Financial Oversight Considered by Senate Ag Committee
In the House, Peterson unhappy giving Fed more power.
Compiled by staff
Published: Nov 19, 2009
A Senate Ag Committee Hearing, held Wednesday, focused on the Financial Stability Improvement Act. Committee Chairman Blanche Lincoln, D-Ark., called the issue quite simply, the single most important factor in our long-term economic recovery. She said that it will be the foundation for our nation's financial future. Senator Lincoln pointed out that deregulation has simply devastated our economy; therefore fundamental financial market oversight reform must pass. Reform is essential to reaffirm the integrity and soundness of our financial system.
In his opening statement, Ag Committee Ranking Member Saxby Chambliss, R-Ga., said the volatility seen recently in some markets warrants extensive analysis, and possibly some regulatory changes.
"I also believe this committee should explore how most effectively to regulate swaps, some of which are statutorily excluded from CFTC regulation and oversight," Chambliss said. "We can no longer ignore the complexities of these markets. We must devote time to understanding these instruments and their applications."
The bill's language creates a Financial Services Oversight Council made up of several agencies - including the Commodity Futures Trading Commission - which would be given powers to identify certain financial players and activities that could pose a systemic risk to the economy.
The Federal Reserve would be given broad powers in the draft, with the ability to impose standards despite the objections or expertise of Council member agencies. In addition, the draft contains loan retention provisions affecting the Farm Credit Administration, which oversees a nationwide network of borrower-owned lenders that provide credit and related services to farm country. House Agriculture Committee Chair Collin Peterson, D-Minn., who is working on similar legislation in the House, has a real problem giving the Fed increased power.
"No one regulator, agency, board, or entity is smart enough to measure a true rise in the value of assets as opposed to the creation of a bubble," Peterson said. "Nor should one regulator be given so much independent power over our economy. Given the Federal Reserve's cozy relationship for many decades with many of the too big to fail institutions that fall under their new regulatory power, makes me wonder whether anything would really change."
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