U.S. regulators "humbled" by crisis -Fed’s Plosser

NEW YORK, May 5 (BestGrowthStock) – Philadelphia Federal Reserve
Bank President Charles Plosser told lawmakers on Wednesday the
U.S. central bank and other regulators have been “humbled” by
the financial crisis.

However, Plosser cautioned against regulatory reforms that
would cut the Fed’s supervisory power over smaller banks,
saying this would run the risk of the Fed losing its Main
Street perspective and exacerbate the problem of the biggest
firms being perceived as “too big to fail”.

In remarks to a Joint Economic Committee Staff meeting,
Plosser also reiterated the need for a credible process of
resolving failed financial firms and warned of the dangers of
politicization of the Fed, the U.S. central bank.

“Regulators from every agency, and every country, failed to
see the dangers that had emerged. And all have been humbled by
the experience,” Plosser said. “The challenge now is to
implement regulatory changes that are most likely to prevent
similar crises in the future.” he said.

Proposed legislation crafted by U.S. Senate Banking
Committee Chairman Christopher Dodd, which the full Senate is
now debating, would put the Fed in charge of overseeing
institutions with assets greater than $50 billion but strip it
of small bank supervision.

Plosser voiced support for Senator Kay Bailey Hutchison’s
amendment that would keep the Fed as supervisor of smaller
banks. Co-sponsors of her amendment include Minnesota
Democratic Senator Amy Klobuchar and eight Republicans, a
Hutchison aide said on Tuesday. For more see [ID:nN04131368].

“I believe it would be best for the Federal Reserve to
retain supervisory authority over all bank holding companies,
regardless of size, and over state member banks. Senator
Hutchison has offered an amendment with bipartisan support that
would do just that,” Plosser said.

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U.S. regulators “humbled” by crisis -Fed’s Plosser