Bernanke, goaded by Congress, steps up banking regulation

[TexasLawyer]

Source: Bloomberg News

Bernanke, goaded by Congress, steps up banking regulation

In his latest move, the U.S. Federal Reserve chairman
examines whether he has authority to investigate mortgage
units of financial institutions that the Fed supervises.

By Craig Torres Bloomberg News
Published: July 17, 2007

WASHINGTON: Ben Bernanke, chairman of the Federal Reserve, is mobilizing to placate Democrats in Congress who claim he is not doing enough to crack down on predatory lending.

Bernanke, who begins two days of testimony to Congress on Wednesday, has ordered Fed staff to determine whether he has the authority to investigate mortgage units of financial institutions that the Fed supervises. The central bank, which the chairman of the House Financial Services Committee Barney Frank has threatened to strip of some regulatory powers, also plans an overhaul of lenders' disclosure standards.

The steps that Bernanke is being encouraged to take amount to rolling back at least part of the free-market legacy bequeathed to him by Alan Greenspan, his predecessor. During Greenspan's 18-year tenure, the central bank was loath to meddle with banks' business practices, relying on guidelines instead of enforceable public rules.

"They did not use the supervisory authority they had sufficiently," said Alan Blinder, who was vice chairman under Greenspan and taught with the current Fed chief at Princeton University. Bernanke needs to tell lawmakers that policy makers "learned something from it," said Blinder, who called Greenspan "the great anti-regulator."

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Read more: http://www.iht.com/articles/2007/07/17/business/fed.php

[Javaman]

1. he's probably a big investor in KB homes. nt