Fed chairman Bernanke’s call for a broad reworking of how the government regulates the financial system was met with skepticism by finance Professor Mark T. Williams, a former Fed bank examiner, and law Professor Tamar Frankel, a securities law authority.
Williams says Bernanke missed the point.
“The Fed took its eye off the ball. The regulatory framework that oversees our banks cannot be repaired until the most important regulator, the Fed, completes a thorough internal assessment of how they missed the real estate bubble which was the primary driver of our current recession.”
Frankel says consolidating regulatory authority would be a mistake.
“In the 1930s we avoided ‘too-big-to-fail government” by splitting the regulation of banking, insurance, and markets. Now there is a proposal to combine them into one huge regulatory system. I hope that both financial intermediaries and their regulators never again acquire as much power as they do now, and I hope we do not strictly regulate the entire system under one roof.”