Federal Reserve chairman Ben Bernanke says new regulations will be unveiled this summer to protect the US economy from another meltdown of the nation’s largest banks and financial companies.
Congress directed the Fed to write the rules when it passed last year’s financial regulatory overhaul in response to the 2008 financial crisis.
The rules will include stricter capital requirements for the biggest banks, hedge funds and insurance companies whose failure could throw the financial sector into another crisis.
In prepared evidence to the Senate Banking Committee, Mr Bernanke said the Fed would allow the public to comment on the rules before implementing them in January 2012.
“Our goal is to produce a well-integrated set of rules that meaningfully reduces the probability of failure of our largest, most complex financial firms, and that minimises the losses to the financial system and the economy if such a firm should fail.” he said in evidence released on the eve of today’s hearing.
Regulators are scrambling to implement hundreds of new rules, many of which must be completed before the law’s one-year anniversary on July 21.
Mr Bernanke and regulators including those from the Treasury Department, the Securities and Exchange Commission and the Federal Deposit Insurance Corporation will update politicians today about their efforts to implement the biggest revamp of the nation’s financial rules since the Great Depression.
On the international front, Mr Bernanke said regulators in the US and in other countries were trying to make sure that big banks and other major financial companies were regulated in a consistent manner. That, he said, was important to maintaining “a level international playing field”.