Group Forms to Urge Strict Oversight of Wall Street

Publication: New York Times

Author: Floyd Norris

06/05/2012 — Efforts to increase and improve regulation of Wall Street have bogged down, according to Sheila C. Bair, the former chairwoman of the Federal Deposit Insurance Corporation. On Wednesday, she will announce a new group, the Systemic Risk Council, that will monitor and encourage regulatory reform.

“The great challenge is to devise a system to identify risks that threaten market stability before they become a danger to the general public,” she said. “We need a more effective and efficient early-warning system to detect issues that jeopardize the functioning of U.S. financial markets before they disrupt credit flows to the real economy. And two of the most critical tasks are how to impose greater market discipline on excess risk-taking and effectively end the doctrine ‘too big to fail.’ ”

The Dodd-Frank act passed in 2010 provided for numerous steps, including the creation of an Office of Financial Research that was supposed to help the newly created Financial Stability Oversight Council in identifying threats to financial stability and deciding which financial firms were systemically important and how much additional regulation they should receive. That council is composed of all the major regulatory bodies, and so far it has accomplished little.

Some of what Dodd-Frank called for has been enacted, including so-called living wills for large banks and rules on how the business of such a firm would be wound down if it failed.

Read the full article, Group Forms to Urge Strict Oversight of Wall Street, on the New York Times website.