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Frank Big changes needed in financial regulation
WASHINGTON (3/21/08)--In the wake of recent financial market turmoil, House Financial Services Committee Chairman Barney Frank (D-Mass.) yesterday called for a number of new policy options he said would help stabilize the housing market and address the current economic downturn, including creating a new or empowering the Federal Reserve to act as a ”Financial Services Systemic Risk Regulator.” In a speech in Boston Thursday, Frank said he wants to give the new regulatory body “capacity and power to assess risk across financial markets regardless of corporate form and to intervene when appropriate.” He said since the repeal of Glass-Steagall, a host of new players have emerged and old ones are doing new things. “To the extent that anybody is creating credit they ought to be subject to the same type of prudential supervision that now applies only to banks,” said Frank. This regulator also must focus on enhanced consumer protection, because “this crisis shows that consumer protection, safety and soundness and systemic risk are intertwined,” according to Frank. Frank also indicated a willingness to consolidate what he called “a duplicative regulatory structure,” but provided little detail in a written statement Thursday. Federal and state credit union regulators were not mentioned. The committee chairman called for a reassessment of capital, margin and leverage requirements because “this crisis has illustrated that seemingly well-capitalized institutions can be frozen when liquidity runs dry and particular assets lose favor.”


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