CongressionalHearings/Dodd-Frank/CHRG-111hhrg55809/CHRG-111hhrg55809--20.txt The Federal Reserve already has begun to incorporate a systemically focused approach into our supervision of large , interconnected firms . CongressionalHearings/Dodd-Frank/CHRG-111shrg55278/CHRG-111shrg55278--65.txt It might easily threaten the independence of the Federal Reserve in taking unpopular decisions to rein in the bubble economy . CongressionalHearings/Dodd-Frank/CHRG-111shrg53085/CHRG-111shrg53085--209.txt At a minimum , this task force should include the agencies that regulate and supervise FDIC-insured banks -- including the Federal Reserve -- plus the Treasury and Securities and Exchange Commission . CongressionalHearings/Dodd-Frank/CHRG-111shrg55278/CHRG-111shrg55278--103.txt To that end , Congress should establish a Financial Company Resolution Fund -LRB- FCRF -RRB- to provide working capital and cover unanticipated losses for the resolution . 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-111shrg52619/CHRG-111shrg52619--171.txt As the central bank of the United States , the Federal Reserve has a critical part to play in the government 's responses to financial crises . 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 The Federal Reserve retained an outside financial advisor to manage the assets held in the Maiden Lane LLC portfolio . CongressionalHearings/Dodd-Frank/CHRG-111shrg52619/CHRG-111shrg52619--210.txt Regulatory Gaps or Omissions -- During a recent hearing , the Committee has heard about massive regulatory gaps in the system . CongressionalHearings/Dodd-Frank/CHRG-111shrg56376/CHRG-111shrg56376--129.txt Among the Federal banking agencies , the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation each are independent from Treasury for all purposes . CongressionalHearings/Dodd-Frank/CHRG-111shrg56376/CHRG-111shrg56376--123.txt --------------------------------------------------------------------------- With respect to bank holding companies specifically , the supervisory program of the Federal Reserve has undergone some basic changes . CongressionalHearings/Dodd-Frank/CHRG-111shrg56376/CHRG-111shrg56376--123.txt Accordingly , the Federal Reserve welcomed and immediately supported an initiative led by the Federal Deposit Insurance Corporation -LRB- FDIC -RRB- to address such regulatory arbitrage . CongressionalHearings/Dodd-Frank/CHRG-111shrg56376/CHRG-111shrg56376--123.txt Others require congressional attention.Charter Conversions and Regulatory Arbitrage The dual banking system and the existence of different Federal supervisors create the opportunity for insured depository institutions to change charters or Federal supervisors . CongressionalHearings/Dodd-Frank/CHRG-111shrg56376/CHRG-111shrg56376--231.txt Another advantage of creating a single Federal prudential regulator is that it would enhance the independence of the Federal Reserve in making monetary policy . CongressionalHearings/Dodd-Frank/CHRG-111shrg51395/CHRG-111shrg51395--23.txt Investors wondered what other major financial institution might fail next and how other money market funds might be affected . CongressionalHearings/Dodd-Frank/CHRG-111shrg54533/CHRG-111shrg54533--91.txt We also propose new authorities and resources for the Federal Trade Commission to protect consumers in a wide range of areas . CongressionalHearings/Dodd-Frank/CHRG-111shrg51290/CHRG-111shrg51290--60.txt It also creates overlap and the potential conflict between the Federal banking agencies , which are responsible for mortgage lending activities , and the Federal Trade Commission . CongressionalHearings/Dodd-Frank/CHRG-111shrg54589/CHRG-111shrg54589--123.txt My testimony today on the regulation of OTC derivatives will reflect the SEC 's perspective as the country 's capital markets regulator . CongressionalHearings/Dodd-Frank/CHRG-111shrg54589/CHRG-111shrg54589--123.txt The current securities laws are broad and flexible enough to regulate appropriately all of these varied securities products and trading venues . CongressionalHearings/Dodd-Frank/CHRG-111shrg51395/CHRG-111shrg51395--265.txt We support giving the financial markets stability regulator the authority to gather information from all U.S. financial institutions and markets in order to identify systemic risk and maintain financial stability . CongressionalHearings/Dodd-Frank/CHRG-111hhrg53234/CHRG-111hhrg53234--164.txt One of the main reasons that Congress in 1991 passed FDICIA , the Federal Deposit Insurance Corporation Improvement Act , was to prevent the Federal Reserve from delaying closure of failing banks , increasing losses , and weakening the FDIC fund . 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-111shrg54533/CHRG-111shrg54533--93.txt These agencies granted Federal banking charters whereas the FDIC and Federal Reserve have oversight regarding charters granted by the States . CongressionalHearings/Dodd-Frank/CHRG-111shrg54533/CHRG-111shrg54533--93.txt If so , will this effectively require the Fed to act as a Federal insurance regulator so that it can properly supervise the company ? CongressionalHearings/Dodd-Frank/CHRG-111hhrg48873/CHRG-111hhrg48873--14.txt The Department of the Treasury , the Federal Reserve , and the Federal Reserve Bank of New York acted to prevent the collapse of AIG . CongressionalHearings/Dodd-Frank/CHRG-111shrg52966/CHRG-111shrg52966--71.txt The Federal Reserve is also the primary Federal supervisor of State-member banks , sharing supervisory responsibilities with State supervisory agencies . CongressionalHearings/Dodd-Frank/CHRG-111shrg52966/CHRG-111shrg52966--71.txt Federal Reserve supervisors have been engaged over the past few years in evaluating firms ' internal processes to assess overall capital adequacy as set forth in existing Federal Reserve supervisory guidance . CongressionalHearings/Dodd-Frank/CHRG-111shrg52966/CHRG-111shrg52966--71.txt This includes a process spearheaded by Federal Reserve Vice Chairman Donald Kohn to systematically identify key lessons revealed by recent events and to implement corresponding recommendations . CongressionalHearings/Dodd-Frank/CHRG-111shrg52966/CHRG-111shrg52966--71.txt A final supervisory lesson applies to the structure of the U.S. regulatory system , an issue that the Congress , the Federal Reserve , and others have already raised . CongressionalHearings/Dodd-Frank/CHRG-111hhrg55814/CHRG-111hhrg55814--368.txt If the committee wishes to give more power to the Federal Reserve , we think it should make clear that this power is only to strengthen safety and soundness regulation , and that it must simultaneously reform the Federal Reserve 's governance . CongressionalHearings/Dodd-Frank/CHRG-111shrg51303/CHRG-111shrg51303--178.txt Discussion then turned to possible Federal Reserve and Federal Government actions and consideration of the credit facility announced that night . CongressionalHearings/Dodd-Frank/CHRG-111shrg52619/CHRG-111shrg52619--167.txt However , we must also acknowledge that many of the systemically significant entities that have needed federal assistance were already subject to extensive federal supervision . CongressionalHearings/Dodd-Frank/CHRG-111hhrg51591/CHRG-111hhrg51591--22.txt Finally , risk management professionals with appropriate training , credentials , and professional standards can play an important role in the Federal oversight of financial services . CongressionalHearings/Dodd-Frank/CHRG-111shrg55278/CHRG-111shrg55278--106.txt Under Chairman Bernanke 's leadership , the Federal Reserve has adopted strong consumer protection measures in the mortgage and credit card areas . 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-111shrg382/CHRG-111shrg382--43.txt Senior-level officials from the Federal Reserve , Securities Exchange Commission , and the Treasury Department represent the United States in FSB meetings . CongressionalHearings/Dodd-Frank/CHRG-111shrg382/CHRG-111shrg382--43.txt Next I will describe specifically the role of the Federal Reserve 's participation and priorities in these international regulatory groups . CongressionalHearings/Dodd-Frank/CHRG-111shrg382/CHRG-111shrg382--43.txt Treasury Secretary Geithner and Federal Reserve Chairman Bernanke represent the United States at meetings of the G-20 Finance Ministers and Central Bank Governors . CongressionalHearings/Dodd-Frank/CHRG-111shrg56376/CHRG-111shrg56376--229.txt As noted , the new consolidated regulatory agency would simply pick up the Federal component of the State examination and regulation , currently performed by the Federal Reserve and the FDIC .