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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Joe S Pack who wrote (49191)	4/25/2009 9:57:35 PM
From: Haim R. Branisteanu	Respond to of 217925

Govt Shouldn't Single Out Too-Big-To-Fail Institutions By Jessica Holzer Of DOW JONES NEWSWIRES WASHINGTON (Dow Jones)--Paul Volcker, a top economic adviser to President Barack Obama, on Saturday warned against labeling certain large complex institutions as "too big to fail" and submitting them to special regulatory scrutiny, an idea that is gaining currency in Washington. The former Federal Reserve chairman said such a move would cause the designated institutions to engage in riskier behavior and also give them an edge over their competitors. "We should try to avoid the presumption that however big those institutions are, they are going to be saved when they get in trouble," he said at a panel at the International Monetary Fund, which this weekend is holding its spring meetings in Washington. House Financial Services Committee Chairman Barney Frank, D-Mass., plans to push legislation this year to create a "systemic risk" regulator with broad authority to oversee threats to the financial system. It is unclear whether Frank will seek to have the regulator zero in on a subset of large, complex institutions. Volcker, who heads Obama's Economic Recovery Advisory Board, expressed support for changes to give federal regulators more power to reduce threats to the financial system. However, he said such changes should be approached carefully. He criticized the idea of drawing a circle around a select group of institutions deemed systemically risky. "When you do it that way, it immediately raises questions about who's in the circle and who's out of the circle," he said. Volcker also weighed in against subjecting hedge funds, investment banks and other institutions that operate in the capital markets to the same level of regulation and scrutiny as commercial banks. He argued that regulators should have authority to look into all capital markets institutions that could create problems, but focus primarily on banks. "I'm not a fan of extending regulation and supervision to non-banks, because I don't know where you stop and what the implications are," he said. -By Jessica Holzer, Dow Jones Newswires; 202-862-9228; jessica.holzer@dowjones.com