Bernanke Doesn’t Want to Oversee Just “Too Big To Fail”

Fed Chairman Ben Bernanke says the central bank shouldn’t just be responsible for the big banks he believes they should have oversight of regional banks as well. “We are quite concerned by proposals to make the Fed a regulator only of the biggest banks … It makes us essentially the too-big-to-fail regulator … We want to have a connection with Main Street as well.”

Bernanke is also saying that the Fed has done some “soul searching” since the financial crisis because they made mistakes. He said they need to change their culture surrounding banks because the crisis was caused by failures in regulation.

FOMC Holds Rates and Keeps “Extended Period”

The U.S. Federal Reserve opted to hold rates at 0 to 0.25% and said rates will stay “exceptionally low” for an “extended period”. They said the U.S. recovery will be “moderate for a time”. They said employers “remain reluctant to add to payrolls” but that the labor market is “stabilizing.” They also confirmed that MBS and Agency debt purchases will end on March 31. They say economic activity has “continued to strengthen.” Overall, very little change in this report. Interestingly Hoenig once again dissented. He “believed that continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted because it could lead to the buildup of financial imbalances and increase risks to longer-run macroeconomic and financial stability.”