WASHINGTON (7/2/08)--Treasury Secretary Henry Paulson and Federal Reserve Board Chairman Ben Bernanke will appear at the first of a series of hearings on the policy implications of the transformation of domestic and international financial markets, according to a Capitol Hill announcement. House Financial Services Committee Chairman Barney Frank (D-Mass.) Tuesday issued the release noting that a primary focus of the hearings will the rise of potential systemic risk associated with the dramatic growth in the share of assets held outside the commercial banking system, the complex arrangements that link firms that are regulated differently (or not at all) and the increasing amount of leverage. Specifically, the chairman intends the hearings to examine:
* Current state of the financial regulatory system, both in the United States and abroad, and ways to measure and limit risk without stifling innovations and improve market liquidity and breadth; * The implications of providing investment banks and others access to the discount window: * In light of the collapse of Bear Stearns, proposals to improve the regulatory structure to better assess and mitigate systemic risk to avoid a similar or more serious crisis in the future: * The need for enhanced capital and reserve requirements for financial firms: and * The adequacy of current powers of the Federal Reserve and other regulatory agencies to protect the financial system and the taxpayers.
Ryan Donovan, Credit Union National Association vice president of legislative affairs, said Tuesday, “ We are pleased to see that one of the items on which these hearings will focus is the need for enhanced capital and reserve requirements. “This is an issue that NCUA as well as the credit union movement have been asking Congress to address with respect to credit unions for several years." The committee also plans to invite New York Federal Reserve President Timothy Geithner, Securities and Exchange Commission Chairman Christopher Cox, other federal regulators, academics, economists and market participants to present views at subsequent hearings later in July and continuing in the fall.