Bernanke Says Proposal to Separate Commercial Banks Would ‘Weaken Financial Stability’

Fed Chairman Ben Bernanke believes that a proposal to separate commercial banks from their swaps trading desks “would weaken both financial stability and strong prudential regulation of derivative activities.”

Bloomberg : “Prohibiting depository institutions from engaging in significant swaps activities will weaken the risk mitigation efforts of banks and their customers,” Bernanke wrote in a May 12 letter to Senate Banking Committee Chairman Christopher Dodd, according to a copy obtained by Bloomberg News. “Depository institutions use derivatives to help mitigate the risks of their normal banking activities,” he said in the letter.

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