Fed Chairman Ben Bernanke said the U.S. government must refrain from imposing ineffective and burdensome rules on financial companies as it implements rules from the financial overhaul law passed last year.[From Bloomberg]: “No one’s interests are served by the imposition of ineffective or burdensome rules that lead to excessive increases in costs or unnecessary restrictions in the supply of credit,” Bernanke said today in a keynote address in Chicago. “Regulators must aim to avoid stifling reasonable risk-taking and innovation in financial markets, as these factors play an important role in fostering broader productivity gains, economic growth, and job creation.”
Bernanke and Fed authorities are attempting to balance the need to limit the risk of repeating the 2007-2008 financial crisis with the purpose of reviving the U.S. economy after the worst recession since the Great Depression.
“While a great deal has been accomplished since the act was passed less than a year ago, much work remains to better understand sources of systemic risk, to develop improved monitoring tools, and to evaluate and implement policy instruments to reduce macroprudential risks,” Bernanke said to the Chicago Fed’s 47th annual banking conference.
“Without a strong microprudential framework to underpin them, macroprudential policies would be ineffective,” he cautioned.
The new macroprudential approach adopted under the Dodd-Frank act focuses on monitoring increasing risks to financial stability and requires cohesiveness and data-sharing among government agencies.