd-Frank/CHRG-111shrg57709/CHRG-111shrg57709--239.txt Chairman Volcker made the point recently that that the ATM has been the biggest innovation in the financial services industry over the past 20 years . CongressionalHearings/Dodd-Frank/CHRG-111shrg57709/CHRG-111shrg57709--239.txt National City experienced severe difficulties caused by its involvement in the subprime market , but the Treasury Department denied its application for TARP funds . CongressionalHearings/Dodd-Frank/CHRG-111shrg57709/CHRG-111shrg57709--130.txt Chairman Volcker or Secretary Wolin , it is my understanding that the Federal banking regulators already have the discretionary authority to impose activity restrictions right now very similar to what would be mandated by the Obama proposal . CongressionalHearings/Dodd-Frank/CHRG-111hhrg56778/CHRG-111hhrg56778--10.txt The Federal Reserve also has taken several steps to support our supervisory staff and understanding the risk arising from insurance activities . CongressionalHearings/Dodd-Frank/CHRG-111hhrg56778/CHRG-111hhrg56778--10.txt The Federal Reserve does serve as the consolidated supervisor of bank holding companies and financial holding companies established under the Gramm-Leach-Bliley Act , some of which are affiliated with insurance companies . CongressionalHearings/Dodd-Frank/CHRG-111hhrg56778/CHRG-111hhrg56778--10.txt The Federal Reserve is also the primary Federal regulator of State member banks , many of which are engaged in the sale of insurance products . CongressionalHearings/Dodd-Frank/CHRG-111hhrg56776/CHRG-111hhrg56776--10.txt In summary , the Federal Reserve 's wide range of expertise makes it uniquely suited to supervise large complex financial institutions and to help identify risks to the financial system as a whole . CongressionalHearings/Dodd-Frank/CHRG-111hhrg56776/CHRG-111hhrg56776--10.txt Mr. Bernanke , '' The Federal Reserve 's involvement in regulation and supervision confers two broad sets of benefits to the country . CongressionalHearings/Dodd-Frank/CHRG-111hhrg56776/CHRG-111hhrg56776--10.txt The Federal Reserve has developed such expertise in its long experience supervising banks of all sizes , including community banks and regional banks . CongressionalHearings/Dodd-Frank/CHRG-111hhrg56776/CHRG-111hhrg56776--10.txt The Federal Reserve strongly supports ongoing efforts in the Congress to reform financial regulation and to close existing gaps in the regulatory framework . CongressionalHearings/Dodd-Frank/CHRG-111hhrg56776/CHRG-111hhrg56776--10.txt The Federal Reserve making of monetary policy and its management of the discount window also benefit from its supervisory experience . CongressionalHearings/Dodd-Frank/CHRG-111hhrg56776/CHRG-111hhrg56776--10.txt In the course of carrying out its central banking duties , the Federal Reserve has developed extensive knowledge and experience in each of these areas critical for effective consolidated supervision . CongressionalHearings/Dodd-Frank/CHRG-111hhrg56776/CHRG-111hhrg56776--271.txt On the 11th of December , your committee passed a reform bill that would preserve the Federal Reserve 's role as a supervisor of financial institutions . CongressionalHearings/Dodd-Frank/CHRG-111hhrg56776/CHRG-111hhrg56776--271.txt In addition , in order for the Federal Reserve to look across financial institutions and the interaction between them and the markets for emerging risks , as it currently does , it is vital that the Fed have an accurate picture of circumstances within banks .